Quick (2 Minute) Survey Results: Direct Ship Decision Factors and Score Card Question
by Victor Engesser, RVCF
With the growing popularity of direct ship fulfillment (retailers asking their trading partners to fulfill the retailer's ecommerce order), we thought it would be informative to ask our members how they determine which products are stocked and which are direct shipped. Based on their responses here are some of the most common criteria used,
- Supplier's ability to direct ship (obviously, but not all suppliers have this capability)
- Size and weight of item (this is both a handling issue for retailer and customer as well as a warehouse space issue, and freight cost calculation)
- If assembly or scheduled install is involved (what works best to support the overall customer experience)
- Forecasted sales and profitability (anticipated sales rate while taking into consideration product turns and inventory holding costs)
- Product seasonality or lifecycle, and in apparel, size or color popularity, etc.
What we also learned from many retailers is that inside their company it is the category buyer that usually makes the ultimate decision on which items to set up as direct ship. This makes sense when you consider today's direct ship has it's roots in yesterday's "special order" capability and has evolved and expanded with the ecommerce "endless isle" objective which quickly filled up ecommerce warehouses. The buyer likely has to consider at least a few other factors before deciding how to proceed,
- Supplier cost to retailer based on which way they decide
- Direct ship product availability if they do not stock
- Markdown risk if the own the inventory
With the rapid grow occurring in direct ship fulfillment we are likely to see more and better financial tools and software capabilities to support this decision making and fulfillment process for both retailers and suppliers.