Plan, procure, execute, & track transportation for every shipment across your supply chain & logistics operations
A SaaS solution to help grow your business by achieving 100% perfect order execution at high volumes
Increase vehicle capacity utilization and customer promise adherence
Grow your business with omnichannel presence and automated pickups
Consolidate shipments for hub to hub movement across land and air
Real-time customer communications and collect accurate PODs
Orchestrate logistics operations with multiple 3rd party carriers
Achieve cost effective, scalable, sustainable, and customer centric deliveries
Orchestrate all your cross-border logistics operations with ease
Improve address accuracy, ensure first-attempt delivery success, reduce costs and boost customer experience
Gain end-to-end shipment visibility, get proactive alerts, and send customers live tracking links
Grow business in a dynamic world and manage operations across First, Middle & Last mile
Delight customers by seamlessly managing store and online orders across own fleet and 3rd party
Reduce freight costs & get end to end visibility across shipments
The rapid growth of the internet has seen an outburst of new D2C brands selling directly to niche markets online. Such has been their success that most established brands selling the traditional way have also jumped on the bandwagon and started D2C operations in the last few years.
D2C eCommerce sales have shown high growth in the US, and this growth is expected to continue, with the US market projected to be at USD 213 billion in 2023.
The number of shoppers seeking relevant, personalized, and connected consumer-centric experiences and D2C brands satisfy this need. D2C logistics solution providers enable these brands to concentrate on their core strength of product development and innovation while taking responsibility for delivery fulfillment.
Direct-to-consumer or business-to-consumer is the business model of selling products directly to customers, bypassing third parties used in the traditional retail model, like distributors, wholesalers, and retailers. The products are sold online through websites or eCommerce marketplaces.
Let us examine the two important retail models – Traditional Retail and D2C.
The traditional retail approach has been to use intermediaries in the supply chain to manage important functions like logistics, warehousing, sales, and CRM.
Manufacturer -> Distributor -> Wholesaler -> Retailer -> Consumer
In traditional retail, the manufacturer manufactures the goods and sells them to large distributors in every strategic pocket of the market. From the distributors, the goods reach the end consumer through intermediaries like wholesalers and retailers.
Manufacturer -> Advertising Website/Mobile Application -> Consumer
D2C or direct-to-customer sales is a sales model where the company sells directly to individual customers through digital channel platforms like eCommerce sites, marketplaces, or an app.
Let us now see why D2C brands are rapidly gaining ground.
By adopting a D2C model, brands can have full control over the product along with better customer interaction. Some other reasons behind the popularity of the D2C model include the following:
D2C brands do not need physical stores and hence can actually scale up immediately to reach customers across the globe digitally. D2C brands concentrate on brand building in their target markets, and unlike traditional retail sales, they do not have to tie up partners to reach the product to the end customers. This makes it easier to scale up across new markets.
By cutting out the intermediate rungs in the supply chain from the brand to the consumer, D2C brands save on commissions to distributors, wholesalers, and retailers. These savings enable the brand to have lower prices for its products.
D2C brands, unlike a marketplace or a retail shop, have a complete commitment to the brand. A marketplace or a traditional retail outlet may stock thousands of brands, and the commitment to a single brand will not be as high.
Customers acknowledge that when they shop online at a brand’s website, they have the brand assurance of quality and commitment to aftersales, something that traditional multi-brand outlets cannot give.
Manufacturers in traditional B2C models have fewer new product launches as the retailers are generally hesitant to take new products. Manufacturers must back up such new launches with an advertising campaign to reassure retailers. Such advertising campaigns for the mass market are, however, quite costly, which limits the number of new product launches a manufacturer can have.
D2C companies can however test launch new products on a smaller scale, assess customer response and make required product improvements before going big on them. So the organization has no constraints if it has to convert new ideas into products and explore niche markets.
D2C is a model where third-party costs like distributors and wholesalers are eliminated; hence it is cost-efficient and more profitable.
Also, the D2C model enables multiple upselling opportunities due to the direct relationship with the customer. Due to the increased lifetime value of the customer relationship, revenue, as well as returns per customer acquired (ROI), are higher.
D2C brands choose not to engage with intermediaries like distributors and retailers, who, in turn, interact with the end customers. By removing these intermediaries from the supply chain, they free resources for engaging and communicating with their clients directly. These brands have access to customer data, and they use this to turn customers.
Direct-to-consumer brands connect to their customers directly on an emotional level while providing value to their customers with the right product. Besides the direct relationship with the consumer, D2C brands can communicate shared values with customers by supporting social and charitable initiatives. The brand story is not lost amid the clutter of other brands as in the traditional retail model.
D2C brands also take full responsibility for aftersales and respond fast to customer queries or issues, something not possible with retailers. Hence D2C brands engender strong brand loyalty.
D2C brands have an advantage in catering to niche markets by customizing in a cost-effective way. They can do a soft launch of personalized products in a small test group and monitor performance to improve it for a larger launch.
This new product development cycle from concept to development to test- marketing to final launch is possible due to the direct interaction with customers, which facilitates feedback. In the traditional retail model, mass brands are preferred as the target market is not a niche market.
