Rohan Thambrahalli, chief executive officer of UpstartWorks, explains how direct fulfillment can serve as a valuable alternative to traditional means of shipping online purchases to customers, especially with the coming of the peak shopping season.
Weeks before the official start of the holiday shopping season, Amazon.com’s giant fulfillment centers are already filling up. To avoid bottlenecks, the company is setting up some vendors for direct fulfillment. But the model isn’t necessarily going to be easy to put into place. The coronavirus pandemic is straining supply chains, making it difficult to meet delivery targets regardless of how the orders are being moved.
Direct fulfillment is about getting product to the end user with the greatest possible speed and least amount of friction, Thambrahalli says. In some cases, the manufacturer is set to execute that strategy. In others, the job might be better handled by the retailer, treating its stores as fulfillment centers. The problem, says Thambrahalli, is that while consumer products brands are set up to enhance the customer experience, their supply chains often aren’t.
With an eye toward avoiding shortages and stockouts in periods of high demand, manufacturers, retailers and distributors find themselves having to hold more backup inventory at multiple locations. “We always recommend that they have both an in-dock and direct-fulfillment inventory feed,” says Thambrahalli. No one fulfillment technique is guaranteed to meet all the needs of demanding customers. Sellers must acquire intimate knowledge of every buyer, and be able to meet individual requirements for product and delivery times. In some cases, that might require assessing an additional charge for rapid service.
Many of the changes in order fulfillment that were triggered by the pandemic are likely to be permanent, Thambrahalli predicts. “They were going to happen anyway,” he adds. “COVID-19 has accelerated them.”
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