We see many debates going around on whether businesses should make use of owned or outsourced fleets. But rather than depending on one, modern enterprises make use of both. When owning fleets, brands can control their customer experience. But how do they ensure effective third-party deliveries and excellence in their e-commerce logistics operations, given that they outsource last-mile logistics to third-party providers?
To get an answer to this question, we connected with Rajiv Perumal, Vice President of the Product team at Locus, for an InFocus Masterclass webinar this week.
Key takeaways from the webinar
Evolution of retail e-commerce logistics:
During the 1970s and 1980s, businesses primarily relied on retail outlets to sell their products, allowing brands to maintain complete control over customer experience. As time passed, retailers like Walmart came into the picture, selling all products of all brands under one roof. This development significantly diminished the power previously held by individual brands..
Much later, during the early 2000s, e-commerce marketplace websites like Amazon revolutionized the way customers shopped. Customers could get what they want within a few clicks and have multiple options, further eroding the little control brands had over customer experience. However, it was not until the introduction of D2C (Direct to Consumer) fulfillment that this fully came into play.
D2C: The fulfillment model that gave brands full control
In the wake of the global pandemic, businesses could not rely entirely on online or offline presence. To regain control, brands sought to establish a harmonious coexistence of online and offline channels. This marked the rise of omnichannel approach and D2C fulfillment.
The D2C model and omnichannel fulfillment gave the brands complete control over their customer experience. Being a D2C business by itself, brands like Apple started to benefit from it. Apple’s D2C sales grew from 29% in 2018 to 38% in 2022. Established brands account for 75% of US D2C sales, not just Apple.
Projections indicate that D2C e-commerce sales in the US will hit $213 billion by 2024, which makes up 16.6% of total e-commerce sales. Also, 60% of customers stated that the buying experience made them buy directly from a brand.
New fulfillment challenges for D2C brands
The fulfillment cost wasn’t a big issue when the scale was small. But as customers increase, businesses must cut down the cost of fulfillment. The key drivers contributing to this rise in the cost of fulfillment are:
- Demand for quicker fulfillment
- Rising complexities of e-commerce logistics like returns
- The dire need to increase capacity to meet growing demand
What do customers expect from D2C and omnichannel retailers?
Low shipping fee: Customers prefer brands that offer lower shipping fees, making it more cost-effective for them to receive their orders.
Multiple fulfillment options: Customers want brands to give them numerous fulfillment choices of when, where, and how orders should be delivered. For instance, if they wish to Buy Online Pickup In Store (BOPIS), Ship from 3PL, or parcel locker deliveries, last-yard deliveries, etc. This provides customers with more flexibility to receive their orders.
On-demand fulfillment: Customers don’t want to wait a week to get consumables, perishables, and essential groceries. They want their orders to be fulfilled on demand, the same, or the next day and this comes with significant fulfillment costs for the business.
Time and day-definite deliveries: Customers want flexibility to select their preferred delivery dates and time slots for their orders. By providing time and day-definite fulfillment, deliveries become more predictable and it makes them trustworthy.
Accurate delivery forecasts: Customers expect their orders to be delivered as promised, without any delays or deviations. Brands must have accurate delivery forecasts to meet these expectations and provide a seamless customer experience.
Seamless returns management: Customers expect businesses to manage their cancellations seamlessly, reattempted deliveries, and returns effectively. Brands that handle returns seamlessly are more likely to retain customers, as customers appreciate a hassle-free returns process.
How Locus’ ShipFlex ensures effective third-party deliveries and excellence in your e-commerce logistics operations
The increased demands of D2C driven by customers have pushed the entire delivery ecosystem to make carriers more competitive. Until they gain a larger audience base, many businesses partner with third-party providers to fulfill their products. A survey states that 82% of shippers rely on third-party providers to procure capacity for at least some of their orders. So, the biggest concerns for brands and 3PL in this setup are visibility, flexibility, and intelligence to automate carrier selection. This is where Locus’ ShipFlex makes carrier selection more effective and answers all the critical questions to your supply chain leaders in the following ways.
Adds visibility: Shipflex provides end-to-end visibility to dispatch managers, customers, and brands, even if they use outsourced fleets.
Scales logistics operations efficiently: ShipFlex saves businesses from the hassles of managing multiple carrier contracts. This helps them scale operations without increasing overheads.
Enables flexibility in multi-carrier deliveries: ShipFlex helps businesses fulfill orders from multiple sales channels and uses automation to ensure orders are shipped on time.
Automates carrier selection: ShipFlex’s intelligent automation helps third-party providers choose the best carrier based on 30+ logic and static rules like speed and cost.
Summing up!
Brands that partner with third-party providers find it challenging to enjoy the transparency their own logistics teams would provide them. With fulfillment costs increasing in the last mile, multi-carrier delivery management is becoming complex, and there is a dire need to manage them effectively.
By investing in a tool like ShipFlex, businesses can get end-to-end visibility even with outsourced fleets. Also, it enables third-party providers to stay ahead of peak season shipping and expand their capacity when required.
Are you looking to simplify multi-carrier delivery management? Schedule a demo with us!
References:
https://fourweekmba.com/apple-distribution-strategy/
https://www.insiderintelligence.com/content/how-d2c-retail-brands-evolving-5-charts
https://resources.coyote.com/source/outsourced-supply-chain-research