Businesses, no matter what they sell, all have one thing in common; they need a cost-effective, streamlined way of delivering products to their end customer. Traditionally, this meant transporting goods to a retail storefront where consumers can make purchases.
But today, fulfillment has gotten a lot more complex. The growth of ecommerce and direct-to-consumer selling means that retail fulfillment strategies are no longer fit for purpose. To manage thousands of small orders and unique delivery destinations, retailers need an effective direct-to-consumer ecommerce fulfillment strategy that drives customer loyalty.
But what does successful ecommerce fulfillment look this in practice? How can brands make all of these moving parts work together seamlessly without breaking the bank?
You’ll find answers to these questions and more in this ultimate guide to direct-to-consumer ecommerce fulfillment.
We’ll be covering:
Direct-to-consumer ecommerce fulfillment, also known as D2C or DTC fulfillment, is the process of processing, fulfilling, and shipping orders directly to the end customer without the involvement of intermediaries.
In a D2C ecommerce model, the retailer sells directly to customers via their online store or social commerce channels and is responsible for coordinating the end-to-end customer experience. This includes marketing their brand and products, offering a seamless shopping journey, and coordinating the fulfillment process. Brands have the option of fulfilling orders themselves or outsourcing to a D2C ecommerce provider.
The key difference between D2C fulfillment and retail/wholesale fulfillment is that items are sent directly to the customer once an order is placed and fulfilled. Inventory doesn’t need to be routed through an extensive distribution network before reaching the shelf. This requires a fulfillment operation that’s capable of fulfilling hundreds or even thousands of orders each day for unique destinations, rather than shipping SKUs in bulk to a handful of distribution centers or store locations.
In sum, D2C ecommerce fulfillment allows retailers to cut out the middlemen and assume responsibility for the entire supply chain. This includes:
Let’s dive into each of these workflows in more depth:
As a D2C retailer, it’s your responsibility to process customer orders. Order management involves overseeing the progress of an order from when it’s received via your OMS to when it’s fulfilled and shipped. Managing orders is a fairly straightforward process when you only have a handful coming in each day. But as your business scales, it’s important to streamline this process. Having a central place where outstanding orders can be viewed helps to minimize errors and identify trends in the demand for certain SKUs.
Inventory management refers to the storage, monitoring, and reporting of SKUs within a retailer’s database. Retailers need to use careful forecasting to ensure they’re not going to run out of popular items, or order too many units and end up with excess inventory. If reported inventory levels are inaccurate, this can result in stockouts or over-selling. This can be prevented by using an inventory management system that offers two-way integration capabilities with your online store, ensuring that inventory counts are adjusted each time a customer makes a purchase or a return.
Inventory needs somewhere to be stored safely until it’s required for order fulfillment, which makes warehousing an important part of your D2C fulfillment needs. Some retailers will use a centralized warehouse location to store all of their inventory, while others will use a multi-node system that places SKUs at several facilities that are in close proximity to important customer hubs. Ecommerce brands may need to use specialized warehousing strategies to maintain product integrity, such as FIFO (First In, First Out) sequencing. During peak season, it may be necessary to seek additional storage space for seasonal inventory.
Order fulfillment is the picking and packing of items required to fulfill a customer’s order as quickly and accurately as possible. ‘Picking’ requires staff to gather the items needed for an order. Picking can be completed in a variety of ways, such as zone picking, where workers only pick SKUs in their dedicated section of the warehouse, or batch picking, where workers are assigned a group of identical orders to pick for. ‘Packing’ is the process of placing items within the box or poly mailer ready for shipping. Depending on the brand’s fulfillment needs, the packing process could be quite elaborate i.e. an unboxing experience that requires specific training.
D2C brands require a carefully considered shipping strategy to minimize shipping costs while still meeting the fast delivery timeframes that consumers expect. This may involve cultivating relationships with multiple shipping carriers, using streamlined packaging designs to keep DIM weight as low as possible, and abiding by carrier regulations for different classes of product such as oversize or Hazmat shipping. By partnering with a fulfillment provider, brands can access wholesale carrier rates due to their partner’s high shipping volumes.
