In 2020, global retail eCommerce sales grew to an astonishing $4.28 trillion. While this growth may have been thanks in large part to social distancing and shutdowns, this growth isn’t likely to stop anytime too. As a matter of fact, e-retail sales are expected to reach $5.4 trillion in 2022.
Worldwide, online shopping is one of the most popular online activities, and direct-to-consumer (DTC) brands are no exception to this trend. Just how popular are these DTC retailers?
- Twenty-five percent of consumers in the U.S. make 20 percent of their purchases from direct-to-consumer brands.
- Over the next 5 years, 81 percent of Americans will make at least one purchase from a DTC brand.
- Seventy-seven percent of apparel and accessory retailers use a DTC sales model.
- Eleven percent of DTC brands are amassing over $100 million in sales.
In general, consumers are warming up to the idea of DTC retail companies. But as their popularity grows, direct-to-consumer brands are looking for places to store their goods and services to help fulfill their increasing amount of orders.
The best solution is a fulfillment warehouse or a fulfillment center.
What is a Fulfillment Warehouse?
While the terms “fulfillment center” and warehouse are used interchangeably, their services couldn’t be more different.
Warehouses are large buildings where goods are stored before they are sold, sent to stores, used, or exported or imported. But warehouses don’t offer much more than just a place to store goods. It’s a static location.
On the other hand, fulfillment centers or fulfillment warehouses are physical facilities that offer packaging and shipping services. In addition to inventory space, these third-party service providers act as the go-between to handle online orders, ensuring they are packaged correctly and that they get to the client’s front door quickly. It’s more than just warehousing, it’s a full-service shipping solution.
The Advantages of Working with a Fulfillment Center
Many DTC retailers use fulfillment centers to ensure that their products get to customers quickly and efficiently. What are the reasons that so many DTC brands are handing over fulfillment to professionals?
- Handle inventory storage better: Inventory storage for DTC brands can be a hassle. Demand can scale up and down in a flash, and fulfillment centers eliminate the stress of managing physical storage space, while also handling packing supplies as well.
- Reach new markets: Online retailers who want to expand into new markets can benefit from the work of fulfillment centers that can hone in on that market and facilitate local and widespread shipping and storage.
- Focus your efforts on what you do best: It takes a lot of time and resources to deal with shipping, packaging, and logistics. Trying to manage all of this yourself takes time away from working with clients, developing products, building marketing strategies, or excelling at your core competencies. A fulfillment center frees up time that would have otherwise been spent on packaging and shipping.
- Keep costs low: Logistical costs can shoot through the roof when you try to handle them on your own. Fulfillment warehouses have connections with everyone in the logistics industry and can negotiate lower prices, Plus, when you store your goods in a fulfillment center, you only pay for the space you need, and can scale your storage space up and down as needed.
Match Customer Demand
What really makes a difference when working with a fulfillment center is the improvement of the overall customer experience. Customers expect to receive products purchased online faster and cheaper than ever before:
- Currently, 28.6 percent of consumers are more likely to place an order online if it will arrive within the week
- A mere 7.5 percent of consumers stated that shipping dates don’t impact their purchasing decisions
- Of those surveyed, 79.3 percent of consumers said that free two-day shipping was important to them—even the norm.
As your DTC brand reaches high order levels, it can be nearly impossible to manage demand on your own; to pick and pack orders and get them to a shipping partner fast enough to keep up with customer shipping expectations. It’s the most logical way to avoid delayed shipments and backorders that can be a business killer. After all:
- Sixty-nine percent of respondents are less likely (or even much less likely) to shop with a retailer again if an item they purchased isn’t delivered within two days of the promised arrival date.
- Sixteen percent of respondents will stop shopping with an online retailer if they get an incorrect delivery just once
- Fourteen percent of those surveyed will stop shopping with an eCommerce retailer if they get a late delivery just once.
OceanX: The Premier Fulfillment Center Solution
At OceanX, we pioneered the fulfillment center solution for DTC brands, including those who offer kits, bundles, and even subscription services. But we haven’t settled for being just a pioneer at the onset. We are a forward-thinking company leading the charge for modern fulfillment solutions.
We’re not just an exceptional fulfillment center; we’re a full-service, data-driven solution to help DTC brands take their operations to the next level. Our services include:
- Incorporating reliable, advanced marketplace integrations and inventory management
- Building personalized automations like inventory reorder points, automatic generation of picking lists, and managed returns
- Gathering and sharing insightful and predictive analytics to forecast inventory, better manage your warehousing needs, and identify customer buying patterns.
- Providing fulfillment and customer care reporting to hone your operations
- Give order channel attribution
- Collect and share valuable customer journey insights
Not all fulfillment centers have multiple fulfillment center locations for faster, more affordable shipping rates in addition to software-focused operations. Our software is feature-rich and robust to enhance the customer experience in the marketplace and with deliveries. The automations our fulfillment services offer will improve your customer wait times and daily order outputs and will share key analytics you can actively use to grow your business.
Through our streamlined fulfillment services and implementation of automations and data analytics, we can improve your operations from end to end. To discover more about an eCommerce fulfillment service that will support all of your operations, request a quote today.