The virtues of selling direct to the consumer are well-known in 2021: Better supply chain visibility, stronger customer relationships, no middlemen taking a slice of the pie. But we hear a lot less about the difficulties holding many D2C brands back from achieving profitability.
There’s no shortage of success stories about D2C brands that have gotten off to a roaring start. But the faster your business grows, the more important it is to ensure that your fulfillment operation can scale effectively and maximize growth opportunities.
By partnering with an experienced D2C ecommerce fulfillment provider, your business can gain an edge in a highly competitive marketplace. 3PL partnerships enable advanced capabilities such as rapid shipping, effective returns management, and even compelling unboxing experiences that strengthen customer loyalty.
In this post, you’re going to learn about the value of outsourcing D2C fulfillment – and how your 3PL can assist you with the challenges commonly faced by D2C brands.
Direct-to-consumer ecommerce (also known as D2C and DTC) is a business model where merchants sell directly to customers without the involvement of intermediaries such as distributors or wholesalers.
Instead of your customer having to visit a retail store or marketplace to buy your product, they can go straight to your ecommerce website and put items in their virtual shopping cart.
Put simply, D2C fulfillment is the process of how an ecommerce business gets its products to that end consumer. This includes order processing, warehousing, inventory management, and shipping.
Being a D2C business comes with some distinct advantages, such as low barriers to entry and more opportunities to engage directly with customers. But there are also significant challenges that merchants need to overcome in order to build a sustainable, profitable brand.
This is where partnering with a 3PL (Third-Party Logistics) provider can make all the difference to your brand’s success.
Many D2C brands choose to self-fulfill orders when they’re first launching. This makes sense while you’re in the startup phase of establishing a customer base and finalizing your product offerings. Fulfilling orders in-house gives you complete control over the end-to-end fulfillment process and the freedom to experiment with different packing techniques.
However, self-fulfillment also carries a number of financial and opportunity costs – especially as your D2C business grows.
Storing inventory, packing orders, and handling shipping are manageable when you have less than 200 orders per month. But as your business scales, fulfillment will start absorbing more time and resources. You’ll start needing more people, better inventory management systems, and more storage space – all of which come with a hefty price tag.
But as a small to medium-sized business, you likely won’t reach the volumes required to achieve economy of scale independently. Even minor issues, such as carrier costs going up or a change in customs regulations, have the potential to derail a fledgling fulfillment operation.
By partnering with a D2C fulfillment provider early on, you can avoid the growing pains that come with being a successful ecommerce retailer. We’ve outlined the 7 biggest challenges that D2C brands are likely to face when going it alone – and how outsourcing fulfillment can help:
D2C brands can become a victim of their own success if their fulfillment strategy cannot pace with their growth. As order volumes escalate, this can result in lengthy delays to order processing and fulfillment.
Moreover, scalable fulfillment isn’t just about scaling up – but also scaling down. Consumer demand is never uniform, with order volumes typically experiencing both peaks and troughs throughout the year. For example, it’s common knowledge that demand rapidly increases in the lead-up to the holiday season.
But unless you can handle the post-holiday calm just as efficiently as the rush, your fulfillment operation could end up costing you dearly due to ongoing running costs.
Instead, it’s much more cost-effective to outsource direct-to-consumer fulfillment to a fulfillment provider. Whiplash can put a flexible technology stack and advanced automation at your disposal to help your brand scale up and down seamlessly in line with your ecommerce sales.
Fulfillment is very manageable when you only have small order volumes to worry about. Inventory and packing materials can be stored in your office or in a storage unit until needed, while order data can be manually inputted into a spreadsheet.
But as your business grows, logistics quickly morphs into a full-time job. Everything from inventory management, processing returns, and printing shipping labels takes time away from managing other areas of your business.
If you don’t have the internal expertise to coordinate fulfillment effectively, this has an impact on the effectiveness of the fulfillment process. As your order volumes grow, you may find yourself lagging behind in your efforts to fulfill orders quickly.
By looping in a 3PL to manage D2C fulfillment on your behalf, the burden of managing fulfillment is taken off your shoulders. This frees up your business to focus on areas that are key to D2C growth, such as marketing and sales.
The so-called ‘last mile problem‘ is infamous throughout logistics. Where order processing, picking/packing, and labeling can be done in bulk to increase efficiency, this stops at the point of delivery. Because every order has its own unique destination, residential delivery lacks the economy of scale needed to streamline this final stage of fulfillment.
This is what makes the last mile the most costly and least efficient part of the fulfillment process. If deliveries are late or missed completely due to failed drop-off attempts, this results in poor post-purchase experiences that damage a customer’s relationship with your brand.
