Brands of all sizes have been doubling down on their direct-to-consumer (DTC) strategy over the past year to capture the massive growth opportunities in e-commerce.
The main problem for many direct-to-consumers brands is their ability to create a powerful DTC fulfillment strategy that can propel them to achieve higher levels of sales, customer satisfaction, and brand loyalty. A weak direct-to-consumer fulfillment strategy causes brands to miss out on the significant growth opportunity in e-commerce, making it a crucial aspect to retailers that can often be overlooked.
Fulfillment is a process that seamlessly delivers customers’ orders from the point of an order being made to the point where it is delivered to the customer. A quality fulfillment experience that offers fast, successful deliveries and multiple delivery status updates to the customer is crucial for brands to maintain long-term relationships with customers.
As such, direct-to-consumer fulfillment is one of the biggest challenges for direct-to-consumer brands because it directly affects the customer’s experience. Even with a great marketing campaign, customers refuse to stick around if they have an unsatisfactory fulfillment experience, such as delayed deliveries or a lack of delivery status updates.
Read on to learn more about the top DTC fulfillment challenges, as well as how some brands have created exceptional direct-to-consumer fulfillment strategies!
Top Direct-to-Consumer Fulfillment Challenges
Operational Challenge – Too much time is spent on managing multiple logistics operations
From managing prices to processing orders and payments, to even handling inventory, shipments, and returns, the many aspects of DTC fulfillment can be time-consuming and put a strain on businesses’ resources. For some retailers that are building a direct-to-consumer channel for the first time, having to manage so many variables can be overwhelming and a source of anxiety.
Many direct-to-consumer brands may end up spending more time on redundant, administrative tasks rather than focusing on more crucial areas of business like growth and strategy.
Additionally, manually managing DTC fulfillment can result in slower order fulfillment which decreases customer satisfaction and loyalty.
Experience Challenge: Delivery experience and customer retention
It is difficult to create an engaging and satisfying delivery experience for the customer in order to improve customer retention rates and brand loyalty.
With 84% of consumers unlikely to make future purchases after a poor last-mile delivery experience, ensuring customer satisfaction at every point of the shopping experience is crucial, even after the purchase has been made. In our exclusive interview with Nabil Malouli, VP of Global E-Commerce at DHL, he shares that the post-purchasing experience becomes “the only experience [customers] have with your brand.”
With fulfillment being brought closer to the consumer in e-commerce — as opposed to traditional fulfillment where consumers are more distanced from it — it is even more important to make sure that the fulfillment experience is satisfactory. This allows DTC brands to build stronger relationships with their customers.
A poor last-mile experience, such as delayed deliveries, is one of the common concerns expressed by top executives worldwide in DTC fulfillment. Delayed deliveries can end up disappointing online shoppers, resulting in a loss of customers for DTC brands.
How You Can Improve Your Direct-to-Consumer Fulfillment
Operational Challenge: 3PL or Outsourcing
Direct-to-consumer brands that find it challenging to manage the multitude of variables in their logistical operations can opt for a third-party logistics provider (3PL) rather than an in-house, “Do-It-Yourself” approach to fulfillment. While the do-it-yourself approach might work for startups with smaller volumes of orders, this can eventually take up a lot of time and resources when the DTC brand starts to scale.
The benefit of 3PL partnerships allows direct-to-consumer brands to outsource the entire logistics process: inventory, packing, shipping and restocking. This becomes a cost-efficient and reliable solution and allows DTC brands to focus on more important aspects of business such as scaling and strategy.
One common solution DTC businesses use is a warehouse management system that allows retailers to track and manage their inventory while automating the packing and fulfillment processes in a warehouse.
On top of that, outsourcing operations to a 3PL helps to create a seamless buying process for the customer, improving the customer experience and trust in the brand.
Experience Challenge: Provide Real-time Updates for Customers’ Parcels
Successful DTC brands provide their customers with real-time updates of their orders, which is an essential part of the entire customer journey. This creates an enhanced post-purchase experience which offers customers full transparency and assurance on the order status.
This involves proactive communication and notifications through emails, SMS, and even chat bots in order to keep customers updated throughout the different stages of delivery.
On the benefits of proactive delivery updates, Malouli shared,
“When you get notifications and you are informed of what is happening, that enhances your trust, your certainty, and also your relationship with the brand… you get pictures and you get that information (and) that just makes you feel better. We like to be informed as consumers.”
In such uncertain times like these, delivery updates enable direct-to-consumers brands to have a competitive edge in such a crowded market by providing customers with a feeling of security and trust.
Experience Challenge: Create a Unique Unboxing Experience
Creating a unique unboxing experience can be a powerful way for direct-to-consumer brands to differentiate themselves. Not only does a memorable unboxing experience make customers feel more valued, it also helps to tell a brand’s story.
This has an added benefit of strengthening customer loyalty, especially since customer retention can be difficult for DTC businesses which see 60% to 80% of customers not making recurring purchases even if they were satisfied in the past. Yet, almost 60% of revenue comes from returning customers, further showing how crucial it is to create an engaging unboxing experience.
Since online shoppers “don’t see anybody” and “don’t speak to anybody,” Malouli emphasizes the importance of creating a memorable and satisfactory post-purchase experience, especially when “e-commerce becomes the only experience,” with “the box and the product itself… becoming the only experience that [customers] have with your brand.”
Malouli adds that “the way the product arrives, the packaging, the unboxing experience that many DTC brands have put a lot of emphasis on is absolutely critical because that’s the whole experience.”
Some DTC brands already providing a memorable unboxing experience include clothing subscription-box company Trunk Club, which ditched the standard parcel box for a custom printed box with a handle attached (resembling a trunk), further spotlighting their brand.
Allbirds, which sells environmentally friendly shoes, has also extended its eco-friendly values to its fully sustainable packaging made from recyclable materials and soy inks which sports a branded, quirky package design that aligns with its playful brand messaging.
Source: Red Antler
Creating a unique unboxing experience that is on-brand can provide that much-needed personal touch to customers, making them more connected to a direct-to-consumer brand.
What’s Next for Direct-to-Consumer Fulfillment?
The pandemic-driven boom in e-commerce has led to the rise of direct-to-consumer brands, with even larger, global traditional retailers like Nike and Adidas doubling down on their direct-to-consumer sales strategy.
With direct-to-consumer becoming increasingly popular, it is exciting to see how DTC brands are creating more advanced e-commerce experiences through seamless last-mile delivery experiences, technologically-driven notification updates, and an engaging unboxing experience.
For more exclusive reports, insights, and interviews on the latest updates in e-commerce, retail, and logistics, follow us on Linkedin or join our community today!