D2C logistics: definition, challenges and optimization keys

160 billion euros will be spent online by 2023, according to FEVAD. E-commerce continues to boom, with one key model on the rise: direct-to-consumer (D2C) sales. The principle? Sell products or services directly to consumers, without intermediaries.

However, the growth of this model brings with it a number of challenges, particularly when it comes to logistics. How can we improve inventory management? How to optimize the supply chain? How can we maintain a high level of customer experience and satisfaction?

Find out all the answers in this article. D2C logistics will soon hold no secrets for you!

1. What is the D2C model?

Sézane, Le Slip Français, Gemmyo... You've probably heard of these successful brands. What makes them special? A business model based on direct-to-consumer. In fact,these companies rely to a large extent ona strategy of direct sales to consumers, without going through intermediaries .

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This modern form of commerce is becoming increasingly common in sectors such as the automotive industry. Tesla, for example, concentrates on selling its vehicles directly, without going through dealer networks. Thermomix and Tupperware also made their name through direct sales, this time to the home. Finally, many mattress brands such as Emma, Tediber and Casper have also relied on D2C to develop their business. In short: D2C is a multi-sector model.

There's no longer any need to rely on distributors, wholesalers, supermarkets and hypermarkets... Direct-to-consumer allows for a more personalized, direct relationship with buyers.

It is also a guarantee of flexibility, and often profitability, thanks to higher margins. For a behind-the-scenes look at this business model, see our article: D2C: advantages, challenges and keys to success in direct sales.

2. D2C logistics

Logistics: an essential link in the chain of success!

80% of consumers are expected to make at least one purchase via a D2C brand in the next 5 years. But to guarantee a quality experience, here's the key success factor: logistics (or fulfillment).

In e-commerce, logistics refers to the entire process of storing, managing, shipping and delivering a company's products. Theaim of logistics is tosuccessfully manage the entire physical flow of products to the end consumer .All these links in the logistics chain have a direct impact on the user experience. Where fast delivery makes for greater customer satisfaction, a delay in delivery or a packaging problem can be a major turn-off..

This is one of the key success factors for D2C brands: successful logistics. And to achieve this, companies have several solutions. They can choose to manage all logistics in-house, or outsource all or part of it. In both cases, the challenges are numerous..

Logistics challenges for D2C brands

The objectives of direct-to-consumer logistics are to :

• Predict and anticipate customer demand

• Manage product supply and storage

• Process orders

• Control delivery costs and lead times

• Track parcels
• Handle after-sales service and any customer returns

Faced with these objectives, the main challenges for D2C retailers are to minimize logistics costs and components. In particular, storage, transport and product availability. The question to ask is: as an e-retailer, are you capable of managing all logistics on your own? Or would you rather concentrate on what drives you most: selling?

Indeed, D2C sales are not incompatible with the creation of logistics partnerships! Quite the contrary, in fact. To meet the challenge of developing their direct sales business, many e-tailers rely on logistics partners like RakutenFulfillment Network.

3. Supply chain: how is flow management organized?

Logistics and supply chain are often confused. Let's remember the difference: logistics is part of the supply chain process. Where logistics is concerned with the movement and maintenance of products (in and out of the company), the supply chain is the strategy that coordinates and manages the entire supply process .

The supply chain is a means of linking all the players in the supply cycle, from production to delivery. In addition to coordinating producers, logisticians, carriers, etc., the supply chain is divided into 4 major flows:

• Physical flow: supply, transport and storage of goods.
• The information flow: all the data (or Big Data) that drives the physical flow.
• Financial flow: all transactions carried out both externally (with partners, suppliers or subcontractors) and internally, within the company .
• Administrative flow : all documents circulating between supply chain stakeholders.
  

To better understand the role of these flows and optimize them for optimal logistics management, take a look at our dedicated guide: how to improve your e-commerce supply chain?

4. How to optimize your D2C logistics strategy?

Measure and monitor current performance indicators

Do you know whether your e-commerce strategy (and therefore your current logistics) is contributing to customer satisfaction? Are they complaining about late deliveries or making complaints?

To optimize your logistics process, the first step is to observe your customers' needs, measure their current satisfaction and your results. Key KPIs to track include :

• NPS

• CSAT

• Sales figures

• Sales margin

• On-time delivery (OTD)

• Product return rate

• Inventory turnover rate
• Cost per unit delivered

And all the indicators can be found here: the 11 key KPIs for maximizing your e-commerce success .

