Many members have questions around fulfilment as they look to capitalise on D2C, and invest in eCommerce alongside existing wholesale and retail channels. We asked members in our network who successfully scaled a D2C offering during the rollercoaster of consumer demands during the pandemic to share their lessons learnt.
While there is no one size fits all roadmap for D2C fulfilment, here is the Retail Hive collective’s answer to a roadmap for evolving from wholesale to a D2C fulfilment Utopia…
Source: Digital Boardroom, 9 Feb 2021, with Asics, Groupe SEB, HelloFresh, Kellogg, LoveHoney, Ideal Shopping Direct, Life Style Sports and recommended partner DHL.
<p class='p1'>Know why you are pursuing D2C? What is in it for your brand? What makes D2C so attractive? Is your driver to generate sales? Increase profitability of sales? To gain customer insights?</p> <p class='p1'>Understand what you need to reshape in your organisation to achieve success. You will need to transform processes and ways of working to make D2C successful.</p> <p class='p1'>Be prepared for a steep learning curve.</p> <p class='p1'>Think about how you will action returns? Different international markets will require different fulfilment experiences as they have different expectations. Build for agility in fulfilment processes as you will need different partners / delivery models / pricing / delivery cut off / etc in different territories.</p> <p class='p1'>Delivery models: don’t be afraid to pass the cost to customer for services such as 24-hour delivery. Customers may pay for this if they want it and you don’t necessarily need to erode profitability. Offer different delivery options to your customers with different costs and with different partners.</p> <p>
</p> <p class='p1'>Be clear about what you need from providers and how your tools and partners need to operate to achieve success. There are so many providers in this space, choosing the right ones is critical.</p> <p class='p1'>Consider the future of your partner ecosystem – do you want to plug D2C into existing platforms and systems or invest in your own operation?</p> <p class='p1'>Considerations when selecting partners:</p> <p class='p1'>– Be clear on what you want!<br /> – How do your partners all work together?<br /> – Ensure capability on returns – critical because of reputation risk if you get it wrong.<br /> – Understand how your fulfilment partners work for eCommerce you need the agility and flexibility to pick and pack multiple variations.<br /> – Future proof nuances of what you offer to your customers. You also need partners who have the potential to expand other elements you may want to incorporate in D2C – e.g.: advertising material in the box that goes out ; gift wrapping; product personalisation.<br /> – Decide what options you want to offer your customers. Find the right partner who can deliver on this and then work out what your own systems can accommodate / integrate.<br /> – Choose a 3PL with multichannel experience. eCommerce fulfilment requires a different model to wholesale and brick & mortar – but some partners can do it all.</p> <p>
</p> <p class='p1'>Some suggested criteria for selecting partners, you must prioritise what is important to you:</p> <p class='p1'>– Global reach<br /> – Agility<br /> – Transparency<br /> – Software – middleware connectivity<br /> – Ability to integrate with existing systems<br /> – Price<br /> – Ease of returns<br /> – Scalability to allow step by step growth in the most efficient way<br /> – Forecasting accuracy</p> <p>
Investigate how to harmonise data for a better understanding of forecasting. Eg: Web traffic analytics should feed through to forecasting.</p> <p>Forecasting accuracy is essential.</p> <p>If you have not forecast high volumes and fail to deliver on your promise to customers you risk your reputation.</p> <p>Remember that a customer is more likely to purchase a second time if they have a great delivery experience and you live up to their expectations.</p> <p>You must consider the cost implications of under-forecasting and needing to put urgent fixes in place.</p> <p>You can’t afford to have a backlog of urgent deliveries to fulfil – this becomes a world of pain.
</p> <p class='p1'>Options for increasing accuracy of forecasting:</p> <p class='p1'>Invest in a system and change the internal process.<br /> Assign a dedicated owner for demand analytics, forecasting and results planning (shared ownership of forecasting becomes a multiple failure if people don’t follow through).</p> <p class='p1'>For accountability try:</p> <p class='p1'>Have a contingency plan ready in case of peak in demand: are there other warehouses where they will also implement eCommerce to spread out the load?</p> <p class='p1'>Ways to manage unanticipated spikes in demand:</p> <p>– Have a plan B in place.<br /> – Extend the network of carriers.<br /> – Have a robust SLA with the warehouse / 3PL – perhaps agree a cap whereby you can accommodate a margin of forecast error (eg 10-15%) and still fulfil on promise.<br /> – Ensure you have the ability to pause wholesale and reshuffle inventory and resource focus on eCommerce orders.<br /> – Build in capacity for an extra shift? Eg: flexible temp worker agency SLA to provide extra shift workers within 48 hours.
</p> <p class='p1'>If you have warehouses that deal manually with big trucks and large pallets, you will need to allocate a separate space / operation for D2C – small orders from eCommerce.</p> <p class='p1'>Hire a dedicated team for eCommerce fulfilment: different shifts and a 7-day per week business model to cope with eCommerce orders being made all the time, and the completely different world of eCommerce.</p> <p class='p1'>Understand the packing process for eCommerce, individual orders. Explore opportunities for automation to fulfil in a more efficient way.</p> <p class='p1'>Space in your warehouse: you will need more scanners and tables.</p> <p>
</p> <p class='p1'>Your IT service capacity, systems and interfaces will need to cope with an increased amount of data in a Black Friday week. For instance: partner interfaces, WMS systems and SAP for invoicing – how can you and what do you need to do to have a stable system even on black Friday with so many packages, orders and extra data.</p> <p class='p1'>SAP and systematic capabilities vs what D2C requires is something to look at and interrogate.</p> <p class='p1'>Ownership: digital team > promotions & strategy > after sales team (order management and returns).<br /> Adding any new channel (website, eBay, wowcher etc) means more volume which leads to the requirement for more space and people in the warehouse.</p> <p>
</p> <p class='p1'>Set up for efficiency and increase the velocity of what you can physically get out of the door.</p> <p class='p1'>Explore how to mitigate risk:</p> <p class='p1'>– Ability to message customers in real time.<br /> – Establish regular communications with customers on critical points along the fulfilment process.<br /> – Personalised messaging is preferable to identify particular orders and avoid communication delay / offer incentives / manage expectations.</p> <p class='p1'>Link fulfilment planning with marketing processes:</p> <p class='p1'>– Plan campaigns for a week not a year hence.<br /> – Eliminate complicated legal processes that will slow the process of getting promotions to market.<br /> – Be prepared to interrogate and change marketing processes and partners.<br /> – Be aware of the impact of promotion on volume – plan timings of promotion and new products based on warehouse capacity and supply.</p> <p>
</p> <p class='p1'>Create the ability to communicate with customers directly and in real time, this requires real time data and visibility on order / shipping.</p> <p class='p1'>Invest in technology so messaging is consistent and you know what has and hasn’t shipped.</p> <p class='p1'>Ensure that your systems architecture is as simple and resilient as possible to withstand volume of messaging and that you have technologies that give you the ability to always communicate with the customer (not just customer facing but in middleware going upward too).</p> <p>