Best Practices for Mastering Direct-to-Consumer Shipping with a Consumer Goods ERP
September 26, 2019
Direct-to-Consumer (DTC) shipping and e-commerce are more than trends in 2019; they're rocket ships that keep soaring higher. Since 2014, e-commerce has sustained a growth rate of 23% and is expected to rise above 20% again this year. For the consumer, it's easy to understand why. Online shopping has not only simplified the buyer's journey, but it also offers nearly immediate delivery. For home goods importers and distributors, keeping up with a landscape that has changed so dramatically is a monumental new challenge.
What is DTC?
Historically, the traditional retail fulfillment model was straightforward for consumer goods importers and distributors; full pallets were shipped directly to retailers. It was as simple as that.
The emergence of Direct-to-Consumer shipping has delivered a new complexity to the traditional fulfillment model. Instead of sending full pallets of product to retail locations, distributors are now in a position where they must ship to various retailers, meeting strict OTIF standards, while also managing direct shipments for thousands of retail customers.
This shift in retail fulfillment has dramatically increased the challenges home goods distributors must solve, namely: boxing, labeling and ensuring on-time, every-time residential delivery. While it's common for industries and organizations to experience waves of change in processes due to technology, distributors are now facing an entirely new way of operating. What are some of the challenges they face?
Top 4 Challenges of DTC
This shift creates four key challenges that distributors now have to tackle:
- DTC Increase Order Volume: The warehouse is now faced with an overwhelming amount of orders, reaching into the tens of thousands during peak times.
- DTC Increases Fulfillment Requirements: Retailers are demanding that businesses adhere to their rules, from order confirmations to availability updates to slapping branded packing slips in shipments. Fines can add up if companies can't keep up.
- DTC Adds Complexity to a Warehouse: Shipping full pallets is easy for staff, but pulling thousands of small, often one-parcel orders one at a time adds new complexity to their workday. Too much as changed for employees to continue operating the way they always have.
- DTC Requires More Shipping Methods: E-commerce shipments aren't reaching their intended destinations in a traditional fulfillment model, requiring the use of small parcel providers. Home goods retailers and distributors need to be able to select the right carrier, control costs, and meet their requirements.
An ERP designed specifically for the consumer goods industry can help prepare businesses for the challenges associated with transitioning to DTC. Having the right tools and technology will help business owners to manage the complexity and volume that transition often brings.
Let's look at the best practices you can use to make sure you're keeping up with the deluge of e-commerce activity.
Best Practices for Managing Volume
With tens of thousands of incoming orders expected on peak days, the order volume can overpower the human capacity needed to manage it. This is where Electronic Data Interchange (EDI) can offer significant benefits. EDI is a method of communication that, when integrated into an ERP solution, allows users to share and exchange necessary order information (addresses, items, quantity) with customers. EDI is the standard of business communication today; automating the process of managing volume eliminates the potential for human error from manual order entry.
While e-commerce has revolutionized the buying process, the delivery process remains directionally challenged and prone to address accuracy issues. Without address verification, products that fail to reach the appropriate destination return to the facility with hundreds of dollars of fees and chargebacks. When integrated into an ERP, EDI has an address verification.
An ERP with integrated address verification can confirm that each address is valid, and staff can more easily manage the small number of invalid addresses without losing money and eroding margins.
Real-time inventory is critical in the age of rapid e-commerce. Retailers want to feel confident that the products on their website are in fact in stock, and distributors want to feel confident that they are providing accurate inventory data to retailers. Your ERP solution, via EDI communication, not only ensures you're keeping up with the volume and sheer demand but that you are doing it accurately and efficiently.
Best Practices for Streamlining Warehouse Processes
What does the activity on your warehouse floor look like? More importantly, how are you pulling your products?
Future-proofing your warehouse starts with exploring ways to pull bulk products. DTC orders have a commonality, which means pulling individual orders is no longer an option to keep up with the speed of demand.
With ERP automation, the paper "pick sheet" process can be eliminated (along with the many repeat trips to the same location). Instead, orders can be pulled on an automated schedule, based on a summary of how they are categorized and ordered. With automated ERP bulk pulling capabilities, you can automate the entire process and pull orders as they stream in throughout the day, rather than waiting on an operator to determine when to pull them. An ERP solution can generate pick instructions for any new DTC order that has inventory allocated to it every thirty minutes, as an example.
Best Practices for Meeting Retailer Requirements
- Proper labeling, branding, and packing: It may not be the retailer shipping these products out, but unless businesses want to be penalized, it would be beneficial to make it look like the package came directly from Costco or Walmart and not your warehouse.
- Smart parcel tracking labels: Business owners don't need to jump to another software to generate a tracking label. The ERP would be integrated with the small parcel shipping system, so everything is driven by a single system. In the same vein, packing lists with the retailer logo on them should be driven by the ERP, not by an employee who is downloading that information.
- Integration with small parcel shipping systems: If an ERP is not integrated with small-parcel or third-party solutions, it's likely operating inefficiently in an increasingly high-volume environment by re-keying data.
- Automated pack lists: Distributors face the challenge of customizing packing slips for each retailer on individual orders - a laborious, inefficient process that is often incompatible with existing systems. The most efficient way to manage is to have these packing slips created directly from the ERP.
Future-Proof Tools for a New Fulfillment Model
It's not that change is coming, change has already arrived. It's time to adapt. The sustained growth of DTC means digital transformation is non-negotiable to keep up with demand. The shift in the buying process requires a change in the fulfillment process; it starts with ensuring you have the tools and technology necessary to manage and ship high volumes of small parcels with efficiency and accuracy.
Learn more here about how Apprise can help you overcome these challenges and handle all that the DTC revolution throws at you by visiting our Apprise ERP overview page.