This post will help you understand how to manage direct-to-consumer (D2C) fulfillment for e-commerce.
You will learn more about:
If you’re interested in learning more about D2C fulfillment for e-commerce or improving your own operations, this article will help you.
Let’s dive in!
Direct to consumer products (DTC or D2C) is a method of selling products to customers. With DTC, the middleman is either completely or partially eliminated from the sales process. There are no retailers or wholesalers involved, and suppliers sell their products directly to customers.
Direct to consumer products are experiencing growth due to several reasons.
These include improved customer experience, access to digital marketing and social media, more competitive pricing models, and more.
It’s also becoming easier for businesses that produce goods to sell them online directly to consumers by creating their own e-commerce platforms.
In fact, DTC e-commerce sales in the United States are expected to reach $174 billion in 2023, rising from $111 billion in 2020.
Let’s go over some of the key points that contribute to the growth of D2C brands:
In traditional retail, every product goes through a long supply chain:
From manufacturers to wholesalers and distributors, then to warehouses and, from there, to retail stores where customers can finally buy them.
The process can easily get costly, and that is why businesses have to charge the products accordingly.
In the DTC business model, there are no middlemen that increase the products’ cost so the price can stay significantly lower for the end customer.
Processing refunds, exchanges, or returns is much easier when you are working directly with the company that made the product.
Booming direct-to-consumer companies are usually known for having customer-centric policies in place. They always go the extra mile to make sure their clients are satisfied.
Research has shown that 65% of customers are willing to share more of their personal information with businesses in exchange for a more customer-centric treatment.
When customers shop on Amazon and similar multi-brand platforms, they can easily fall for fake or low-quality products.
On the other hand, when they shop on a brand’s website, they will know exactly who made the products, what the products are made of, and where they are made.
This type of detailed information is only available with DTC brands, and not even brick-and-mortar retailers can always provide it.
Top DTC brands have put in a lot of effort so they could form a loyal following on social media.
Many brands engage and communicate with their clients directly, which helps them turn loyal customers into brand advocates.
Some even use their popularity to work for a greater cause, helping charitable organizations and supporting certain values.
Fighting together for a significant cause helps them connect with clients on a whole new personal level.
Launching a direct-to-consumer business is now easier than ever. Numerous e-commerce platforms like BigCommerce, Shopify, WooCommerce, and many others have made the process incredibly simple.
All that business owners need to do is choose a platform they find the most convenient, create an account, and the business will be ready to start getting DTC sales.
The traditional retail model often served as a safe spot when a customer needed a product right away.
A total of 49% of shoppers say they choose brick-and-mortar stores because they like to take the items home immediately.
However, this is only possible if the requested product is in stock. If it’s not, the customer can wait for the item to be restocked, go buy the product elsewhere or choose a different one.
Either way, the customer experience deteriorates.
That is why many brands rely on the DTC model as a channel that provides greeter product availability.
When a business is in control over sales, delivery, and marketing, there is more information about the customers’ desires.
Direct-to-consumer brands have access to a larger amount of data they can use to get a better understanding of what their clients need and why.
When a brand directly interacts with a customer every step of the way, they can accumulate valuable data that can help them improve their offering, create a stronger lineup, and build trust with customers.
On the contrary, when one part of the process is outsourced, significant data points are lost.
For example, if a brand has no access to delivery data, they will not be able to understand why certain delivery attempts failed, and they will miss a chance to measure and improve their delivery performance.
The direct-to-consumer business model also gives companies more control over their brand image. Great DTC e-commerce brands understand how significant it is to have control of brand messaging across the whole customer journey, each and every time.
Completing DTC fulfillment directly rather than going through middlemen can ensure that each point of interaction with customers actually reflects the values of the brand. This way, a business can tell its story to the customer the way they imagined it.
This way, each client will connect the amazing branded delivery experience to the brand itself, and not to one of the businesses in the middle.
Without a direct-to-consumer retail model, brands have to deal with middlemen having a central position between the consumer and the manufacturer.
With a DTC strategy in place, businesses can form direct relationships with their clients.
There are many benefits of being directly in touch with customers. For example, brands can collect phone numbers and email addresses for direct marketing campaigns. They can also use social media to create a community around the brand’s core, build brand awareness, and make use of user-generated content.
Brands that invest in better relationships with customers end up providing a more personalized customer experience which increases loyalty and repeated purchases.
Offering an omnichannel approach that allows customers to expand their buying experience on multiple sales channels instead of just one is a neat advantage for every shopper.
Many consumers like to check out the product in the store before actually completing a purchase. For example, 68% of shoppers buy books, movies, and video games both online and in-store.
The system with integrated sales channels provides consistency between the messaging and brand experience, regardless of where the customer decides to make the purchase in the end.
D2C delivery provides businesses with an important marketing tool: branded fulfillment experience and consistent branded messages across multiple touchpoints.
For example, 68% of shoppers buy books, movies, and video games both online and in-store.
The use of dark stores for e-commerce fulfillment is a convenient delivery option available to both e-commerce retailers and traditional consumer brands.
Dark stores are basically retail spaces where online orders are fulfilled. It does not provide an in-door shopping experience but it helps businesses offer on-demand delivery and improve delivery speed.
This is a more affordable alternative to staffing and stocking traditional brick-and-mortar stores. These stores require less complex staffing and can be placed in warehouse spaces located in cheaper non-commercial areas.
72% of American shoppers have already used on-demand services. Using dark stores allows direct-to-consumer e-commerce brands to fulfill the orders quickly, sometimes as fast as in one hour.