Returns management is the workflow of receiving, processing, and refurbishing returns to get items ready for resale. The flexibility of your ecommerce returns policy will determine how many returns your brand is likely to receive. Given the expectations for no-questions-asked returns in ecommerce, D2C brands need to be able to handle inbound returns just as effectively as outbound orders. This may also include paying for return shipping, return tracking, and facilitating exchanges for different sizes/colors to prevent losing revenue.
Finding profitable retail partnerships is a tricky business for emerging brands, a process that kills off many ventures before they even get started. Setting up a standalone retail store comes up with a huge number of overheads, and is a risky strategy when your brand doesn’t have an established following. But with the power of platforms like Shopify and BigCommerce, it’s possible to set up an online store and begin selling direct to consumers within hours.
Middlemen such as distributors, wholesalers, and online marketplaces can end up taking a considerable cut of your revenue, and there’s a risk that their fees could increase with little warning. By managing the end-to-end supply chain yourself, you get to maximize your profit margins and invest these savings back into your business.
It’s easy for inconsistencies in the customer experience to develop when the fulfillment process is being carried out by different parties. If the quality of customer care and the delivery differs from vendor to vendor, this can be very damaging to your brand’s reputation. By centralizing fulfillment under your brand’s direct control, you can ensure consistency and invest in more premium experiences to enhance customer satisfaction.
Newly-launched D2C brands can generally handle ecommerce fulfillment for themselves. But direct sellers are prone to sudden increases in order volumes that can easily swamp a fledging ecommerce operation. Without the right assistance, brands can rapidly outgrow their current setup. This results in lengthy delays in fulfilling orders or processing returns, which reduces customer satisfaction.
Overseeing the entirety of a fulfillment operation is both a blessing and a curse for retailers. While it’s easier to pick up on potential issues in the fulfillment process, it requires a strong internal team to manage fulfillment effectively when the burden isn’t being shared by distributors or partnering retailers. As your D2C business grows, this side of your operation will need to grow in tandem.
Those low barriers to entry are great for ambitious entrepreneurs, but make it much more challenging to succeed in the long run. The D2C marketplace is increasingly crowded with up-and-coming brands, all fighting to establish a loyal customer base against a backdrop of similar offerings. If you don’t have a unique product to fall back on, you may find yourself competing with the likes of big-box retailers who can undercut your pricing.
The D2C market has experienced unprecedented growth in the last five years, both due to the low barriers of entry for startup brands and legacy retailers choosing to grow their direct selling channels. The explosion in online retail activity caused by the COVID-19 pandemic has further accelerated the shift towards selling direct, with D2C ecommerce sales forecast to reach almost $175 billion by 2023.
Consumers are showing a growing preference to purchase from brands directly, instead of through participating retailers. Over half of consumers say they prefer to buy direct, rather than from a multi-brand retailer.
The growth of direct-to-consumer ecommerce is tied to increasing consumer expectations for cohesive brand experiences across channels, something that easily can’t be guaranteed with a complex web of distributors and wholesalers. Moreover, buying direct enables consumers to contact brand representatives, action returns, and participate within a brand’s community with far less friction.
Many brands are now opting for a D2C fulfillment strategy from the outset. But there’s a growing number of major retailers who are transitioning from traditional retail fulfillment to selling directly to their already established customer base.
Nike caused a stir with their announcement that they were dropping Amazon as a stockist after a two-year trial to focus on expanding its direct selling capabilities. Combined with its unique concept stores and successful Nike app, the sportswear brand is creating a powerful brand ecosystem that nurtures customers across multiple touchpoints in the shopping journey.
Meanwhile, outerwear brand Canada Goose nearly tripled its D2C revenue over the past year, thanks to a robust effort to strengthen its ecommerce presence.
So, what’s behind this massive shift to D2C ecommerce fulfillment?
The likes of Glossier and Warby Parker have demonstrated to legacy retailers how much easier it is to manage the brand experience when you have full control over your selling channels and customer care strategy. By engaging with customers directly via social media and live chat instead of relying on stockists, successful D2C brands can build a loyal base of brand advocates who they can rely on to spread the word.
Knowing what your customers want is the key to being a successful retailer, but many brands never get full visibility over their operation due to stockists’ difficulty to gather data. By coordinating the entire retail operation from end to end, you have access to a multitude of touchpoints that are prime spots for gathering data about your customer’s shopping habits.
