When free returns are offered, sales can increase by as much as 357% (CNBC).
Manufacturers understand shipping to distributors and retailers, but fulfillment for consumers has a different set of challenges. If you have a cohesive plan to address these challenges, shipping and fulfillment present valuable opportunities to enhance your brand. If you drop the ball on this, the downside might be costly in terms of customer retention, profit and reputation. One study showed that 95% of consumers share bad customer service experiences with other people. (Zendesk)
The First Mistake
A direct to consumer initiative is often kicked off by an executive edict and an assumption that the organization’s existing skills and infrastructure can be quickly adapted to take on the new project. It will happen because the senior executive says it will. This is a mistake. Any DTC plan should designate a champion for each component of the eCommerce value chain, including warehousing and fulfillment. The internal champion should have the ownership and authority to build an operational solution that conforms to the specific needs of DTC for manpower, infrastructure and processes.
So What’s the Difference?
Shipping to channel accounts usually involves infrequent, large, pallet-sized orders. The warehouse and material-handling equipment conform to these requirements. Employees who service the account often have a relationship with the stakeholders and detailed knowledge of how to best meet their needs.
DTC fulfillment is a high-volume pick/pack/ship environment with smaller orders. Your warehouse that is configured for B2B shipping won’t be optimal for DTC needs, which requires different storage and material handling systems, such as:
- Frequent receiving operations for replenishment and returns (returns are infrequent in B2B)
- Dedicated continuous packing and shipping line
- Cycle counting and other inventory accuracy procedures may be needed
- Warehouse zones configured for the needs of B2C
- Pick/Pack/Ship able to handle same day/next day shipping
- Return processing – back to stock, damage processing, credit to customer
- Carrier rates negotiated for small shipments
- B2C packaging requirements, both generic and branded
What does customer service have to do with shipping?
- Your technology stack should give your customer service team complete visibility to warehouse and shipping data to meet the fast-paced demands of DTC order inquiries.
- Self-service order tracking should also be available.
- Are your systems integrated to facilitate real time visibility?
According to a survey by Harris Interactive, consumers said that customer service agents failed to answer their questions 50% of the time. Don’t be one of these companies.
COO Jim Madaj discusses the challenges a company can face when going direct to consumer.
Shipping is an Extension of Your Brand
Is your goal to build your brand or just sell products? Every package that you ship is an opportunity to make a connection with your customers and reinforce your brand. How?
- The Basics: Order accuracy and on-time delivery. This is the first step in establishing credibility and the fastest way to lose it.
- Packaging – In eCommerce, your delivered package is the first direct physical connection between you and your customer. Imagine consumers receiving a plain brown box sealed with generic packing tape. Now imagine the same customers receiving a box that reflects your brand, sealed with colored tape that matches your brand colors and includes your logo. A thank you card inside or maybe something extra added, like a few free samples. A survey from Dotcom Distribution found that premium packaging has a big effect on customers, with 52 percent likely to return to an online merchant that delivers premium packaging.
- Continue the Dialog – It’s common to send automated messages during the shipping cycle to inform customers of their order status. Take it a step further with tips on how to get the most value out of their purchase and recommendations of other products they might be interested in.
Making It Work
What works for you in your B2B model might not be of much help in DTC warehousing and shipping. What are your options for building an efficient DTC fulfillment operation?
Building your DTC fulfillment operation in-house has some advantages. You’ll have tighter control over costs, process and quality. It also has many challenges. You’ll have to modify existing facilities and add manpower. If you don’t have expertise in the latest DTC best practices you’ll have to get up to speed quickly or recruit talent. Finally, you’ll need to integrate systems and processes.
There are many advantages to outsourcing to a 3PL (3rd party logistics) provider. To begin with, you’re relieved of the burdens of sourcing space, equipment and manpower. If your business is growing or has seasonal fluctuations, the 3PL can scale to meet your needs. Choose one that has experience with B2C and is current with best practices. Don’t make your decision based solely on price – find one that’s a good fit for the requirements of your business and industry.
The one potential pitfall of working with a 3PL are the integration challenges. Can their systems integrate easily with yours? If not, will the integration be costly, time consuming and flawed? The importance of a seamless flow of data can’t be overestimated – your customer service and management teams will need visibility in order to perform at optimal levels.
A turnkey eCommerce company can provide total end-o-end managed services that include all components in the eCommerce value chain. It offers all the advantages of outsourcing and the additional upside of having completely integrated systems, peopleand processes. This eliminates worries about integration projects and fragmented processes.
Companies that are successful in DTC eCommerce try to incorporate a positive customer experience into everything their business does, including shipping. What some looked at as a mundane business process is now an opportunity to enhance your brand and strengthen customer relationships.