We’re only two years into it, but for business historians, the 2020s might be called the decade of disruption.
The pandemic. Port congestion. Raw material shortages. Labor shortages and rising costs. And now increased economic headwinds.
The list seems never-ending. But disruption doesn’t have to mean disaster. There’s a solution to meeting unforeseen – and often unpleasant – changes in your ecommerce world.
Ecommerce infrastructure is complex, increasing interconnected, and constantly changing. So how can your ecommerce fulfillment system be built to be resilient to whatever changes are coming down the road?
That solution is fulfillment flexibility.
Dan Coll recently sat down with Etail CEO Michael Anderson to talk about how supply chain and other disruptions are redefining fulfillment strategies for D2C. Their complete discussion, part of Etail’s D2C Leadership Now live briefing series, is available here.
Dan Coll knows ecommerce fulfillment. Dan is a partner and CRO at Fulfillment IQ, a supply chain and fulfillment consultancy that works with global ecommerce brands, retailers, 3PLs and emerging D2C brands. His background also includes leadership stints at Kenco, FedEx Supply Chain and as founder of two successful ecommerce order fulfillment 3PLs.
The COVID pandemic resulted in dramatic changes in how brands thought about ecommerce. Ecommerce sales reached levels predicted to take years of growth in a matter of months. Amazon closed FBA to “non-essential” goods, highlighting to sellers the fragility of depending on any one source of fulfillment. B2B brands, with their retail outlets on lock down, were forced to expand their D2C fulfillment efforts.
So what where the lessons learned from the COVID experience and how can brands leverage them to build a more resilient supply chain?
It's the tech that enables the supply chain
Most brands are doing some ecommerce, Dan said, so they have some experience to build on. When it comes time to expand their D2C fulfillment efforts, it becomes a matter of focusing on the right processes and building a foundation to scale. And that relies on developing the right ecommerce tech stack.
“Scaling isn’t about making a total switch,” Dan said. “Scaling is about a process and a methodology that really looks at every aspect of the business to see what needs to be done to ensure that it’s successful. The only way that can be done is through leveraging the right tech stack. Because when you think of it, it's the tech that enables supply chain.”
Technology aside, often brands find that the initial challenges in scaling ecommerce are internal, starting with people.
Brands looking to expand their D2C fulfilment capabilities need to start out with a simple question, Dan said.
“Do I have the right talent set on my team? Because ‘Joe Smith’, might be leading the B2B effort and might be a super star. But that might not translate to ‘Joe Smith’ being able to be a super star on the direct-to-consumer side.”
Legacy systems, workflows and processes are often the next challenge.
“From a four-wall perspective, a facility that does ecommerce fulfillment is not set up to scale to do D2C and vice versa,” Dan said. “Because if I'm used to shipping a pallet or a case or an inner pack, now I have to change my systems and my SKU methodology to be able to do ‘eaches’.”
The brands never saw a world where they would ever sell anything less than a case
The ability to ship “eaches” – individual units in single parcels sent to specific consumers – is a common challenge for brands looking to expand their D2C capabilities, said Michael Anderson. The Etail Solutions CEO and cofounder has spent more than a decade helping brands and high-volume online sellers solve tough ecommerce fulfillment problems.
“We’ve seen a lot of companies have made sometimes six-to-seven figure investments into ERP, WMS and other platforms but these systems were not configured to handle eaches,” Michael said “They were set up to handle cases because the brands never saw a world where they would ever sell anything less than a case.”
“As simple as it sounds, one of the things we work on a lot with companies is the unit of measure. Because if I’m used to shipping pallets or cases, now I have to change my systems and my SKU methodology to be able to ship eaches and assemble bundles and kits,” Dan said.
Beyond the unit-of-measure issues caused by selling eaches, brands face further challenges. Often, they need to warehouse and ship product from multiple locations to meet consumer and marketplace demands for 1-2 day shipping. And that may mean added fulfillment partners like 3PLs.
“For a lot of brands, their inventory is like their child,” Dan said. “They don’t want to give up control and they want it to live close to them. Or at least be able to hop in their car and see it within a one-or-two hour drive. Now their relationship has to be with partners dispersed throughout the United States so they can have product available closer to the consumer. They have to relinquish control and be more than okay with others handling this essential part of their business.”
However, increasing fulfillment partners also increases the complexity of the ecommerce ecosystem.
“We've seen that, for any national company that has inventory in multiple locations, to be able to pull off this regionalized inventory comes down to sophisticated systems integration,” Michael said. “Because if you don't know and understand where that inventory is, you don't know and understand what it's going to cost to deliver inventory from each and every location. Then that stops you from being able to publish prices correctly so you can protect your margins. It stops you from publishing shipping costs or knowing what your shipping costs are so that at least you can build that into your pricing model. This is a complex problem to solve at its very core.”
Often, Michael said, the biggest roadblock to addressing these issues are the legacy systems that the brand already has in place.
“If you’ve made major investments into your systems and they are running your B2B business, they are going to be the sacred cow,” Michael said. “You don’t want to disrupt those systems because they are funding everything else.”
Fortunately, Michael added, systems like the Etail platform have been developed to work with legacy systems already in place – providing flexibility without the cost, time and risk associated with a complete “rip and replace” of the brand’s current systems.
“Flexibility and the ability to adapt and adapt quickly is one of those things that has been sort of a hard lesson learned for a lot of folks,” Michael said. “It’s important that brands understand that you don’t necessarily have to completely replatform. Technology does exist that allows you to be able to adapt.“
LEARN MORE. WATCH THE WEBINAR
We’ve just scratched the surface of Michael’s wide-ranging conversation with Dan Coll. They also covered the best ecommerce KPIs; selecting the right 3PL partners; and how AI, robotics and automation are changing D2C fulfillment. To listen to a recording of the live briefing. Click here.
Dan Coll eCom Logistics podcast
Seven Steps to Scale D2C Fulfillment
Expanding D2C Fulfillment without Losing Control