Being able to sell directly to consumer boosts a brand’s ability to weather external events that could disrupt its retail operation. COVID-19 offers a great example of what happens when a retailer relies on distributors to do the heavy lifting, with corporations such as Coca-Cola and Unilever launching D2C channels for the first time as their supply networks seized up. By maintaining your own fulfillment and warehousing operations, it’s easier to be responsive to sudden marketplace changes.
Self-fulfillment, or in-house fulfillment, is when a brand chooses to manage the end-to-end fulfillment process themselves. This includes inventory and storage, order processing, packing, and shipping. Outsourced fulfillment is when a business brings on a third-party logistics provider who offers a range of fulfillment services using its own facilities, staff, and technology.
It’s not unusual for many retailers to opt for an in-house fulfillment strategy, especially when they’re just launching. However, brands should be aware that self-fulfillment carries a large number of hidden costs – especially as your D2C business grows.
For example, self-fulfillment costs such as storage, packing materials, and shipping fees are quite manageable when you’re only handling 50-100 orders per month. But when your order volumes escalate, it’s no longer practical to manage fulfillment yourself.
You’ll need to look at hiring extra staff to help you pack orders, as well as taking on additional storage space for inventory. It’s also prudent to invest in management systems that give you more visibility over your orders and stock levels. But these costs quickly add up; before you know it, the cost of running your in-house fulfillment operation can seriously impact your profit margins.
Aside from fulfillment itself, there are also opportunity costs. Valuable growth and brand-building opportunities can be missed when your time and attention are taken up by logistics concerns.
Once your ecommerce business reaches the point where self-fulfillment is no longer cost-effective, consider outsourcing to an ecommerce fulfillment company with purpose-built fulfillment centers and experience at working with D2C brands.
Coordinating a seamless fulfillment process requires far more than just manpower and space to store your inventory. As consumer expectations grow for faster turnarounds from ordering to delivery, brands have little room for error. Tools such as automation and AI aren’t just ‘nice to haves’, but essential tools for scaling effectively and identifying slowdowns in the fulfillment process. Yet it’s rarely cost-effective for brands to invest in these areas on their own. Partnering with a well-resourced fulfillment provider gives you access to these technologies – and the expertise to get full mileage out of them.
Instead of having to bring on separate partners to manage warehousing or returns, a full-service 3PL can handle the whole spectrum of ecommerce fulfillment services that your business requires. By keeping everything under one roof (no pun intended) you can ensure better communication and transparency between different systems and teams.
Most retailers will never field order volumes big enough to qualify for discounted shipping rates with major carriers. By outsourcing ecommerce fulfillment, merchants gain access to more affordable wholesale shipping rates due to 3PLs’ ability to negotiate rates. This means faster, more cost-effective shipping options than you can achieve independently.
The better organized your fulfillment process is, the happier your customers will be. 3PLs help you to eliminate common teething issues such as late shipments and bottlenecks in returns processing which usually happen due to a lack of expertise or appropriate infrastructure. By taking these responsibilities off your hands, you can focus on strategies to enhance the customer experience and build lasting brand loyalty.
You don’t want to develop a successful 3PL partnership, only to end it a year later because your business has outgrown its operation. It’s important to take a long-term view when vetting partners to make sure they don’t just accommodate your current needs, but can scale effectively alongside you.
Whiplash is well-equipped to build scalable fulfillment strategies for its customers via state-of-the-art warehousing and storage space, a flexible technology stack, and seasonal labor to handle both peaks and troughs in demand throughout the year.
Ecommerce fulfillment isn’t just about moving goods from A to B; your fulfillment partner needs to be your eyes and ears for everything that’s going on on the ground. This requires an advanced technology stack that unifies the fulfillment ecosystem to give your brand full visibility over your orders, stock levels, and shipping strategy.
The Whiplash platform is a powerful tool that puts flawless fulfillment and order management at your fingertips; set order rules on the fly, pause or cancel orders as needed, and track individual SKUs for up-to-the-minute insights over your operation.
A centralized D2C fulfillment strategy works while your customer base is small, but this gives you little flexibility as your ecommerce business grows. Having an online presence means that your brand can be discovered by consumers from Seattle to Secaucus. A fulfillment partner who can put a nationwide network of facilities at your disposal enables you to pioneer responsive multi-node fulfillment strategies that get orders to your end customers faster and more affordably.
