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Fulfillment guide for 2022 DTC Brands and Online retailers

DTC Brands are rapidly taking over the eCom industry. However, such brands are expected to be entirely responsible of the whole customer experience. From product quality to delivery performances. Check out this guide to know more about DTC fulfillment!

A new sales channel strategy called DTC

Among the many post-pandemic innovations pertaining to the eCommerce industry, a special mention goes to the role of order fulfillment, essential especially for DTC brands. Even though many brands were already oriented towards DTC channels or starting to prefer such scheme to a wholesale, retailer or distributer one, the process has definitely been accelerated due to the COVID-19 pandemic. In fact, the development of social commerce reaches new milestones everyday, just see the latest partnerships between Shopify and platforms like Twitter and YouTube. This, added to the blooming of new, cutting edge eCommerce technologies and social media networking applications makees easily predictable how DTC brands will soon become the majority of consumer brands.

dtc brands sales channels instagram live shopping

DTC is in fact a new approach and a new way of doing business that all brands that want to stay in step with the modern world are choosing or exploring.  In fact, as reported by Invesp in their “The rise of DTC Brands” inphographic, 55% of consumers prefer to buy directly from DTC brands rather than intermediaries. Also it is predicted that 80% of consumers will make at least one purchase through D2C brands within the next five years.

This doesn’t mean that they will abandon their previous approaches but that they will stop relying on middle men such as distribution networks, wholesalers and retailers to get these products to the consumers and will start developing a direct relation with their customers (who are also fans of their brands).

With this said, the importance that DTC brands must give to fulfillment, grows dramatically because delivery performances as well as shipping (and payment) options become part of the product rather than a negligible accessory.
In other words, fulfillment and delivery have an impact on the consumer’s brand perception and lifetime value and this is the reason why DTC brands should learn as much as possible (possible = reasonable) about order fulfillment and how to select the right partner.

Definition

We can define eCommerce Fulfillment as a sequence of steps a company undertakes to process an order from the point of sale to the delivery of goods (with customer satisfaction).
Once the business starts selling regularly and is getting a higher amount of orders, there must be a solid fulfillment and distribution process in place.

Steps involved in this process are: Receiving, Inventory Storage, order Processing, Shipping and Returns Processing.

outsourcing order fulfillment dtc brands

Fulfillment glossary for eCom owners

3PL: stands for third party logistics. These service providers are responsible of provideing logistics and transportation for other companies.

4PL: stands for fourth part logistics. When compared to a 3PL, 4PLs operate on a higher level by managing 3PLs, as well as resources, technology and infrastructures at the scope of providing supply chain solutions to their clients.

Bar Code: Code that uniquely identifies a product. Barcode labels are extremely useful for the automation of logistics operations because they are used to quickly acquire detailed order and delivery information through the entire order fulfillment  process (see next paragraph).

Backorder: Order for a good that cannot be fulfilled due to lack of supply in that specific moment

Bulk Order: Purchase of a large quantity of one item (generally 100+ units) to be delivered to a specific location.

Cargo: Bulk goods or products being transported from one place to another by air, water or land.

Carrier: a company that provides transport services and is responsible of getting the purchase items from the logistic center to the final customer. 

Consignee: the person or entity to whom the package is delivered.

Customs: Agency or Authority tied to a government that regulates the flow of goods into and out of a country. They are also responsible of collecting Customs Duties: the taxes imposed on imported goods.

Distributed Inventory: strategy in which inventory is stored in multiple warehouses. When the merchant receives an order, the product will be shipped from the warehouse that is closest to destination.

Inbound Shipment: Shipment of the finished product from the supplier/manufacturer to the warehouse. From here, the product will be shipped to the final customer.

DTC: (or D2C) stands for Direct to Consumer. DTC brands sell their products or services directly to the public without using a retailer or a wholesaler.

Free Shipping: Online marketing and sales tactic that attracts customers because they know that they won’t be required to pay any additional shipping fees after selecting the desired products for purchase.

Fulfillment: Process of preparing and delivering a customer’s order. Check full definition in previous paragraph

Integration: The process of bringing together various softwares in a single program. For an online merchant, this translates into being able to manage sales from multiple sales channels with one single software. For DTC brands it’s crucial!

Inventory: All the items for sale that are in stock owned by a company in a given moment in time.

Out of Stock: Inventory condition in which the product is sold out. The last thing that a seller wants as it will cost them sales!

Private Label: Product manufactured by a third-party manufacturer and then sold under another company’s or retailer’s brand name.

