We’ve all heard the radio ads and seen the TV commercials — from socks and bedsheets to bras, hair color and more — brands that are bypassing Amazon and major traditional retail and online resellers by selling direct-to-consumer are revolutionizing the retail industry. This trend will continue in 2019 as direct-to-consumer brands expand beyond e-Commerce to brick-and-mortar. Despite predictions of a “retail apocalypse,” it’s evident that both online and even brick-and-mortar retail is alive and well, especially when compelling and experiential.
Why are these brands so successful? Because they’re listening to their customers. Today’s customers expect an excellent product and a personalized experience, and successful brands are taking note. But there’s more: According to Epsilon research, eight out of 10 customers prefer to buy directly from a brand when shopping online. They want choices, but not too many. They want ease of access and demand top-notch customer service. Customers want it all, and to stay competitive, brands must deliver.
Digitally-driven direct-to-consumer brands don’t grow linearly, rather, they experience growth spurts and surges, including the well-known “hockey-stick” curve, where scaling happens dramatically at an inflection point. One day there are a few dozen or a few hundred orders per day, the next day there’s a mention on TV or a celebrity wears an item, which then gets captured on social media, and suddenly there are tens of thousands of orders. It’s not always possible to predict exactly when this kind of surge will happen. So when direct-to-consumer brands anticipate growth, scalability is critical.
Because the devil is in the details, many of the top performing direct-to-consumer brands have thoughtfully chosen to fully outsource their fulfillment services so that they can focus on what they do best — developing and marketing wonderful products. They want to give their customers low-price shipping options while delivering a top-tier, personalized customer experience.
When selecting a third-party logistics company here are a few questions brands should be asking:
1. Do they offer seamless API integrations?
Can the third-party logistics company you are considering seamlessly integrate with major e-Commerce platforms and order management systems?
2. Are they bi-coastal?
Your business is national and your options for shipping and storage should be as well. Find a fulfillment company with East and West Coast warehouses so your business can scale with a single software system, single point of contact and one single, unified provider.
3. How is their reliability?
Research. Research. Research. Find a fulfillment company that is reliable, and that can get the job done on time, every time. Do not settle for less. How can this be measured? Ask about their retention rates. How many of their customers stay with them year over year? How much attrition do they experience?
4. How do they scale?
As a direct-to-consumer brand, you are in a unique space. One day you can have 20 orders, and the next two thousand. With a newer brand, there may not be enough data points to know when a larger volume of orders will come through, and your fulfillment provider has to be prepared to scale with you. This is where things get tricky, and many fulfillment companies fail. Choose a third-party logistics company that works with brands like yours — one that understands scalability and will act fast to provide the same exceptional quality regardless of the number of orders placed. Ask providers for anecdotal stories of how they have scaled through sharp growth.
5. Do they truly provide customer satisfaction?
Your customers are your bread and butter. They believe in your product, often promoting your brand through word-of-mouth, online reviews and social media. Retention is just as critical as growth. Keep your customers happy. When it comes to fulfillment services, customers want orders delivered as promised — a quality product in the size/unit they purchased, neatly packaged with a timely arrival. Finding a company that gets it right virtually 100% of the time? Impossible. Select a fulfillment company that gets it right 99% of the time, and that will handle all customer service concerns directly — a company that stands by your brand promises and services customers with sensitivity and efficiency.
6. Can you schedule a visit?
Whether you end up actually visiting or not, a fulfillment company worth its salt will welcome and encourage a visit. They’ll be proud to show off their scale, robotics and systems. The response to a request to visit, and what you see if you actually do, will tell you volumes about how they will be to work with.
Making the switch to a third-party logistics company, or switching to a new and more effective one, can be liberating and may transform your business; that is why the most successful and innovative brands understand that it’s the best way to fuel both growth and longevity.
Esther Kestenbaum is President/COO, Ruby Has Fulfillment. She has been in leadership and C-Suite roles within venture-backed e-Commerce and retail technology companies for 20 years, including several exits — both acquisitions and IPOs. Prior to her role as President and COO at Ruby Has, she was CEO of DayOne, a baby and prenatal e-Commerce and retail as well as B2B services company, and prior to that was founder and CEO of TheShops.TV, an e-Commerce company leveraging QVC-style video. Prior to that she was in SVP and VP roles with retail marketing technology companies including Mobile, Ad tech, and Data Analytics. In addition to all qualifications for C-suite operational roles, Kestenbaum has a strong background in fundraising, corporate governance, and media relations along with significant supply chain background and certifications such as Six Sigma Black Belt and the APICS CPIM certification.