With 18 facilities in strategic locations across the United States totaling over 6.5 million square feet of omnichannel fulfillment space, Whiplash is well-equipped to manage the demands of both emerging and established retailers.
For D2C brands, having a cohesive brand identity is the key to building familiarity with customers. This doesn’t just mean the shopping experience itself, but what customers receive once they place an order. Partnering with a fulfillment provider who can support value-added services like custom packaging, kitting, and subassembly for unboxing experiences is an invaluable asset to help your brand stand out from the crowd.
Whiplash maintains relationships with major packaging suppliers and can train our teams to fulfill orders in the manner specified by your business, ensuring consistent and high-quality delivery experiences that increase customer satisfaction.
World-class ecommerce integrations are the key to running a thriving online store. For successful fulfillment, direct-to-consumer brands need to be able to trust that information will be passed easily from system to system without mistakes. Integrations between your shopping cart and fulfillment systems ensure that information doesn’t need to be duplicated across multiple places, which lowers the risk of errors and orders going astray.
Whiplash offers native integrations with all major ecommerce platforms including Shopify, as well as direct integration with major parcel carriers like FedEx and USPS via our SmartRate selection tool so you can compare shipping rates with ease. Find out more about Whiplash integrations here.
Apparel brands typically have very large SKU bases due to the higher number of variations per product. This requires high-level inventory management to control proliferation and minimize duplications. Whiplash’s intuitive ecommerce technology allows you to monitor your inventory levels across locations – all from one convenient dashboard.
Cosmetics and beauty fulfillment offers some of the most complex workflows in ecommerce due to expiration dates and storage requirements. Whiplash’s network of modern facilities can coordinate large-scale FIFO and FEFO sequencing according to your needs and accommodate custom packaging requirements.
Due to the importance of a comfortable fit, footwear has some of the highest return rates in ecommerce. This makes streamlined returns processing a vital part of your D2C ecommerce fulfillment strategy. Whiplash’s seamless integration with top returns management tools and reconditioning services mean that we can get footwear back on the shelf in no time.
But don’t just take our word for it; let’s hear straight from the brands we’ve helped to grow and thrive:
Rad Power Bikes is one D2C brand that has grown in leaps and bounds as a result of the COVID-19 pandemic. With gyms and fitness centers closed due to stay-at-home restrictions, e-bikes became a hot commodity virtually overnight. They required a fulfillment partner who could not only scale quickly but create a cost-effective shipping strategy for a bulky and fragile product.
“Rad Power Bikes has seen massive growth every year since the company was founded, and as demand and interest for ebikes has surged, we needed the ability to scale quickly. With a Seattle presence and a nationwide operation, Whiplash was a clear choice for a fulfillment partner that allows us to deliver an unrivaled customer experience.”
Mike McBreen, Chief Operating Officer at Rad Power Bikes
One of the country’s leading sports apparel manufacturers, Outerstuff was struggling with scalability and finding a fulfillment provider with the technological infrastructure to support their complex SKU base. Whiplash gave them the multi-node fulfillment capabilities they needed to support rapid surges in demand for a different team and player apparel.
“Whiplash helped us to pioneer a sophisticated multi-node fulfillment approach that can be easily scaled up or down depending on our needs. These capabilities have been invaluable in our efforts to remain one of North America’s premier licensed sports apparel providers.”
Ted Feindt, VP of Operations at Outerstuff
As a brand-new D2C brand, Brunt required the support of an experienced fulfillment partner to ensure a smooth product launch and fulfillment of their first orders. Their launch saw on September 15th, 2020 saw their first orders leaving the warehouse within just 24 hours of being placed – a rapid turnaround that would not have been possible without Whiplash’s dedicated eCommerce platform.
“The Whiplash platform offered us this unique interface where we could see what was happening in the warehouse in real-time. It made us really comfortable to make the switch because we knew that we didn’t need to be close by to monitor what was happening.”
Eric Girouard, Founder and CEO of Brunt Workwear
The best way to reap the rewards of a responsive D2C fulfillment strategy is to get started before the growing pains begin. Whiplash is a nationwide fulfillment provider that can get your brand up and running with a best-in-class fulfillment strategy that gives your brand the competitive edge in a crowded marketplace.
Contact us today to find out how Whiplash can help your D2C business flourish.