*UPDATE* As COVID vaccines continue to roll out across the country, many can see the end of the long road of the past year nearing an end. Of course, that doesn’t mean that things will go back exactly as they were pre-pandemic and that includes the way consumers shop. And in turn the way retailers and eCommerce players ship.
We’ve all heard about the “new normal” businesses have been operating in this year. COVID-19 has changed the way people shop, accelerating the growth of direct-to-consumer (D2C) fulfillment and shipping for retailers, eCommerce marketplaces, and manufacturers, particularly consumer packaged goods (CPG) companies, following the lead of some snack food giants.
While many of these companies have dipped their toes into the D2C waters (and, of course, some brands have been built exclusively on this model), the current crisis has forced others to accelerate their plans to adopt a D2C model, causing a strain on resources.
In March 2020, eMarketer forecasted that D2C sales would account for $17.75 billion of total eCommerce sales in 2020, up 24.3 percent from 2019. And that was early in the crisis. Stay-at-home orders have accelerated the rise of eCommerce, with 44 percent of consumers planning to do more grocery shopping online and 39 percent anticipating buying more durables online over the next one to two years, according to the EY Future Consumer Index. Consumers are realizing that maybe they don’t have to squeeze those avocados.
*UPDATE* As reported in ROI Revolution, a recent report from showed that 73% of consumers using D2C ecommerce over the course of COVID-19 plan to continue post-pandemic
For many supply chain participants, moving to a D2C model will mean significant changes to their fulfillment processes and systems. More packing of “eaches” and fewer full cases. More parcel shipments, fewer LTL and truckload. More stops and miles per delivery, less aggregation.
*UPDATE* According to a report from Arvato Supply Chain Solutions 70% of D2C brands outsource their eCommerce fulfillment, meaning there is a great opportunity for 3PLs and other service providers to capture market share if they have the capabilities for parcel shipping as part of their offerings.
Here are 3 tips for companies looking to start—or speed up—their move into the booming D2C space:
#1 Communicate with your current partners
Odds are if you’ve been a more traditional brand, you want to keep selling through your normal distribution channel or at least a hybrid model. This is a tricky tightrope to walk as you risk “competing” with your retail channel. Communication and a solid plan, such as segmenting product lines or buy online, pickup-in-store (BOPIS), can allow you to sell through both. Don’t give your retailers the silent treatment. Engage with them and make them part of the plan—whether it will include them long-term or not.
#2 Build it well, and they will come
Your eCommerce store is the face of your D2C operations, and it needs to be well-planned, with thought put into its design, technology, and overall user experience— from the product description to ease of consumers picking shipping options early in the process and processing returns.
#3 Automate your fulfillment from order to door
You might have to re-evaluate the systems you have in place to handle fulfillment, along with things like your warehouse layout, packaging materials, and inventory monitoring. There’s also a considerable shift in managing a transportation network that not only includes FTL and other modes used to move larger shipments to one that now consists of national, regional and local carriers moving smaller shipments across town, across the country, and possibly the world. Oh, and do not forget the need to manage returns and exchanges as well.
The move to online shopping by consumers isn’t going to go away, even when COVID-19 does. According to a study reported by Essential Retail Magazine, 42 percent of customers are expected to shop online more frequently after the crisis. There is an excellent opportunity for companies that take their products directly to consumers with this shift.
Having a multi-carrier parcel management solution such as Transtream can not only speed this move but help speed the way to success as well.