Direct to Consumer or DTC strategies are very popular right now in retail and consumer goods companies.
It’s easy to understand why, especially for consumer goods companies. Start with the continued soaring growth of ecommerce. After what seemed then robust ecommerce growth in the US of 14-16% annually for many years, in the stay at home economy of 2020, that growth rate soared to 44.5% in Q2 of last year, 36.6% in Q3, and 32.1% in Q4.
No company wants to miss out on that megatrend.
Second, many traditional retailers, especially mall-based chains, continue to struggle. That also means trouble for consumer goods companies that sell through those channels.
If your one of those companies, you have two basic choices: sell through Amazon – or go to consumer direct.
Third, the taboos that existed for many years against consumer goods companies selling direct and in effect competing with their retail partners is almost completely gone today.
No company exemplifies this megatrend more so than Nike. The shoe and sports apparel giant announced a couple of years back it was cutting its retail sales channels globally from some 36,000 to under 40 – a dramatic change in strategy.
Then in June of last year, Nike announced its Consumer Direct Acceleration Initiative – the name alone says it all.
But of course going direct to consumer isn’t just a business strategy – it has significant fulfillment implications. Many consumer goods DCs are simply not set up for order picking and shipping for direct to consumer orders.
There are two key areas to consider:
First is capacity – do you have the ability to meet current and future direct to consumer volumes? One of Nike’s key current initiatives, it recently said, is building sufficient direct to consumer capacity across the globe.
The second is capability: can you pick, pack and ship DTC orders profitably? What technologies will be deployed to do so over time?
Challenges in both capacity and capability lead many companies to outsource efulfillment to third parties.
But many want to do DTC fulfillment in-house – or have a path to bringing it in house at some future time.
We’ve talked to a number of both retail and consumer goods companies that said with the surge in ecommerce volumes, the goal was just to survive peak season 2020, with plans to improve, add capacity, and optimize in 2021.
The tools available are many: that includes Distributed Order Management software to identify the optimal sourcing point for reach order.
Inside the distribution center, tools include technologies such as Voice, pick to light, smart carts, put walls, mobile robots, goods to person systems, and more.
Of course, you need the right software to power those materials handling technologies. That’s where Softeon’s advanced Warehouse Management and Warehouse Execution systems come into play – to optimize fulfillment now, but provide a platform for future growth and additional technologies as volumes rise.
Consider one Softeon omnichannel retail customer.
The company began with basic cart picking, with orders manually moved to pack stations.
The company became interested with put walls, and Softeon supported the test of a single put wall module as a pilot, with carts taking the picks to the front side of the wall for packing on the backside.
Based on success, the retailer deployed 9 more put wall modules, and added high speed auto bagger systems on the back side of the wall modules.
It later added another 20 wall modules, with Softeon WMS managing and optimizing the entire process.
Next, the company installed mechanized pick modules, with conveyorized transport to the pack station
More recently, the retailer added a number of mobile robots.
That’s the kind of flexibility and continuous improvement Softeon WMS and WES can deliver – we would love to talk with you about your opportunities.