Direct to consumer (DTC) fulfillment services explained
Direct to consumer, DTC, D2C… there are 101 terms to describe the process of selling to the end customer and managing every stage of the customer experience. The aspect that usually gets overlooked? Direct to consumer fulfillment.
Managing the entire process of order fulfillment – from order management to delivery on your customer’s doorstep – is a major undertaking even for established brands with a lot of internal logistics expertise. Inventory management, packing, shipping, returns – they all take valuable time away from other business activities that promote growth. So, what’s the solution?
We’re going to cover all things DTC fulfillment, including how it works, why DTC fulfillment and ecommerce fulfillment are not the same, and what brands stand to gain by investing in a streamlined D2C operation.
What is DTC fulfillment?
Direct to consumer (DTC) fulfillment or D2C fulfillment is a retail model where businesses sell products directly to the end consumers, without the involvement of any intermediaries, such as retailers, wholesalers, or distributors. Through bypassing traditional retail channels, this more streamlined supply chain management also opens up opportunities for businesses to take a more brand-centric approach to selling and forming direct customer relationships, making it easier to foster brand loyalty and repeat purchasing behaviors.
When fulfilling customer orders directly, direct to consumer brands are responsible for the entire process of order fulfillment, from order processing to the moment of delivery. This includes but is not limited to warehousing, inventory management, order management, picking and packing, and shipping – or choosing a fulfillment provider to manage the entire fulfillment process on your behalf.
In sum, DTC fulfillment provides a pathway to greater control over the customer experience and each stage of the post-purchase experience. However, direct to consumer also means a lot more responsibility sitting on a brand’s shoulders; DTC brands are responsible for every aspect of sales, marketing, fulfillment operations, customer data, and more. This creates a lot of opportunity to ensure customer satisfaction – but also more room for error.
How DTC fulfillment services work
Order management
In a direct to consumer model, order management requires brands to handle customer orders from the point of placement to delivery. This includes order processing, monitoring orders throughout the order fulfillment process, and keeping customers informed about their order status. This may happen with the help of an Order Management System (OMS) for more efficient order processing and monitoring.
Inventory management
Incoming inventory coming into your warehouse or fulfillment center needs to be properly received, tracked, and stored to optimize warehouse space and picking processes for warehouse staff. Monitoring inventory levels via a Warehouse Management System (WMS) ensures that your business always has enough inventory on hand to meet customer demand, but also prevents excess inventory from piling in fulfillment centers and increasing your storage costs.
Order fulfillment
Once an order has been processed, it needs to be picked, packed, and shipped to the end customer within a competitive timeframe to ensure customer satisfaction. DTC fulfillment services like automated picking, cartonization, and shipping optimization help brands find the optimum balance between cost-effectiveness and speed.
Value-added fulfillment services
Additional fulfillment capabilities such as kitting, subassembly, custom packaging, and inserts make a world of difference to a brand’s ability to deliver memorable customer experiences at scale that increase customer satisfaction. Because direct to consumer selling gives businesses control over each stage of the customer experience, leveraging value-added services offers a major competitive advantage.
Returns management
Not all of your DTC sales are going to stick. Return rates in direct retail channels are as high as 30% for some product categories, making streamlined returns and effective inventory management essential to prevent excess inventory from tying up capital and missing out on valuable resale opportunities.
DTC vs. Ecommerce fulfillment
Direct to consumer fulfillment and ecommerce fulfillment are terms that often get used interchangeably in discussions about outsourcing fulfillment. While ‘direct to consumer ecommerce fulfillment’ is a distinct set of services, it’s important to note that DTC fulfillment and ecommerce fulfillment are not the same thing. There are some significant overlaps, but also areas where they differ:
Selling channels. ecommerce fulfillment involves fulfilling customer orders at least one online sales channel, such as an online store or an Instagram shop, though this may also include non-DTC channels such as Amazon. However, DTC fulfillment may include order fulfillment for multiple sales channels both online and offline, so long as they are managed directly by the brand.
