Studio McGee Handles Remarkable Growth by Simplifying Key Processes in NetSuite ERP

Suzy Strutner, Marketing Specialist

August 4, 2022

Studio McGee was in the right place at the right time – with the right business model – when demand for homewares spiked in 2020.

The brand was six years old. Owner Shea McGee had built a devoted Instagram following for her interior design service before launching an ordering service – so that fans could recreate her projects in their homes with the same goods – and then a direct-to-consumer ecommerce store.

With timeless pieces that have broad appeal, Studio McGee carries out its simple mission to “make life beautiful.” Its seven subsidiaries include SM Design, the interior design business that started it all, and McGee & Co, the ecommerce store stocked with furniture, artwork and other homewares.

Studio McGee’s brand awareness paid off as the home industry grew by $12 billion in the year following the pandemic’s onset. The company’s annual revenue has grown more than 8X over the past five years, topping $80 million in 2021. A team of about 20 employees has grown to 200. The design studio and ecommerce brand have a combined Instagram following of over 4.5 million. A Netflix show starring Shea and her husband Syd, Studio McGee’s CEO, makes it clear: This brand resonates.

As Studio McGee made its ascent, the team battled disconnected business systems behind the scenes. It was time to trade a patchwork of technologies for a hub of the company’s many pursuits.

Watch an overview of Studio McGee’s story:


Cleaning Back-of-House

In 2018, Studio McGee ran on “multiple systems that didn’t speak well to each other,” said VP of Technology Josh Batchelor. It used Xero for accounting, Stitch Labs for inventory, Shopify for ecommerce, ShipStation for fulfillment and Excel to plan buying and run financial analyses.

“Reporting was the hardest part” of having so many systems, Batchelor said. “… It was this weird process of trying to pull data together and cross-referencing it to figure out what our actual numbers were.”

To create a weekly sales report, for example, the VP of merchandising & product development pulled individual reports from Xero, ShipStation and Shopify, then compiled them together. The effort was too complicated just to come up with simple measures like sales volume, shipping costs and margins.

The team also had plans to shift from a 3PL to its own fulfillment center, illuminating the need for not just a better accounting tool but rather a centralized system “to take us to that next step to manage all of that data,” said Batchelor.

studio mcgee
Studio McGee's subsidiaries include McGee & Co, its ultra-popular ecommerce brand.


Organizing Processes With ERP

Areas in which Studio McGee has improved its processes the most since implementing NetSuite ERP(opens in new tab):

Reporting

Inventory stock reporting and tracking vendor prepayments have become noticeably easier with NetSuite, Batchelor said. Previously, the team also had to manually enter bills from shipping carriers, usually at a summary level. Using NetSuite, they can now enter bills individually. This creates a clearer picture of landed cost, so Studio McGee can identify its exact profit on products from any given vendor.

Newer team members use prebuilt reports in NetSuite(opens in new tab), then learn how to customize reports and searches to add insights. For example, they might customize a prebuilt A/P Aging report to include payment methods.

Intercompany Accounting

Studio McGee moved to NetSuite shortly after its ecommerce subsidiary took off. It’s now easy to create journal entries to adjust values from one account to the correct one, and NetSuite automates intercompany elimination.

Since intercompany transactions can be hard to identify, the accounting team appreciates that NetSuite has a system of controls to make sure each transaction is correctly identified and recorded: For example, the system can tag sales orders and purchase requisitions as intercompany transactions, link them together, then automatically find transaction lines that need to be eliminated when an order is invoiced.

Invoicing

Instead of paying standard invoices, interior design clients now review and pay custom invoices using SuiteCommerce MyAccount(opens in new tab). Studio McGee uploads all products that are scoped into a design project into the invoice. Then, the client reviews: If they decide that they don't want an item, they can unselect it from the invoice. They can then make ACH payments in the system, instead of only credit card or check. The changes “make it feel more like an ecommerce experience,” Batchelor said.

Inventory

While using Stitch Labs, Studio McGee created and edited purchase orders manually. POs for drop-shipped items didn’t close properly in the system, so inventory counts were off. Now, that process is significantly automated. Most of Studio McGee’s vendors are integrated via EDI, so they now get paid faster, and the accounting team has less work.

NetSuite also offers more accurate inventory tracking, so the team has improved its forecasting and ordering practices.

Studio McGee has broad appeal: Annual revenue has grown over 8X in the past five years.


A Well-Designed Team

Studio McGee wouldn’t have been able to handle its recent growth if teams were still working on a handful of disconnected systems, said Batchelor. At McGee & Co. specifically, “NetSuite touches all aspects of the business and simplifies everyone's jobs.”

By automating work in NetSuite, the company has been able to keep headcount low, making relatively few hires for highly specialized roles instead of constantly adding headcount, especially in accounting and inventory.

“If we didn’t have this system in place, it would have been this other, arcane way of doing things – and we would’ve just kept hiring more and more people to handle the load,” Batchelor said.
 

More Functionality, More Efficiency

Studio McGee is implementing more NetSuite functionality to continue knitting its processes together.

  • NetSuite Connector(opens in new tab) will soon link its NetSuite and Shopify environments, making it easier to process refunds, along with other ecommerce tasks.
  • The company will also combine its NetSuite and Shopify data in NetSuite Analytics Warehouse(opens in new tab), later adding data from Google Analytics and other systems. The team will more easily create reports on the fly and pull what Batchelor calls “quick data,” like daily sales compared to those from the previous year. It will also have one source from which to pull that weekly sales report, saving time and effort.
  • The team will use NetSuite Planning and Budgeting(opens in new tab) to run the budgeting process, plus merchandise planning at the category and source level, faster than in Excel.
  • NetSuite Advanced Revenue Management(opens in new tab) will handle Studio McGee’s deferred revenue and accrued expenses. It’ll also help align all costs of fulfilling each product with the sales price of each product in the proper time period, so the team can better understand product margins and gross profit margins.
     

Ready for Anything

This year, Studio McGee is also expanding into a 325,000-square-foot fulfillment center complete with pick-and-pack robots. NetSuite integrates with the robots’ technology, giving Batchelor confidence that the launch will be an easy one.

Studio McGee is also expanding its shipping capabilities to Canada while finishing its first international design project, and more international endeavors could be in store. Batchelor cited NetSuite’s support for global business management(opens in new tab) as another confidence boost.

No matter which projects the team moves forward with, “We know NetSuite supports it,” said Batchelor. “The functionality is there. And knowing that will make those initiatives easier.”

 

See how your business can also use automation to make your accounting team more efficient(opens in new tab) in this on-demand product demo.

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