Packing List: Document prepared by the manufacturer or the supplier that provides all the necessary information about a specific cargo. It contains details such as net and gross weight, dimensions and contents of all shipped pieces, etc…

Pick & Pack: part of the order fulfillment process that occurs after an order has been placed. The right product is picked from the warhouse’s shelf and brought to the packing station. Here, after choosing the right box and packing materials, the item is prepared for delivery and will be soon picked up by the selected carrier.

Processing Time: is the time that passes from when a purchase order is placed by a customer to when the package is sent out for delivery. You want this time to be as short as possible.

Reverse Logistics: Set of post-sale operations related to those items that move from the end customer back to the logistic center. The returned product can then follow multiple routes as it can be directly resold, repaired and resold or recycled.

Sales Channel: An access point to the market from which a merchant sales goods. For an e-seller this is represented by all the eCommerce platforms (Shopify, Magento, Prestashop, etc…), Marketplaces (Amazon, EBay, Etsy, etc…) and Social Media platforms that present an internal checkout or integrated with a preexisting sales channel.

Stock: Inventory of products stored in a warehouse and destined to be sold to a customer.

SKU: Standing for Stock Keeping Unit. It’s a reference number for a product that indicates the exact location where it’s stored. It helps vendors to track the item and to manage it.

White Label: Product produced by a manufacturer as unbranded. The product is then offered to other companies to be rebranded and sold to the public.

The order fulfillment process

The process consists in receiving and processing the order, then delivering it to a customer. However, this underlies the presence of activities such as receiving and storing inventory, processing the order, picking and packing the items, shipping the order and processing returns. 

Let’s see how it works:

The story begins way before hitting the buy button. In fact, products must be first of all shipped to the fulfillment centers. Goods are shipped in bulk from the manufacturer or the supplier.

The Logistic center needs to be notified about the inbound shipment so that they can prepare the warehouse to receive it. 

Once the bulk oder has arrived to destination, and the pallets or the boxes unloaded, the receiving team counts the inventory units to make sure they coincide with the amount indicated on the inbound shipment documentation. A quality check is also performed on a sample number of products (or all of them depending on the type of product and agreement in place with the warehouse). At this point, inventory is moved to the designated warehouse location where it will be stored for the long term.

Once the storage phase is completed, the software system is updated with information like the item’s presence, the number of available units and the warehouse location. This information will be also visible on the merchant’s side and this is the moment from when they will be able to resume sales, start campaigns and promotional activities. 

It goes without saying that sooner rather than later orders will start flowing in and the merchant will promptly forward them to the fulfillment center for preparation and delivery. This is where the pick and pack phase begins: in fact, the orders arrive and display information like the mailing address, the kind of items with their SKU and the number of units purchased.

The newly sold item will be picked up and brought to the shipping table where it will be scanned and prepared for shipping.

Scanning the product means that its barcode will be scanned by a reader that will then send the info to the main system in order to update the remaining available quantities. In the packing phase, instead, the product will be adequately wrapped and prepared to face the journey all the way to the final customer.  After preparing all packages for pickup, the carrier will come and pickup all packages from the logistic facility and this is when the delivery phase begins. The packages will be transferred from hub to hub until they reach the one closest to destination. At this point delivery to the final customer will take place. 

DTC fulfillment

The choice of outsourcing order fulfillment

It becomes easy to understand the reason why outsourcing order fulfillment becomes a necessity for every eCom retailer and all DTC brands that want to keep delivering a high quality service or improve performances as well as growing the business or scaling it in other countries, without considering cutting operational costs (just think about the time and the resources needed to handle returns). Many eCommerce businesses and DTC brands have chosen to outsource this process to companies specialised in fulfillment and can now focus on marketing, product development, branding and activities that cannot be outsourced as they pertain to the soul of the business.

What 3PL logistics providers do, is assist with the entire order fulfillment process and use their high specialization in eCom logistics and fulfillment operations to process orders quickly, with the lowest error rate possible and contribute to the outstanding customer experience the Brand aims to deliver through the newly purchased product. The advantage is real, no wonder 3PL logistics market is to reach $1924.31 billion by 2028 and 50% of the share is hold by the eCommerce industry. 

How can DTC Brands recognize a good order fulfillment service

Among the many fulfillment services out there, recognizing the perfect one for your business can be challenging. A good service is one that allows a Brand to match Customers’ desires and overachieve them. Here are some key elements to keep in consideration when making your evaluation:

Warehouse Technology

Not all facilities are managed with state of art technology, especially when warehousing conditions are particularly “elastic”, an extra eye should be thrown towards this aspect. Smart warehousing integrates technology, automation and human assistance in the right proportions and sections. Warehouse automation can truly make the difference, but notice that it doesn’t necessarily (or exclusively) mean physical or robotic automation or super smart AI. Plus, even the most seasoned eCom owner can know only up to a certain point about processes and warhouses’ workflows.

But the presence of automation is a great starting point for a successful relation with a 3PL. In fact, software is the star able to replace manual tasks and determine therefore a sensitively lower error rate as well as a mouth-watering cuts on costs. By automating the fulfillment process using softwares, businesses can intelligently choose how to fulfill orders based on inventory availability and internal rules assuring inventory is managed in the most efficient way while their customers are receiving their orders in a timely manner.

Software Integration with all sales channels is crucial for all DTC Brands

Software is king also on the “other side”: the merchant’s side. DTC Brands must continuously update their strategies and be present on the many DTC consumer channels that pop up every day. When each channel has an independent checkout, the challenge is to find an easy way to collect and manage those sales. An effective order fulfilment strategy on the merchant’s side must allow them to use one platform for all their sales channels, therefore providing the chance to integrate all sales channels in one software is crucial. In addition to that, the fulfillment software must provide total visibility and control as the order moves through the whole fulfillment process.

Packing criteria

An underestimated criteria of evaluation this is. But not for your customer and this speaks loudly in terms of overachieving one’s expectations. As Amazon has created the pain of utilising enormous packages with tons of stuffing that clearly appears to be a waste when the package contains small products, or eCommerces give tons of papers instead of one single invoice, DTC brands want to stand away from this negative trend and look to turn a “no waste” packing criteria into a selling point.

Choose logistic centers that use appropriate packing procedures and materials not only based on the kind of product, but also on its size. If it’s true that customers prefer delivery services that are green-oriented, and chose products that have the least environmental impact as possible, it is also true that delivering such products in a packaging that screams “WASTE!” at first sight, is profoundly disappointing for the customer and damaging of their brand opinion.

The management of returns

Returns are inevitable therefore when a customer needs to return an order, this process needs to be simple and as straightforward as possible. If not, chances are they will be lost as a repeat customer.
Also when it comes to reverse logistics, the presence of automation is an indicator that the process will be executed correctly. Once again DTC brands must be very careful and formulate a frictionless returns policy supported by easy to perform operational procedures because this is what communicates to the consumer the exact level of fairness the brand carries.

Cash On Delivery

Does the 3PL under examination support Cash On Delivery (COD)? Cash on Delivery is a payment system just as much as it is a delivery method. With COD the delivery agent role is even more important. In fact the courier not only delivers the package, but collects the payment for the product purchased before leaving the product into the hands of the final customer. This purchase method is very popular in many countries around the world like India, Philippines, UAE and the middle east, but also many European countries like Italy, Spain, Romania, Hungary, Bulgaria, Greece etc…

It goes without saying that you shouldn’t settle for anything less if you are planning to sell to the aforementioned countries or anywhere where COD is among the top 5 preferred payment methods.

Not being able to provide this payment method in such countries means loosing a conspicuous amount of conversions as many people that enjoy buying online still don’t have or are not interested in acquiring the knowledge needed to complete prepaid online purchases or might have trust issues both towards new stores or online payment systems. Also, DTC Brands that look to have a closer relation with their customers, must demonstrate that they know what makes them comfortable, especially when it comes to pulling out money out of their pockets. This means that by not providing the Cash On Delivery option at checkout, you will be losing clients also from the prepaid front. 

cash on delivery
payment for delivery with cash. Female hand transfers money to the courier with a box

Conclusions

Most people think of eCommerce as selling or purchasing a physical product online, but there is so much more to that! The rapid diffusion of the latest years and the growing importance of fulfillment in connection to one’s brand perception, has been putting huge pressure on 3PLs to provide a higher quality and state of art service. This at flexible conditions and with smart technology. For DTC Brands, this is even more important as they not only should look for a partner that can do the job, but for a company that will help them build a positive reputation and making them look good.

These are the pains that Bordel3ss is here to solve: smart logistics, warehousing and delivery solutions for DTC brands that aren’t only looking to grow, but to scale in other European countries – even simultaneously – while keeping focus on their main goals.

Our solutions are studied to provide emerging DTC brands, mid sized ones and enterprise companies with exactly what they need to sustain their growth, ameliorate their reputation, and save on operational costs always through one single platform that integrates seamlessly with the preexistent sales channels. Hopefully this fulfillment guide has provided you with the information you needed, but if you still have questions we invite you set a meeting today with out team to learn more about DTC fulfillment and all the options you will finally be able to access through Borderl3ss service and technology. Click HERE.  

Robin Calandri

Robin Calandri

DTC Fulfillment Blog

Find all the information you need to optimize your European fulfillment operations. 

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