As a Direct-to-Consumer (DTC) brand, the entire fulfillment process falls on your shoulders.
This means that you’re responsible for everything, from managing your inventory and processing store orders to ensuring products are shipped promptly to your customers. Unlike relying on intermediaries, you have full control over these critical operations.
As you may well know, nailing these aspects of DTC operations can be a real challenge. But fear not, because today, we’re going to share nine top-notch strategies you can put in action to streamline and optimize your DTC fulfillment process.
But before we dive into these strategies, let’s take a moment to look at the DTC model, the advantages it offers and the most common hurdles that DTC retailers face. Let’s begin!
What Is DTC (Direct to Consumer) Fulfillment?
As a brief reminder, the DTC ecommerce model occurs when a company single handedly oversees its inventory, receives orders solely from its stores, and delivers orders directly to consumers, without involving retailers (think Amazon), distributors, wholesalers, etc.
So, Direct-to-consumer fulfillment refers to the aspect of DTC operations that involves manufacturing or sourcing products, storing them, receiving and processing orders from your stores, and shipping customer packages without involving any intermediaries.
So, Why Is The DTC Ecommerce Model So Popular?
By selling directly to customers and skipping middlemen, companies get to reduce the cost of listing their products on big-name retail stores – allowing them to enjoy higher profit margins and offer more competitive prices to customers.
DTC fulfillment also offers greater branding and marketing opportunities. Companies can communicate directly with customers, build closer relationships and tailor offerings based on readily-available customer feedback.
Plus, with access to data and customer journeys, DTC brands can gather valuable insights on shopper behaviors that will be useful for product development and marketing campaigns.
Additionally, the DTC approach is easily adaptable to changing market conditions. By handling the sales process in-house, companies are able to respond faster to new market trends and customer needs, quickly enough to maintain a competitive edge against other brands.
5 Benefits Of Selling Direct To Customers
These are some of the benefits you get by selling DTC;
Enhancing Your Brand Reach
Selling directly to customers through your store and online sales channels allows you to single-handedly manage the image and messaging of your brand customers get to see.
Conversely, when you sell through marketplaces, products from other retailers can easily overshadow your product and messaging, making your overall branding less effective as you compete with similar and even cheaper alternatives to your product.
Intermediaries like wholesalers, distributors, and retail marketplaces can end up taking a significant portion of your revenue.
And you’re almost always at the risk of fees increasing without warning and losing product visibility due to competition for the first page and reduced storage space in a physical setting.
By managing your fulfillment chain yourself, you can maximize profit margins, invest your savings into your business, and, as we’ve said before, attract more customers by offering more competitive prices.
Direct Oversight Over The Fulfillment Process
It’s easier for hiccups and inconsistencies to occur during operations and in the customer experience when your fulfillment is overseen by various parties.
And when the quality of delivery and customer satisfaction differs from vendor to vendor, the reputation of your brand will suffer an unnecessary hit, leading to less business for you.
By controlling your company’s fulfillment directly, you can ensure a consistent customer experience every time and facilitate tailored, premium experiences for select customers to improve customer satisfaction.
Stronger Relationships With Customers
Shoppers love it when brands interact directly (and positively) with them.
Whether it’s a swift response from customer service or a welcome email following a completed purchase, regularly engaging customers with a positive and personal brand interaction makes them more likely to buy.
And everyone knows happy customers are more likely to recommend brands to other people, effectively becoming one of the most valuable marketing assets – brand evangelists.
Access to Valuable Customer Data
In business, knowing what your customers want is the key to being successful.
However, because of how tedious it is for marketplaces to track data for their various partner brands, the companies that sell through them never get the needed visibility over the behavior of their customers.
But by organizing your entire retail operation from end to end, you will have direct access to your brand’s customer touchpoints, which are prime spots for gathering data and insights into customer’s shopping habits and their desires.
4 Fulfillment Challenges DTC Companies May Face
Inability to Run a Direct-to-Consumer Fulfillment Operation
While the DTC business model offers many perks, overseeing the entirety of a fulfillment operation can be challenging for retailers, especially small and new business owners.
To manage it effectively, you will need a capable internal team and an expert fulfillment team to coordinate operations and handle issues that may arise as the various workloads aren’t being handled by partner distributors or retailers.
Scaling Can Be Tricky
Generally, new DTC companies can handle ecommerce fulfillment for themselves. But as the scope of operations grows and order volumes increase, they fall prone to sudden mishaps that can result in the sudden collapse of business operations.
This results in delays in handling inventory, processing returns, and fulfilling orders, which reduces customer satisfaction. When this happens, your business reputation falls and you lose customers as a result. But with the right assistance, brands like yours can mitigate these issues.
Pressure for Free and Fast Delivery
Thanks to Amazon Prime’s 2-day shipping, customers have grown to expect fast and free delivery as a standard service from retailers.
Because of this, you may need to fulfill your orders from distributed locations of warehouses to store inventory closer to customers and enhance shipping speed.
Moreover, to meet customer’s expectations, you can create the illusion of free shipping by including the cost of shipping in the product and offering bundles or minimum spending thresholds for shoppers to qualify for free shipping.
Handling Increasing Returns
Returns management is the process of collecting, processing, and refurbishing returned products in order to prepare them for resale.
Given customer’s expectations of no-frill, no questions asked returns, your DTC company will need to be able to handle returns as effectively as customer orders.
These may mean covering shipping costs, offering returns tracking, streamlining your returns authorization process, and maintaining close communication with customers throughout the returns process, all of which may result in more costs, smaller profits and even losses.