Intermediaries: While DTC fulfillment involves no intermediaries such as distributors or wholesalers, ecommerce fulfillment may still involve middlemen such as wholesalers or dropshippers, depending on the sales channels used.
Customer data: Because brands are in direct contact with their customers during every stage of the shopping journey, DTC fulfillment offers direct access to valuable data on consumer preferences and behaviors, meaning the ability to create more targeted and personalized marketing efforts. While ecommerce fulfillment may offer some opportunities to collect valuable data, will depend on the sales channels and there may be difficulties with consistent data collection across channels.
What DTC fulfillment and ecommerce fulfillment do have in common is the need to outsource fulfillment to continue scaling seamlessly and keeping fulfillment operations cost-effective. In-house fulfillment is a good starting point for emerging brands but usually ends up being cost-prohibitive as brands grow. This makes third-party logistics a better option to future-proof business growth and ensure reliable, accurate order fulfillment.
Advantages of DTC fulfillment for ecommerce brands
End-to-end control over the brand experience
Because brands have complete control over the entire sales process and DTC fulfillment operations, this creates more opportunities to manage customer satisfaction and introduce value-adds into the post-purchase experience, something that’s difficult to manage consistently when retailers and wholesalers form part of the supply chain.
Whether it’s direct communication with your customer via social media and email or delivering a memorable unboxing experience to the doorstep, these kinds of touchpoints are essential to build brand loyalty within a saturated marketplace. By managing every stage of the order fulfillment process, it’s much easier to create opportunities for customer engagement.
Bigger, better cost savings
Because traditional retail channels and wholesale partners are not eating into profit margins, direct to consumer fulfillment enables brands to net more of the proceeds of DTC sales and reinvest into their operations. This includes sales and marketing strategies, loyalty initiatives, business development, and building a more streamlined logistics network.
Faster, more responsive fulfillment
A DTC fulfillment model is a lot more nimble and tech-forward than traditional retail models and wholesale fulfillment operations – out of necessity. Customers want their orders quickly, expect consistent communication from the brand, and demand a memorable customer experience. Meeting these high expectations forces direct to consumer brands on a path of continuous operational improvement to streamline delivery timeframes, shipping costs, and keep pace with changing market trends.
But when direct to consumer fulfillment is executed well, customers feel more motivated to buy directly and bypass traditional retailers, reaping the benefits of increased convenience and quality assurance.
What to look for in a DTC fulfillment partner
A streamlined DTC order fulfillment operation is challenging and expensive to achieve without the support of a fulfillment provider who specializes in direct to consumer fulfillment services and supporting that direct relationship with your customer. As well as equipping your business with the right infrastructure and expertise to deliver a positive customer experience, your 3PL also needs to
Tech-forward fulfillment services
DTC operations are impossible to coordinate effectively without the backing of streamlined technology to reduce overheads and turnaround times for your business. Think real-time inventory tracking, integrations with your selling platforms and marketing tools, and a warehouse management system that gives you full visibility over your DTC fulfillment operation when you need it.
A scalable network
Being able to grow your operation seamlessly alongside your order volumes is key to reducing growing pains and ensuring that your fulfillment partner is always there to support you. A fulfillment company that can offer a network of fulfillment centers in strategic locations ensures you can store inventory closer to customers and cut shipping costs and transit times for higher customer satisfaction.
Transparent pricing
Fulfillment pricing models will differ depending on the fulfillment company and how their fulfillment services are structured. It’s important to get an itemized quote and make sure there aren’t any hidden fees for set-up, maintenance, or using certain technology systems. Whatever fulfillment provider you choose, their pricing needs to align with your business’s goals and growth projections, or you can end up paying far more than you need.
Partner with ShippingTree for DTC fulfillment
At ShippingTree, we ensure that your DTC orders always keep moving with our seamless integrations that give you ready access to wherever your customers are. Our multi-node distribution network puts your inventory within close reach of customers for faster delivery and better customer experiences. We keep our pricing simple and designed to scale with your business, no matter whether you’re a startup or a rapidly scaling brand.