Before we move on to discuss the details of logistics for D2C brands, let us have a quick look at the two common modes of D2C delivery fulfillment.
This type of fulfillment is chosen by emerging or small-sized businesses with limited orders that can be managed manually. All the fulfillment processes, including inventory and storage, picking and packing, shipping, and delivery, are managed internally. The in-house D2C fulfillment team also takes care of returns and reverse logistics, customer support, growing and scaling operations.
As the D2C brands scale up operations, they prefer to outsource deliveries or complete fulfillment to a third-party logistics provider. 3PLs have technical expertise, experience, and the technology to manage deliveries cost-effectively and efficiently, allowing D2C brands to scale up operations.
Owing to the scale of operations and highly personalized consumer offerings, logistics for direct to consumer brands vary and become challenging and subject to inefficiencies, leading to increased operational costs.
Determining the right amount of inventory to keep on hand can be difficult, as D2C brands may not have the same level of insight into consumer demand as traditional retailers. Further, handling fulfillment in-house can be costly and time-consuming, and brands often need to offer free or low-cost shipping and easy return policies to stay competitive, which can further add to the cost of logistics.
D2C brands need to integrate their logistics with their e-commerce platform to avoid errors and inefficiencies. However, with the increasing demand for delivery within 2-3 days, the last mile delivery is becoming a big challenge for D2C brands.
Below, we discuss the top challenges in logistics for D2C brands in more detail.
As D2C brands start getting volume sales through the online channel, they need to monitor inventory across their multiple warehouses and have full visibility of stock movement from the warehouses. Minimum inventory levels of all products have to be maintained at all warehouses to prevent a situation of stockout and to enable the business to confirm when an order has been placed.
At the warehouse, there has to be a system to store items in pre-marked locations for easy retrieval for fulfilling orders. When the order is placed, it should be possible to generate the picking list, quantity, and location of parts to be picked by the packing team. D2C brands may have a harder time forecasting demand for their products as they don’t have the same level of data and insights as larger, established brands. This is why these functions of logistics for D2C brands suffer.
When an order is placed online, the relevant warehouse must be communicated instantly. A picking list having part details and location has to be generated for the picking team. Packing has to be done with standard packing or customized packing if ordered by the customer and a barcoded label has to be generated for the package.
For shipping, it should be possible to allocate the item suitable for the available vehicles. Also, it should be possible to map all driver’s locations using GPS tracking so the packing can be instantly allocated to the nearest positioned vehicle and the information is communicated to the vehicle. Once the item is dispatched, an ETA should be communicated to stakeholders.
However, such optimized capabilities in packaging and shipping are not easily affordable, and in-house engineering also comes at an additional cost.
For shipping of ordered items, it has to be seen whether an FCL (full container load), LCL (less than container load), TL (truckload), or intermodal transport is used. However, the majority of D2C brands find it hard to utilize transportation assets, like drivers and vehicles, in an optimal manner.
There is no way to allocate a vehicle and rider combination based on the nature of the consignment, the load, and the distance to be transported, etc. They have to manually allocate the vehicles and create a delivery schedule to cover all customers on the delivery route created by static routing.
D2C businesses may face high maintenance costs for delivery vehicles, particularly if they are operated for extended periods of time. Finally, D2C businesses may have difficulty tracking the location and status of delivery vehicles in real-time, making it harder to manage and optimize their fleet.
All this brings down the efficiency of logistics for D2C brands and also degrades the overall business profitability as well.
Poor supply chain visibility can be a significant challenge for D2C businesses when it comes to logistics. Without visibility into the supply chain, D2C businesses may have difficulty knowing how much inventory they have on hand, which can lead to stockouts or overstocking. D2C businesses may have difficulty planning efficient routes for delivery vehicles, which can lead to increased fuel costs and longer delivery times.
D2C businesses may have difficulty tracking the location and status of shipments from suppliers, which can make it difficult to plan for and respond to delays. Without visibility into the supply chain, D2C businesses may have difficulty identifying bottlenecks or other issues that are affecting delivery times. Also, D2C businesses may have difficulty identifying and addressing performance issues with suppliers if they lack visibility into the supply chain.
It is very common for customers to provide incorrect or incomplete addresses when placing orders, which can make it difficult for delivery drivers to locate the correct location. Also, the drivers may not be familiar with the area where a delivery address is located, which can make it difficult to find the address.
Some delivery addresses may be located in areas with limited access, such as gated communities or apartment buildings, which can make it difficult for delivery drivers to reach the location. Unforeseen obstacles such as road closures, construction, and traffic can make it difficult for delivery drivers to reach a delivery address on time.
Real-time tracking can be a significant challenge for logistics for direct to consumer brands, as it requires coordination and communication among multiple parties, such as suppliers, warehouses, delivery drivers, and customers. They might not have access to real-time data from suppliers or delivery drivers, which can make it difficult to track the status of shipments and deliveries in real-time.
