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September 24, 2020

Experts John LeBaron & Zech Hintz: How to Use Fulfillment and Logistics as a Strategic Ecommerce Weapon

Written by: Jason Fidler

Fulfillment and logistics are often viewed as problems to be mitigated. With the holiday season right around the corner, one can easily understand why. An anticipated surge in ecommerce in Q4, and continued uncertainty due to COVID-19, means many brands are trying to determine any number of things that could go wrong when it comes to delivering products to consumers.

But what if the mindset were to change and brands asked how they could make fulfillment and logistics (F&L) a competitive differentiator?

The Digital Shelf Institute (DSI) presents the D2C Strategy Playbook Series, a virtual program of expert-led sessions outlining how to navigate a D2C program in this "new normal."

John LeBaron, chief revenue officer at global commerce company Pattern, and Zech Hintz, president of Borderless Distribution, joined the most recent session, "How to Use Fulfillment and Logistics as a Strategic Ecommerce Weapon."

They spoke about the common misconceptions of F&L and how brands should instead think about it being tied to significant business objections. They also provided a glimpse as to how the future of F&L might look.

The Biggest F&L Mistake Brands Make

According to LeBaron, the biggest mistake brands make when it comes to F&L strategy is not thinking of it as a strategy at all.

“The biggest misconception on this front is people treating it like an afterthought,” LeBaron said.

LeBaron noted that brands too often consider it separate from their growth, reviews, and control strategies — when, in reality, F&L needs to be incorporated and tightly aligned with those other top priorities. Under this mindset, the importance of F&L is mitigated.

“People think of it as just moving boxes around ... they think of it like a ‘dumb’ function,” LeBaron said.

How Brand Manufacturers Can Tie F&L to Revenue

LeBaron recommends looking at how F&L can directly impact revenue to make it a strategic weapon. If ecommerce revenue is the product of traffic, conversion, and price, then F&L has a tremendous impact on each function.

Essential F&L metrics, according to LeBaron:

  • Traffic: Inventory forecasting and in-stock rates have a tremendous impact on traffic. Even with the best search engine optimization (SEO) and advertising strategy, without product in stock and able to be delivered, your return on those investments, as LeBaron puts it, “goes to zero.”
  • Conversion: Whether it comes down to more productive bundling of packages, better packaging materials for different products, or customer delight factors such as the coloring of the packaging or additional things included in the box, fulfillment often represents the first tangible experience the consumer has with a product. If brands can make it a memorable experience, the consumer is more apt to become a loyal customer or write a positive review — both of which positively impact conversion.
  • Price: According to LeBaron, many brands do not consider the packaging differences required to fulfill ecommerce expectations instead of what needs to be done to have the product ready on a physical shelf. If brands can think more purposefully around ecommerce packaging, they will see opportunities to drive down packaging prices.

Bright Spots in the Future of F&L

Upon first glance, the near-term future of fulfillment might be stress-inducing. Many expect major retailers like Amazon to have shipping and inventory issues, both due to the expected uptick in online shopping and the constant threat of a COVID-19 resurgence.

Simultaneously, the expectations set by Amazon, such as one-day shipping, put further pressure on brands to deliver something similar across all channels.

But there are bright spots in the future of F&L. LeBaron points out that four of the top 10 fastest-growing companies, according to the Inc. 5,000 list, are logistics companies.

Hintz noted that Chinese ecommerce companies have also made incredible strides in recent years, such as some retailers guaranteeing extraordinary six-hour delivery times. Additionally, retailer behemoths like Walmart could find even more innovative ways to treat their stores like “mini distribution centers,” as Hintz put it, opening up even more efficiency gains.

Ultimately, there are hosts of opportunities for F&L innovation. Both LeBaron and Hintz agree that it is up to this generation of brand manufacturers to find them. And those that make the business case to their companies to start thinking of F&L as a strategic weapon will be the ones that will drive more sales in the process.

Watch the virtual session to learn the ins and outs of distribution and fulfillment for D2C and marketplaces.