Last week we had a great couple of days at the Direct Selling Association's Annual Conference in Orlando. It's where leaders from the top direct selling companies gather to discuss strategies to grow and manage the business better. What were the hot issues, at least in terms of direct sales fulfillment? Well, concerns seemed to center around 3 issues – scale, delivery time, and parcel cost reduction.
Scaling Fulfillment to Support Direct Sales Growth
One thing you gotta love about direct sellers: they're all about growth. As such, they are concerend with any barriers to growth, like an inadequate fulfillment infrastructure. They want a robust capability, but don't always have the money to fund a truly "future proof" solution – at least not today.
One mid-sized direct seller talked to us about having direct sales fulfillment services that work like a parking meter: if you need more, no problem – just put money in the meter. The costs rise in direct relation to the need.
Well, that idea is not far off the mark. Third party fulfillment providers can put goods in a multi-client warehouse where you pay for the space and labor used in a given month. Staff are often trained to work across accounts, depending on which ones are busy at the time, so labor costs can be more variable.
Flexibility is a key in the direct selling indsutry, where there is great variability in order volumes from day to day (BOGOs, end-of-month promos) and from year to year. A great new product launch could trigger exponential growth and the need for a completely revamped fulfillment solution.
In terms of scaling fulfillment operations, look for a fulfillment partner that can help you today, but also has the capability to grow with you as the business enters the stratosphere.
Improve Delivery Times
Part of the Amazon effect is consumers want to get products faster. At least that's the perception of the direct sellers we spoke to. There's a sense that rapid direct fulfillment is a competitive advantage – so they want it.
Here, you want to look at the number of delivery points you have. The only way to economically provide Amazon Prime-like delivery speed is more warehouse locations. Here, it helps to work with fulfillment companies that have a nationwide fulfillment network and can warehouse your products close to customers.
When it comes to shipping cost versus speed, you might be surprised to know that 60% of consumers would wait 5-7 days to receive an item if there was free shipping. Sure, it's fair to enhance your direct sales fulfillment network to improve service times, but remember that, in the minds of consumers, cost still trumps speed on eCommerce shipping, at least for now.
Parcel Cost Reductions
About 75% of overall fulfullment costs are gobbled up by parcel delivery. So it's no wonder that this was top of mind for people at the DSA Conference.
Parcel shipping remains a black box for many direct sellers and eCommerce shippers. Accessorial charges, dim weight charges, residential surcharges.... The big parcel carriers have their own language and, unless you understand it, it's easy to overpay.
Sometimes what's needed is an "interpreter" who can make sense of the options. Third party fulfillment companies like Amware serve this function and can help you reduce parcel costs.
It's always great to visit with old and new friends at the DSA Conference. The entrepreneurial spirit at this annual gathering is infectious. We enjoyed dinner one of the nights with some Amware customers and supplier partners Pay Quicker, Thatcher and Dream CSX. Direct sellers dream big, no doubt. Our job in fulfillment is to support that dream – to be the "engine room" that takes care of all the details once the order is dropped.