Integrating real-time tracking systems with existing logistics systems, such as warehouse management systems or transportation management systems, is also a difficult task and can spur inefficiencies. Some real-time tracking systems may not be compatible with the devices and software used by delivery drivers or other logistics personnel, which can make it difficult to implement real-time tracking.
Further, the off-the-shelf real-time tracking systems may be vulnerable to data breaches or hacking, which can compromise the security of sensitive information such as customer information and inventory levels.
Route planning and optimization can be a significant challenge for D2C logistics, as it requires coordination and communication among multiple parties, such as suppliers, warehouses, delivery drivers, and customers. Further, these businesses do not have access to real-time data on traffic, weather, and other factors that can affect delivery routes, which can make it difficult to plan and optimize routes.
This inability to plan efficient routes for delivery vehicles can lead to increased fuel costs and longer delivery times. Coupled with the lack of real-time tracking of the location of delivery vehicles in real-time, makes it difficult to adjust routes and optimize delivery schedules.
Now that we have a firm understanding of the various challenges in logistics for D2C brands let us move on to discuss how intelligent D2C logistics solutions can help businesses overcome these challenges and unlock better margins, higher efficiency, and reduced costs.
D2C (direct-to-consumer) logistics automation solutions can help with unified delivery planning by streamlining and automating various logistics processes, such as inventory management, transportation management, and delivery tracking.
These solutions can help to optimize inventory levels by using data analytics to forecast demand and automatically adjust inventory levels in real-time. This ensures that the right products are in the right place at the right time. They also help to optimize transportation routes and schedules by using data on traffic, weather, and other factors to plan the most efficient routes. This can help to reduce transportation costs and improve delivery times.
Automated D2C logistics solutions can provide real-time visibility into the status of deliveries, including the location of delivery vehicles, the status of shipments, and delivery times. This helps to ensure that customers are informed about when to expect their deliveries and can also help to identify and address any delays or issues.
Automated order fulfillment and seamless returns management are some other benefits offered by these solutions.
Intelligent D2C logistics solutions can help with automated fleet management by providing real-time visibility into the location and status of delivery vehicles, and automating various fleet management processes. They can provide real-time visibility into the location of delivery vehicles, which can help D2C businesses to optimize delivery routes and ensure that deliveries are made on time.
The automation solutions can use data on traffic, weather, and other factors to plan the most efficient routes for delivery vehicles, which can help to reduce transportation costs and improve delivery times. They can also automate the process of monitoring and scheduling vehicle maintenance, which can help to reduce downtime and improve the overall efficiency of the fleet.
These solutions can also provide real-time data on the performance of individual drivers, which can help D2C businesses to identify and address any issues with driver behavior or performance.
D2C logistics solutions eliminate the need for manual routing by providing clear visible maps with detailed information for the routes. These routes are system optimized for a number of parameters included in the system besides the orders needed to be delivered. Manual adjustment is also possible with a simple drag-and-drop functionality.
D2C logistics automation solutions can automate the process of dispatching delivery vehicles, which can help to ensure that the right vehicle is sent to the right location at the right time. They can provide real-time visibility into the status of deliveries, which can help D2C businesses to identify and address any delays or issues.
All in all, these solutions can help D2C businesses to better plan and manage delivery routes, which can help to reduce costs and improve the efficiency of delivery operations.
AI-powered D2C logistics solutions provide end-to-end visibility of inventory levels across warehouses and also inbound inventory, which allows businesses to maintain minimum inventory levels and dispatch items as committed. Businesses can gain visibility into the entire supply chain, from suppliers to customers, which helps to identify and address any bottlenecks or issues that may arise.
The businesses get an integrated dashboard which gives a holistic view of the operations and allows managers to have a real-time overview of the entire logistics process. The D2C logistics automation solutions offer advanced data analytics to identify trends and patterns in logistics data, which can help D2C businesses to optimize their operations and improve efficiency.
After item dispatch, D2C logistics solutions provide regular updates in real-time rather than updates at intervals to stakeholders like the brand and the end customer. The system tracks the vehicle using GPS technology or by geo-targeting the location of the driver’s smartphone-based app to follow up on schedules and send tracking data to customers.
The solutions help in real-time tracking by providing real-time data and analytics on various logistics processes, and automating various logistics functions. They can offer real-time data on the location and status of deliveries, including the location of delivery vehicles, the status of shipments, and delivery times.
This real-time information empowers businesses to track deliveries in real-time, which can help to improve efficiency, reduce costs, and improve customer satisfaction. Further, they can identify and address any issues in real-time via intelligent in-built data visualization and smart reporting tools.
Shipsy’s AI-enabled logistics management platform allows for 360-degree visibility into different delivery operations, like carrier allocation, scheduling, tracking, and more. Businesses can get access to real-time data insights and can make use of these actionable insights to optimize logistics and identify any hidden loopholes in operations.
The intelligent platform integrates all services via a unified interface to sync decision-making for all stakeholders. Ensure a branded CX with real-time tracking and communication via multiple channels like SMS, emails, and Whatsapp. Coupled with geotracking, this helps reduce fake NDRs and increases first-attempt deliveries.
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