The reason why D2C brands fail is the lack of scalability.
Often, D2C brands properly market their offers and experience a large demand.
But because they don’t have a suitable logistics partner, they can’t handle such large order volumes.
This means that emerging D2C companies can’t provide a good delivery experience. And so they fail at retaining customers.
This guts their revenue streams so they can’t generate enough revenue to grow operations.
And the cycle repeats itself once again.
Direct-to-consumer fulfillment is a broad term that refers to every aspect involved in preparing inventory for distribution, ensuring it reaches the end-consumer and handling potential issues that occur after that (e.g. returns and exchanges).
D2C fulfillment covers the whole order and delivery process, including inventory and stock management.
Since the DTC business model deals with customers directly, it eliminates middlemen from sales and distribution.
This affects how D2C companies treat the fulfillment processes.
Typically, there are two types of direct-to-consumer fulfillment options available to you:
In-house direct-to-consumer fulfillment is a method where a D2C e-commerce business handles delivery logistics on their own. (Without partnering with a third-party provider.)
When handling direct-to-consumer order fulfillment in house, you have to have existing logistics operations in place in terms of people, processes, structures, and technology.
This is how you can deal with the key elements of fulfillment on your own:
But also secondary activities:
The other option is to outsource fulfillment via third-party logistics providers (3PLs).
This is a more popular option among brands and there’s a lot of D2C examples where companies outsource all of their fulfillment.
Partnering with a 3PL provider for outsourced e-commerce fulfillment means handing them over the entire cycle of fulfillment operations:
From receiving and storing inventory to restocking returned items, managing customer service, and everything else.
This method works best for large or growing e-commerce companies with a large volume of orders.
On the other hand, small businesses and D2C startups struggle with this fulfillment model.
Small D2C brands can’t afford the high costs that come with 3PL fulfillment. That’s why their D2C products are, typically, more expensive or exclusive than those of bigger players.
Still, it’s a more affordable alternative to building an agile delivery from the ground up.
Many use that exclusivity to outperform big DTC brands and even compete with Amazon and other retail giants.
eLogii helps D2C brands establish more efficient delivery operations by optimizing their delivery logistics.
This allows D2C companies to streamline their operations, save time and money, and focus on business growth.
Here are some of the ways eLogii can help D2C brands optimize delivery operations:
With centralized delivery in place, one team manages the entire delivery operation. Once they have the schedule down, it is dispatched to all depots and drivers.
Likewise, the team members located in the field can always send information back to the central hub.
eLogii helps businesses apply the centralized way of delivery planning regardless of the number of depots.
D2C brands can manage and optimize e-commerce fulfillment and all other relevant activities in one place.
Teams can easily improve their DTC delivery by considering all significant parameters such as:
eLogii’s advanced software integrates all the tools in one central system, enabling businesses to plan direct-to-consumer delivery at a depot level.
The entire system is optimized for efficient resource planning with maximum cost-effectiveness in mind.
eLogii offers fully centralized planning that helps even the most complex multi-depot operations.
If you own multiple sites, optimization through vehicle use and driver management can be a challenging task, and not being able to complete it leads to missed optimization opportunities.
eLogii provides their clients with a powerful Multi Depot SaaS solution that handles central planning by including every single parameter:
From product size and type through driver skills or vehicle capabilities, to access points to each depot.
This way, the businesses are provided with the most optimal plans every time.
The solution also helps companies handle different product categories and various security requirements within direct-to-consumer e-commerce fulfillment.
Thanks to the clear visibility of all the depots, the brands can pursue their direct-to-consumer strategy and plan their resources in the most efficient possible way.
Dispatch teams are the core of successful last-mile delivery logistics.
Improved fleet dispatching ensures that the drivers always arrive at the right place, at the right time, and with the right products to deliver.
Control, visibility, and automation are the key components of fast and accurate dispatching and eLogii provides all of that in a single package.
Fleet dispatching with eLogii’s platform can be fully automatic, manual, or anywhere in between.
The platform empowers DTC fulfillment dispatchers to make necessary changes to daily operations and keep the drivers updated in no time.
eLogii’s dispatch technology offers real-time visibility of drivers across territories, vehicle types, categories, and more.
eLogii’s route planning software eliminates the need for manual routing. It provides businesses with clearly visible maps with detailed information for each of the routes.
Dispatchers can further optimize the routes through manual adjustments using a simple drag and drop function.
The platform includes a large number of parameters to produce the most optimal routes available.
It helps internal teams manage their delivery operations in a cost-efficient way.
The platform also helps businesses create fixed routes based on pre-determined parameters and delivery orders.
The routes can then be easily adjusted with corresponding drop orders and dedicated drivers.
Key direct-to-consumer trends rely on advanced tracking technologies.
Using eLogii’s platform enables businesses with real-time insight into their delivery operations.
D2C brands can track orders and vehicles in real-time thanks to geocoding used by the software.
The routing software can be connected with an onboard telematics system that tracks vehicles using GPS, or use geo-targeting to identify the location of the driver’s app on a smart device.
The information is automatically updated and ready for dispatchers to see and use to follow up on schedules or send tracking data to customers.
Most logistics companies present their services without explaining all the fees they are planning to charge.
eLogii believes in honest cooperation without hidden fees.
Our clients are always presented with transparent pricing options so they can easily calculate their costs and see how profitable they will be if we partner together.
And that’s not all…
If you’re an emerging direct-to-consumer company, we can help you beyond this article.