Manufacturers are increasingly pursuing direct online sales to end users these days, and with that comes the challenge of more, but smaller, shipments. When you’re built for pallets and cases and you’re shipping onesies, you face new challenges. The rise of e-commerce has made the integration of logistics and distribution a integral part of operational competency.
Moving from a manufacturing and wholesale environment to a direct sales model for e-commerce may require more employees, fixtures or space.
Instead of loading pallets into trucks, you may be staging small shipments in boxes. Documentation and labels multiply, and new types of equipment may be needed along with everything from tape and packing materials to racks and printers.
Is it worth it? Dave Turbide, a New Hampshire based consultant and APICS certified CPIM makes the point in a recent article in APICS Magazine that, in fact, you may not have much of a choice.
E-commerce is growing so quickly that some manufacturers have found they have no choice but to direct-ship to customers. The question becomes one of whether to do it yourself, or engage a third party.
Turbide suggests a few questions, taken from APICS’s CPIM body of knowledge, to ask if you’re facing that question yourself:
- Is the activity strategically important?
- Does the company have specialized knowledge?
- Is the company’s operations performance superior?
- Is significant operations performance likely?
If you answer yes to one or more of these questions, Turbide suggests careful exploration and to consider the cost-service trade-offs involved either way. If you can answer no to most or all, then outsourcing may be the way to go. Just remember that e-commerce is not going away, and only likely to grow. It can become a vital link in your customer relationship experiences. You may want to “cultivate positive workings relationships with package delivery services” like UPS, FedEx and others.
It’s worth noting the following survey statistics recently produced by PwC. When asked “Which of the following channels are companies using to generate sales,” respondents indicated:
- 79% – Store
- 73% – Website
- 25% – Mobile app
- 24% – Catalogue
- 21% – Third party provider
As to the reasons people say they shop online:
- 38% – Convenience
- 25% – Bargains
- 18%- Speed