DTC Fulfillment (Direct to Consumer) is the process of fulfilling orders that come directly from a consumer, bypassing the traditional retail channels. DTC fulfillment is the model wherein there are no wholesale or retail businesses in between the consumer who placed the order with the dtc brand and the fulfillment of the order. In other words, using this model, dtc brands handle manufacturing of the product, marketing of the product, inventory management, order taking, the fulfillment process and shipping to the customer – direct to consumer.
How did dtc fulfillment begin and grow? In the past, prior to the Internet, a product would be manufactured, perhaps then go to the wholesale company and from there to a fulfillment center, and from there to the retail brick-and-mortar store. After the onset of Internet shopping, the product would perhaps go to a wholesale company or an online big retail store that offers a number of brands. For the manufacturer there would be costs incurred when selling through big retail brands and/or brick-and-mortar stores, so when dtc fulfillment became a possibility, it was an attractive opportunity for the money saving.
DTC fulfillment began as a means of avoiding the wholesale option or the big retail store. It is a form of eCommerce where customers place online orders for a product from the manufacturer of the product. The order can be fulfilled in-house or by a full-service fulfillment center. Over the past years, an increasing number of companies are offering their products directly to the consumer online, seeking to build relationships with customers, promote their brand, and even connect more closely with their customers by promoting shared values such as sustainability.
Benefits of DTC Fulfillment
One of the primary benefits of dtc fulfillment is that the companies creating the dtc brands have direct control over the entire fulfillment process, especially the interactions with their customers. This direct control allows the company to offer high-quality, personal attention to issues that may arise. Another plus is the opportunity to create brand loyalty by offering exceptional communication with the shoppers, creating return customers. Brand image means a lot to manufacturers, and when the company utilizes dtc fulfillment they can very carefully and successfully manage the image of their brand through advertising and excellent customer service including speedy shipping and delivery.
The supply chain process is streamlined as well. Whether the company does in-house fulfillment or utilizes a full-service ecommerce fulfillment center the product does not move from manufacturer to wholesaler to fulfillment center to retailer to customer – it moves directly from the manufacturer to the consumer. Finally, the profit margins are increased, with no middleman taking a percent of the profit.
What are the Key Components of DTC Fulfillment?
The key components of dtc fulfillment are as follows: order placement, inventory management, picking and packing, shipping logistics and handling returns. Order placement comes first, which means that the company has an online store and a method by which consumers can purchase an item. When the consumer places the order online there must be sufficient inventory in the warehouse, so inventory management would be the 2nd key component. Certainly there must be expertise in inventory management, as too much inventory is as detrimental as too little.
Thirdly we have the ecommerce fulfillment process. The item purchased online waits in the inventory to be picked and brought to the packing station where it is packed and prepared for shipping. The next key component is logistics. The company will have relationships with shipping companies, wherein they can ship the product to the consumer within the timeframe agreed upon. Finally, dtc brands must have a system in place to deal with product returns, offering refunds or replacements according to their agreement with the consumer.
Challenges in DTC Fulfillment
One of the primary challenges in dtc fulfillment is managing high order volumes. The company must become skilled at anticipating order volume and having sufficient inventory in place as well as sufficient personnel to pick and pack high volumes of orders.
Inventory management can be complex, as order volume may be hard to predict. Certainly, dtc brands can prepare for seasonal shopping and align their inventory on hand with advertising campaigns and holidays in which their products are needed or given as gifts.
Another challenge is in logistics, i.e. last mile delivery demands. The demand for faster and more flexible delivery has led to innovation and increased competition in last-mile delivery companies. The ecommerce fulfillment company can meet these demands by developing relationships with shipping companies including companies doing local deliveries.
The Role of Third-Party Logistics (3PL) Providers
The benefits of partnering with the right 3PL provider are many and measurable. A full-service ecommerce fulfillment company, such as AMS Fulfillment, has, first of all, absolutely top-notch proprietary technology providing warehouse management and inventory management, allowing their fulfillment partners to view their inventory at all times and keep track of their orders and deliveries.
The right 3rd party logistics provider will be able to grow with the company, handle high volumes of orders, provide customer service, handle returns for the company, handle the accounting, provide the best shipping prices and services, and much more. AMS Fulfillment is a full-service ecommerce fulfillment provider, and as such, AMS can basically do everything that dtc brands may require, i.e. everything but manufacture and advertise and sell the product.
As to the question of how to choose the right 3rd party logistics company, there are some basics to look at first, such as the locations of the warehouses. AMS is located close to ports on the West Coast and also close to ports on the East Coast, and this is beneficial in that it creates savings on shipping costs for clients. So, when looking at potential 3PLs to work with, pay attention to their locations.
Another vital element in choosing a fulfillment partner is their technology. The right 3PL provider will be able to integrate their technology successfully and fully with the business needing their services. Integration with the inventory management system is vital for a successful partnership. In addition to excellent technology integration, AMS Fulfillment has proprietary software for finding the best shipping options for their clients. What this means for the client is cost savings and satisfied customers as well.
There are many advantages to utilizing AMS Fulfillment. One advantage over and above most others is that AMS is a sustainable fulfillment company and a certified B Corporation, which enables their clients to give their customers the comfort of buying a product that is fulfilled sustainably with no environmental damage.
Conclusion
When dtc brands need to outsource fulfillment in order to accommodate growth, a high-quality ecommerce fulfillment company such as AMS Fulfillment can be a very beneficial partner. Top dtc brands need a fulfillment partner that can meet their growth needs, communicate fully and transparently, save money on shipping, skillfully pick and pack and ship, receive and handle returns, handle the customer service and take care of back-office responsibilities if needed. AMS Fulfillment is full-service, meaning we do all of these things and more.
We invite readers to contact AMS Fulfillment today to learn more about how we can serve as your dtc fulfillment provider.