In addition to quantified KPIs, take an interest in your customers' qualitative feedback. What are their satisfaction or dissatisfaction criteria? Product packaging, delivery time, place of manufacture, delivery method... All these elements are linked to your logistics, and can be optimized according to the feedback received by your customer service or shared in online reviews.

This regular monitoring enables you to measure

oosing the shared logistics option

the impact of your e-commerce strategy, from a financial and customer point of view. Depending on the figures and customer feedback, you'll probably have to rethink the evolution of your logistics.

Here's an example of logistics optimization: pooling. Pooling logistics enables you to optimize the supply chain, from receipt of goods to delivery to the end consumer. Examples of pooled logistics include the sharing of storage warehouses between several companies, or the pooling of delivery vehicles.

This form of logistics is on the increase because it meets retailers' expectations, particularly in terms of cost reduction. Smaller, urban logistics centers are also emerging. Practical, to bring products closer to customers and meet environmental constraints.

Opt for outsourced logistics

D2C places customer proximity at the heart of its business model. To maintain this proximity over the long term, it's essential to take care of customers, listen to them, offer the best products... But it's difficult to be on all fronts when you're an e-tailer. That'swhy outsourced logistics is booming: it enables brands to concentrate on selling their products and their customers. While logistics service providers take care of all or part of the logistics .

There are different types of logistics provider:

So, have you thought about outsourcing your product storage and transport, with a 2PL (Second Party Logistic) partner? Or entrusting transport, storage, order picking and strategic optimization to a 4PL provider?

There are many advantages tousing one of these forms of outsourced e-commerce logistics:

• Lower costs : savings are passed on not only in structural costs, but also in staff recruitment. By reducing internal logistics costs, you improve your profitability. An important point, at a time when almost 12% of e-tailers are unprofitable due to logistics costs linked to distribution, in particular! (Logistics Bureau)
• Saving time : outsourcing your logistics gives you the time to concentrate on your core business. So you can develop your product, marketing and sales strategy without pressure.
• Greater customer satisfaction : entrusting your logistics to experts also means benefiting from their know-how. This reduces the risk of problems linked to product loss or delivery errors. A partner like Rakuten Fulfillment Network can even help you reduce your delivery times: when you know that delivery times are the second leading cause of shopping cart abandonment on e-commerce sites, according to Sendcloud (2023)... It's a good idea to do everything you can to convert your customers, then build their loyalty over the long term!

5. Rakuten Fulfillment Network: an asset for D2C

For the past ten years, Rakuten has been helping brands capture the hearts of their customers through a D2C approach. Companies like Emma, SEB and Kusmi Tea rely on our marketplace to speak directly to their buyers... And to our 13 million regular buyers.

In addition to the marketplace, Rakuten offers a whole range of services, such as the Rakuten Fulfillment Network. The principle is simple: you entrust us with your logistics. We manage it for you. And you benefit from the results, such as an average saving of 25% on your logistics costs!

Rakuten Fulfillment Network takes care of the storage, packaging and shipping of your products: you choose, our logistics service is flexible and scalable to your needs. You can, of course, controlalllogistics remotely, and keep a real-time eye on your inventory from a centralized location .

Thanks to this logistics partnership, your customers also benefit from quality service. 99.8% of orders placed before 2 p.m. are delivered within 24 hours, to the delight of your busiest customers!

You've got it: with Rakuten Fulfillment Network, you don't have to worryaboutstock-outs, packaging or shipping. Our network of warehouses and logistics partners is there for your products. We manage the logistics of your e-shop for you, and you benefit from a real competitive advantage over other D2C brands.

In addition to standing out from competitors and satisfying customers, some brands that choose Rakuten Fulfillment Network even multiply their sales by 10! Let's find out more.

6. D2C logistics: the case of Dreame

Dreame is a Chinese company specializing in high-end household appliances. As the company seeks to conquer the French market, it faces a major logistical challenge: delivery times .

Before placing its trust in Rakuten Fulfillment Network, Dreame's delivery times were between 7 and 10 days .Yet, according to McKinsey, 44% of buyers say they don't want to wait more than two days to receive an order! To speed up and simplify its entire logistics process, Dreame joined the Rakuten Fulfillment Network.

Results:

• 5x faster delivery: from 10 to 2 days, from China to France!
• A 10-fold increase in sales: thanks to more attractive delivery times, French customers are more likely to buy, which considerably boosts the company's sales.
• 200-fold increase in visibility: by selling on our marketplace, Dreame has access to over 13 million connected customers. This increases visibility, credibility and brand awareness.

Would you like to take advantage of a turnkey logistics service for your D2C business? Follow in Dreame's footsteps, and turn your e-commerce dreams into reality: