It’s a month after your annual conference and you’re on a high. Your company, a direct selling organization, introduced two new products during the conference and sales agents across the country left excited and ready to sell. In fact, new orders are pouring in.

But an email from your warehouse fulfillment company stops you dead in your tracks. New orders are severely backlogged, and they are looking for approval on a $25,000 overtime bill to cut into the logjam.

You’ve got no choice but to approve, but shouldn’t they have anticipated the increase volume?

Fulfillment companies unfamiliar with direct selling and multi-level marketing (MLM) businesses may struggle with some of the unique requirements to serve this market. Following are 5 keys to success in fulfillment operations for direct sellers and what to look for in a fulfillment partner.


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5 things to look for in a direct selling fulfillment partner

 

1. Scalable fulfillment infrastructure

direct selling fulfillmentAs a direct seller, you’re one good Instagram post from a big demand spike and one product launch from exponential growth. Having a virtual sales organization makes it possible for you to rapidly convert market demand into profit. So, it’s critical that your direct selling fulfillment partner can keep up.

Look for the following capabilities to determine if your 3PL can scale:

  • Nationwide locations. The fulfillment industry is dominated by small, one-location operations. This may be ideal as you build traction but as you grow, you’ll want the ability to add locations to reduce transportation costs and delivery times.
  • Engineering and design expertise. To minimize your cost-per-order, your warehouse layout, processes and automation must adapt to changing order profiles and increasing volumes. Choose a provider that can deploy systems and automation in a modular fashion, as your volume dictates.
  • Full-featured warehouse management system (WMS). Basic WMS systems can handle basic operations. But what happens if you need your system to integrate with conveyor systems and other automation? Will that require a major, unplanned capital investment?
  • Real-world experience. It’s one thing to say, “We can handle it,” it’s another to see proof of your provider’s ability to scale its operations with each stage of your company’s growth.
  • Parcel cost reduction. About 75% of overall fulfillment costs are gobbled up by parcel delivery. The big parcel carriers have their own language and, unless you understand it, it's easy to overpay. Your 3PL should act as an interpreter while helping you reduce parcel costs.

2. Flexibility to handle unpredictable volumes

direct sales fulfillment flexibilityAll businesses have their fair share of volatility; but there are times when it seems like direct selling companies wrote the book on it. For example, it’s not unusual for BOGOs (buy one get one free), month-end promotions, or post-convention excitement to create massive surges in demand that are followed by equally dramatic dips in the other direction. In addition, a new product launch has the potential to go viral really quickly, especially if consultants decide the product is so noteworthy it merits an extra social media push.

As a result, some fulfillment models – including those that feature variable space and staffing – are a better choice for supporting direct selling businesses than others. That requires a fulfillment partner that can effortlessly flex its operations to absorb this added volume and then quickly ratchet down space and labor. In this way, fulfillment costs parallel your revenue stream.

Key requirements in this regard include:

  • A multi-client warehouse where staff are cross-trained on the requirements of multiple accounts
  • Flexible contracts where you pay only for the space and labor you use in a given month
  • A knowledgeable management team that can collaboratively forecast based on a promotion schedule, history, and experience with similar organizations.

Fulfillment companies with direct selling experience understand that advance notice of sales-triggering marketing events is not a given. Direct sellers and MLMs are marketing-driven organizations that do not necessarily consider the operational implications of a new product introduction or advertising campaign. Look for a partner that knows the importance of staying close to the marketing organization.

 

3. Flexible systems with real-time visibility throughout the order process

direct selling fulfillment visibilitySystems that can’t adapt to your requirements can bring your business to its knees. Proper vetting of providers in this area is critical.

First, you’ll want a high level of confidence that orders will flow seamlessly between your direct selling platform and your fulfillment partner’s WMS. Look for partners that serve companies using top commerce platforms like Exigo, Magento and InfoTrax. You don’t want to be the guinea pig. Many fulfillment companies talk about data integration like it’s no big deal, but lack the systems expertise to build the required application program interfaces (APIs).

Kit building is also common in the direct selling/MLM space, where multiple SKUs are bundled to create new products. Systems must enable creation of these “build-on-the-fly” kits as a core function. And you’ll want real-time visibility into order and inventory data. Look for a provider that can provide you with an online portal to retrieve this data and also push the data automatically to your system.

 


Some facts about the direct selling industry

If you're a direct seller, you're part of a big industry that's getting bigger every year.  Following are some direct sales statistics.

  • Direct selling companies represent $35.2 billion in annual sales (Direct Selling Association).
  • There are 7 million people involved in direct selling– 6.8 million direct sellers and 36.9 million customers - this number was just 15.6 million in 2011.
  • Women account for 74% of direct sellers and customers, with 35-44 the most popular age group.
  • Wellness products top the list of the types of products sold - accounting for 36% of the market.

 

4. Packaging excellence for brand consistency

direct sales packagingCustomers of direct selling companies are not buying a commodity from the lowest cost supplier. They are making a lifestyle choice. As such, the relationship is more with the brand than the product.

That’s why direct sellers want a high-quality presentation at delivery with a package that has their logo (not Amazon’s!). They want the paper inside to be folded just so, and the product to be positioned a certain way in a box that may contain a personal note to the buyer. Basically, they want the package to arrive looking like a Christmas present.

Your MLM fulfillment partner must be capable of delivering this level of packaging customization, and they must do it as part of a high-volume, rapid-turn warehouse operation. Most fulfillment companies are not used to this. Choose a partner that understands the importance of the WOW factor in product presentation and that can handle all of the unique shipping tasks you may require.

 

5. Experience handling party-based sales

direct selling party salesParty-based sales are a big part of many direct sellers’ business models. So, just how significantly does this increase fulfillment complexity?

Every customer shipment is important. But the multi-order shipments to party planners or hosts, who then arrange for final delivery to their party guests, are doubly so – because if something goes wrong with even one order there will be two important audiences that are inconvenienced rather than one. Just as important, there might be (ahem) “heck” to pay if they vent about it on their Facebook, Twitter, or Instagram accounts. 

We’re huge advocates of systems that can create detailed packing slips for each individual order within a party shipment, because it ultimately makes life easier for everyone, especially the party host. 

It starts with the direct selling company. They must send orders, via a CSV file or API/WebService, that indicate whether party orders should be fulfilled to the host or guest. From there, it’s up to your fulfillment department or outside direct selling fulfillment specialist to receive and process these party orders appropriately.

For Amware Fulfillment, which works with several top direct selling companies, the process looks like this:

  • Automated workflows are created based on the client file received
  • All guest orders associated with a host are processed together and are printed in sequence
  • Orders are picked and packed in sequence
  • Guest orders slated to go direct are mailed directly to the guest, while guest orders slated to go to the host are included, with packing slips, within the master carton that ships to the host
  • Tracking numbers are provided for the master carton and assigned to either the host or party order
  • Tracking information can be provided on all orders to the direct selling company so orders can be closed out on their system

The right system is critical for efficient direct sales fulfillment of party planning orders. The system must be able to handle orders with a Parent-Child protocol.

Any good fulfillment system will be programmed with checks and balances to help prevent errors. This can include, for instance, custom coding that prevents printing of shipping labels for guest orders that need to go to the host. This and other customizations are specific to fulfillment of party orders.

 

Experience is the key to fulfillment excellence in direct selling

All B2C fulfillment is not the same. For direct selling companies, complex inventory management, unexpected volume spikes, and custom packaging requirements are business-as-usual challenges that must be managed.

Direct sellers benefit from working with direct sales fulfillment partners that have the experience in the industry to bring best practices to the table.

To learn more about these best practices and how you can take your direct selling fulfillment program to the next level, contact Amware Fulfillment to arrange a discussion.