When consumer expectations for fast and stress-free delivery are higher than ever, you simply can’t afford for your business to be let by a lackluster last mile. Partnering with a D2C fulfillment provider who can implement a multi-node fulfillment strategy is the key to reducing last-mile delivery times.
With 18 state-of-the-art fulfillment centers located nationwide, Whiplash is the perfect partner to assist your business with its last mile delivery woes. We can create the perfect multi-node strategy by selecting facilities that are in close proximity to your customer hubs, thereby increasing customer satisfaction through faster, more seamless delivery.
Direct-to-consumer order fulfillment is about far more than just moving goods from A to B. Unless you have fast and reliable integrations between your ecommerce platform and your OMS (Order Management System) you’re not even going to know which goods you have in stock – much less where you need to send them.
The purpose of integrations is to ensure that information is communicated seamlessly between different systems. The average ecommerce business relies on a huge number of platforms working together efficiently, from your online store and payment processor to your Warehouse Management System. But if your integrations are unreliable and result in information being lost or corrupted, this can cause massive disruptions to your fulfillment operation.
Partnering that a technologically advanced ecommerce fulfillment provider is the key to streamlining integrations between all of these moving parts. Whiplash’s proprietary fulfillment software offers native integrations with all major ecommerce platforms, including Shopify, BigCommerce, and Magento in addition to traditional EDIs. This enables merchants to access real-time insights about orders, shipping, and inventory levels – all from one easy-to-use interface.
We all know that nothing is ever truly ‘free’ – and this includes shipping.
With merchants now expected to foot the bill for home delivery, shipping costs are biting further into already narrow profit margins. This is exacerbated by issues such as high DIM weights and peak season surcharges, which can drive up shipping costs to unsustainable levels.
However, customer loyalty is at stake. Online shoppers are now accustomed to fast, cheap shipping thanks to Amazon’s generous policies. This means that merchants have a tough decision to make; lose customers by charging for shipping, or run the risk of making a loss.
Partnering with a shipping fulfillment service means that your shipping strategy isn’t restricted to such black and white decisions. Access to wholesale shipping rates lessens the burden of shipping costs on your business, while knowledgeable industry professionals can assist you in implementing a shipping strategy that works for you and your customer’s needs.
By partnering with Whiplash, D2Cs gain access to our SmartRate shipping tool which enables you to compare shipping rates between zones and parcel carriers in real-time, helping you to optimize for both cost and speed for ultimate control over every single order.
When you’re only handling a low volume of orders, it’s relatively straightforward to add embellishments to the order fulfillment process that enhance the customer experience. Additions such as custom packaging and inserts are value-added extras that showcase a higher level of care for your customer, helping to drive customer loyalty.
However, elaborate fulfillment practices don’t necessarily scale well as your business grows. Creating an unboxing experience, for example, adds a lot of extra time to the fulfillment of each order.
This puts D2C brands in a difficult position. Losing the trimmings can disappoint loyal customers, while also removing what makes your business unique. But as order volumes increase, it’s not always feasible to continue with such time-consuming practices.
By partnering with a D2C fulfillment provider who offers custom fulfillment services, you can ensure that your unboxing experience scales effectively alongside your order volumes. Whiplash offers a full suite of value-added services, including kitting and subassembly, allowing you to execute your brand’s vision flawlessly every time.
Handling a high volume of returns is a fact of doing business for ecommerce merchants. Online shopping behaviors are fundamentally different than how consumers shop offline, with shady practices such as bracketing and ‘wear once and return’ now well-established. Combined with the genuine reasons that customers make returns, it can feel as though there are just as many parcels coming into your facility are there are going out.
While returns will typically peak just after the holiday season, merchants need to be prepared to manage an influx of returns at any time. When returns processing is slow and unwieldy, returned items begin piling up at your facilities, resulting in frustrated customers and lost resale opportunities. If left unchecked, there’s a real risk of dead stock accumulating.
Outsourcing your reverse logistics to a D2C fulfillment partner can help your ecommerce business transform returns from a liability into an opportunity. Whiplash offers advanced integrations with three of the top returns management providers – Returnly, Happy Returns, and Loop – in addition to self-service returns options via the Whiplash platform to streamline your returns workflow.
If you’re a rising D2C brand, it’s likely that you’re currently facing one or more of the fulfillment challenges listed above. When your self-fulfillment strategy has outlived its effectiveness, this is a good sign that it’s time to partner with an experienced D2C fulfillment provider.
Whiplash is a best-in-class fulfillment provider that can help your D2C business to scale effectively with our advanced proprietary technology and nationwide fulfillment network. Contact Whiplash today to find out how we can help your brand to whether the challenges of D2C fulfillment.
For a deep dive into all things D2C fulfillment, check out our Ultimate Guide to D2C Fulfillment.