Further on in this post, we’ll talk about some ways you can mitigate the cost of returns.
8 Game Changing DTC (Direct to Consumer) Fulfillment Strategies
Prioritize Demand Forecasting
Demand forecasting is the process of predicting customer demand for products by analyzing trends, historical data, seasonality, and other external factors.
Practicing demand forecasting is essential for your business to find the balance between costly overstocking and missing sales opportunities due to stockouts.
Also, accuracy at this stage is crucial for making informed production and inventory management decisions, especially in the apparel industry, where fashion trends quickly change based on consumer preferences, seasonal patterns, and simply what’s popular.
To put things in perspective, consider these two inventory situations. In both cases the sales velocity, total sales and time frame are the same. But as you can see the Cost Per Bin/Month for the efficient inventory is one-third the cost paid by the inefficient inventory.
Cost-effective Returns Management
High returns rates are a troubling issue for clothing retailers. According to Coresight Research, consumers return 24% of clothes they buy online, owing to discrepancies in size, color and product quality. And, mainly, the inability of shoppers to see or feel a product before they buy it.
As the number of orders your store receives grows, so does the number of possible returns, making it essential to avoid losing profit by managing returns as effectively as possible. When framing your returns policy, it will be best to include:
- A defined time window for returns, such as 30 days, 90 days, etc.
- Expected condition of products, such as unopened, with seals or tags intact, etc.
- Necessary documents for returns, such as purchase receipts.
Wish to learn how to write a returns policy that minimizes losses and can keep money flowing in your business? Go check out this returns policy guide from Shopify.
Distribute Inventory Locations
Some retail companies use one central warehouse to store all their inventory while others rely on multi-node networks that strategically place SKUs nearby customer hubs.
When choosing warehouse locations, know that shipping carriers charge prices based on shipping zones.
Shipping zones are calculated based on the distance between a package’s pickup location and the final destination, so having multiple strategically placed warehouses may be a good choice when you have customers in various locations and are fulfilling a high volume of orders.
That way, you can significantly reduce shipping costs and ship orders promptly by automatically routing orders to the warehouse closest to your customer’s location groups.
Embrace Warehouse Automation
Warehouse automation refers to the use of software and machinery to enhance your operations, like inventory management, order fulfillment, and product handling.
Manual processes slow down operations and leave room for human error. AI technology like self-operating robots and modern monitoring systems, on the other hand, help shorten processing time, enhance staff efficiency, and save your business time and money.
When your business scales and you eventually need to outsource fulfillment, look for an agent that not only offers a distributed network of robot-enabled warehouses but one that unifies those warehouses with an Enterprise Resource System that’s functional and easy to use.
To minimize shipping expenses and still fulfill delivery expectations, you’ll need to implement carefully planned shipping strategies.
This involves optimizing packaging to keep dimensional weight low, developing relationships with several shipping carriers and requesting discounts on large order quantities, among others.
You may also consider partnering with a competent fulfillment provider to benefit from the wholesale rates they can access due to their high shipping volumes they handle.
Enhancing Last Mile Delivery
One of the biggest customer pains associated with every fulfillment model is the last-mile delivery. In supply chain terms, this refers to the last leg of the shopping journey or, broadly, the movement of packages from the shopping facility to the final destination.
When you have to manage the entire fulfillment process in-house, this aspect of fulfillment can be prone to delays, becoming significantly longer and more frustrating for your customers.
And with 84% of consumers unlikely to make future purchases after a poor last-mile delivery experience, nailing this aspect of fulfillment is a must.
In this case, partnering with a fulfillment provider can help. As businesses that focus on logistics and fulfillment, we have good relationships with last-mile delivery providers and can work with our own transportation methods to ensure your customers get the fastest shipping possible.
Effective Order Management
As a retailer, order management involves supervising the progress of customer orders, right from when they’re received via your shopping cart-connected order management system to when they’re processed and finally shipped.
When you’re starting out and have only a few orders coming in daily, you won’t have a hard time with order management.
However, when your business starts to scale, you will want to streamline this process by integrating an order management software that can track increased order volumes, minimize errors, and inform you of outstanding orders.
Leverage Data and Analytics
Combining data from your warehouse management systems with analytics tools will offer valuable insights into cost-cutting operations inefficiencies, enhancing your workforce’s output and making informed decisions during each stage of your operations, among other benefits.
When you fulfill from multiple warehouses, the need for data analytics and reporting is even greater. With the way interconnected warehouse networks operate, one delay at any point of operations can quickly cause operational issues elsewhere.
That’s why, to achieve fulfillment excellence, you should explore ways to navigate and use actionable data flowing through your supply chain operations.
Final Thoughts on DTC (Direct to Consumer) Fulfillment For Apparel Sellers
In summary, Direct to Consumer fulfillment refers to the process of receiving, processing and fulfilling customer orders without intermediaries.
It’s an end-to-end approach to fashion ecommerce that gives you total control over your shopper’s journeys, allows you to foster closer relationships, learn from customer data and enjoy better profit margins.
However, it’s important to remember that “do-it-yourself” fulfillment can quickly take up a lot of time and resources, eventually becoming unsustainable for your business, which is why many DTC retailers choose to outsource their entire logistics process,
Worry not, however, because Globallyfulfill is here to help.
From sourcing and managing inventory to packing shipping and handling returns, our team of experts can help you solve your DTC operational challenges, allowing you to focus on more important aspects of business like scaling and strategy. Get in touch with us today!