Between 2019 and 2021, direct-to-consumer (DTC) eCommerce sales essentially doubled, growing from $76.68 billion in 2019 to an astonishing $151.2 billion in sales in 2021.
DTC brands are surging in popularity with no end in sight, and as a result, they are also growing increasingly competitive with more and more capabilities. These DTC brands have a broad digital presence and because they cut out the middleman of in-person stores, they can offer great prices, affordable, fast delivery, and easy returns.
But behind the scenes, DTC fulfillment is a complex system that requires great attention to detail and finely-tuned processes to get their growing number of orders processed and distributed to a network of carriers all working to get orders delivered to customer doorsteps in record time. Here are some of the ways you can optimize your fulfillment operations as a DTC retailer.
Examine Your Carrier Network and Fulfillment Center Configuration
Selling directly to consumers means having to send large quantities of packages to individual consumers around the country—which makes your carrier a crucial part of your fulfillment process.
eCommerce transit times are getting faster than ever before—so much so that consumers expect lightning-quick delivery times no matter who they are buying from. As discovered in a survey from 2020, 65 percent of American consumers expect delivery within two to three days from the retailers they choose. What’s more, in 2020, 29 percent of U.S. retailers were aiming to reach this delivery window speed by this year. Fast shipping is the new retail norm.
Also, sixty-five percent of eCommerce brands, fulfillment partners, and other industry professionals are investing in next-day delivery, 6 percent of consumers expect same-day deliveries, and 18 percent of brands are setting their eyes towards same-day delivery goals.
Large eCommerce marketplaces like Amazon and Walmart are investing in infrastructure to make fast and same-day delivery an attainable reality. Amazon is investing in more warehouses, airplanes, and Amazon-branded blue vans for more than 100,000 drivers.
While not every DTC retailer has access to the kind of capital to make this happen on their own, they can choose to work with a fulfillment provider that can make fast delivery possible and affordable. Having multiple fulfillment locations and a diverse portfolio of carriers—in addition to a well-run, efficient fulfillment operation—is the key to delivery success and expedited transit times. This means large national names and small regional carriers alike.
Take Advantage of Fulfillment Center Technologies
Like shipping, there is a lot that can be done to speed things up in the fulfillment center. What’s more, consumers are expecting that after anticipating the arrival of their order, the products inside should be accurate. In fact, 23 percent of all eCommerce returns happen because the consumer received the wrong item. Slow order processing and incorrect product picking can majorly damage a brand’s reputation.
All kinds of technologies and automation can provide faster, more accurate shipping. With pick-to-light solutions and quality assurance, OceanX was able to improve its order accuracy rate from 99.8 percent accuracy to 100 percent accuracy for luxury hair color brand Madison Reed—which makes sense. After all, sending the wrong shade of hair color could quickly become a public relations nightmare in the age of social media; one post from a dissatisfied customer could do major damage to the brand’s reputation. They needed 100 percent accuracy all the time.
In addition to pick-to-light tools, DTC brands can quicken and streamline their fulfillment line with tools like automated box assemblers and mail inserter machines to distribute printed marketing materials in each package, conveyor belts.
Make the Most of Your Fulfillment Center Warehouse Space
The setup of your fulfillment center can make a huge difference in how smoothly fulfillment goes. From making the most of your warehouse space to the order and placement of where and how products are stored for picking and packing, your fulfillment provider should offer valuable insight as to how your warehouse should be set up.
How can you optimize your warehouse space? Multichannel Merchant suggests the following tactics:
- Pay close attention to slotting, replenishment, and location control to keep things running efficiently, limit associate walking time, and reduce travel distance for picking commonly purchased items.
- Account for traffic patterns and the layout of where products are stored to minimize congestion and to keep things moving.
- Take advantage of slotting to store similar products together and increase efficiency in both available space and labor performance to limit the need for replenishment trips.
- Use barcodes frequently to improve order accuracy, limit labor costs, and improve efficiency in picking and packing.
- Measure and track employee performance to continue to fine-tune your fulfillment operations.
Multichannel Merchant also encourages following the 80/20 Rule. This rule states that 20 percent of all of your SKUs typically account for 80 percent of all of your unit sales. These items are the ones that your fulfillment partner’s associates will want nearby and accessible; they deserve valuable real estate in your fulfillment center. This can help ensure that they are processed quickly and efficiently. You may even opt to establish a “hot pick” zone for fast-selling items.
Make the Most of Your Valuable Data
One thing that’s unique to an online marketplace? It can be hard to adequately predict the amount of product needed—without data, that is. Unlike online retailers that sell directly to other businesses (and therefore have some level of predictability regarding order volumes, etc.), DTC brands must be able to leverage data for inventory forecasting.
To optimize DTC fulfillment, eCommerce brands need access to data and the tools necessary to synthesize this data into actionable insights regarding factors that include:
- Smart warehouse routing to send consumer orders to the closest available fulfillment center with the proper products in stock.
- Strategic warehousing to predict how many units of each SKU should be housed in each fulfillment center.
- Predictive analytics tools that can assess data to anticipate order volumes. This helps avoid wasted products and overfilled fulfillment center shelves, where eCommerce retailers have to pay to hang onto excessive quantities of a particular SKU.
Get Support from OceanX
At OceanX, we’ve been in the DTC game for decades—it’s how we got our start. From a data-rich operating platform that gives you full transparency of the entire fulfillment process to three state-of-the-art fulfillment facilities connected to a robust network of small regional carriers and large regional carriers.
We changed the DTC game once, and we’re doing it again. Are you ready to revolutionize the way you handle fulfillment? We can take it from here. Contact us today to learn more about how we can help you.
