6 challenges manufacturers can overcome by partnering with an experienced fulfillment provider.
Manufacturers were built for bulk which works well in traditional manufacturer-to-retailer relationships, but the trend we saw emerging — well before the pandemic — took off like a rocket when stores shut their doors. Retailers are more than ever opting for direct-ship relationships with their suppliers where they can simply list a product on their website and never actually bring it into their warehouse or allocate shelf space. This has forced many manufacturers to scramble to keep sales while trying to figure out a new way of doing business.
And, while some have found success, others are turning to fulfillment partners to overcome the challenges of managing their direct-to-consumer business.
- The trust factor – In a direct-ship relationship, the retailer has to give up a little control and rely on the supplier to ship orders accurately and efficiently. Most of us would admit we don’t like to give up control…unless…UNLESS…we really trust who’s taking over. A fulfillment partner with expertise in shipping eaches can help you quickly build that trust, strengthen retail relationships and potentially avoid costly customer service issues
- Inventory management – It’s not only a matter of transforming bulk SKUs into consumer SKUs, it’s making sure you can accurately account for your inventory regardless of the unit of measure or selling channel. Inaccurate inventory reporting can lead to lost sales and chargebacks from online retailers for canceled orders. And, it’s not just about accuracy — it’s about maintaining real-time data as orders flow in and product flows out. A fulfillment partner with omni-channel ecommerce abilities will allow you to fill orders for all channels seamlessly from one set of inventory.
- Lack of integration capabilities – With so many ecommerce platforms and back-office systems in play, integration is a MUST. Data needs to flow and systems need to talk to each other with as little human intervention as possible. In the last few years, integration has become pretty commonplace among top fulfillment providers, but making sure it’s the RIGHT integration solution to solve your current roadblocks should be high priority — it’s the key to real-time inventory reporting, same-day order processing, order tracking and streamlining any manual processes currently slowing you down.
- Location, location, location – It’s an important factor in cost-effective, fast delivery. A manufacturer might have one warehouse that can handle D2C orders, but a fulfillment partner should have multiple locations. So, let’s say you already have a decent-sized warehouse that can handle D2C business on the West Coast, but you’ve just been given approval to list products with a retailer better known on the East Coast. In this case, a fulfillment partner could offer a second or third location to supplement your business and support continued growth of your brand.
- More financial risk – With direct-ship partnerships, retailers are no longer placing POs upfront for bulk orders, putting more of the financial risk back on the manufacturer. A fulfillment partner who can help you easily expand your sales channels acts as the safety net to ensure you have the means to sell through excess inventory and recoup your investment.
- Manpower – All of these things add up to extra resources and a tremendous amount of added overhead. If you’re not ready or willing to invest enough to adequately build an internal fulfillment infrastructure that will allow your business to grow, a fulfillment partnership is the answer.
In a drop-ship fulfillment model, so much is riding on the precise steps and carefully choreographed actions that occur after the order is placed. In fact, 64% of retailers surveyed in an ecommerce benchmark study named post-purchase experience a high priority for 2021*. For manufacturers and merchants, a fulfillment partner with integration capabilities and expertise in direct-to-consumer drop-shipping might be the most cost-effective solution for staying competitive in this all-delivery economy.
*2021 Ecommerce Delivery Benchmark Study, MetaPack and RetailX