When a product starts as a direct-to-customer (DTC) brand and experiences a successful digital sales platform with major growth, the logical next step may be to expand the brand into the retail market. Also, it has become just as important for retail-only (brick and mortar) brands to move their product to a digital storefront, giving customers the choice and raking in sales from many directions.
No matter where your product made its first sale, to reach a maximum audience, it’s important that it makes it to retail shelves and onto virtual ones. While there are many areas to consider when entering a product into a new market, the logistics of moving from DTC or business-to-customer (B2C) to business-to-business (B2B) are where order fulfillment can get overwhelming. That’s why outsourcing your B2B order fulfillment to a third party like WSI can be highly beneficial.
The Direct-To-Consumer Process
DTC fulfillment is (usually) a three-step process: manufacturer to wholesaler to consumer. However, B2B can be a part of an even longer process: manufacturer to wholesale to distributor to multiple retailers to consumer. This is oftentimes a big leap for sellers and presents certain challenges, but that is where a 3PL with retail compliance and freight brokerage service (FBS) can be of assistance. Additionally, understanding the nuances of LTL and FTL shipping can make this transition smoother.
When a B2B shipment goes out, it’s typically a large-volume single order, or there may be a few large-volume orders. Depending on which retailers a brand is shipping to, they may have different requirements for how the products need to be packed and labeled to avoid chargeback fees. Managing the different requirements of retailers and end-consumers all at once can be overwhelming for a B2C brand that has not had the experience of high-volume orders before.
WHAT IS B2B ORDER FULFILLMENT?
In short, B2B order fulfillment is the process through which your business delivers anything to another business, typically a retailer or distributor. The most distinguishing factor of this form of fulfillment generally is the size of the orders being processed. If you’re shipping goods to another company, chances are you’re sending a bulk shipment. This provides the retailer with a large enough inventory to meet consumer demand on its end. It also ensures that they don’t have to place countless smaller orders that would consume their time and potentially introduce more delays into the process.
Because these shipments are usually sizeable, great care must be taken at every step along the supply chain. Whether you handle fulfillment in-house or rely on a third-party logistics partner, it is crucial that orders are filled accurately, efficiently, and carefully. Any mistakes in terms of packing, labeling, or shipping could mean much more than the loss of a single item — it could mean your entire product line misses its chance to get in front of consumers in a timely fashion. You can also expect some fines. Therefore, the key qualities to look for when choosing a partner should be efficiency and cost-effectiveness.
WHAT IS B2C ORDER FULFILLMENT?
Selling directly to the consumer means each shipment is generally much smaller than those of B2B fulfillment. However, in contrast to dealing with other companies, individual consumers have many different expectations of you. Whereas retailers are ordering with an eye toward meeting demand in the future, shoppers typically want their orders filled immediately.
The rise of Ecommerce and giants such as Amazon has raised the bar in terms of what most people expect when they buy something online. This often means next-day shipping, if not same-day. Any delays or mistakes that occur along the way have the potential to seriously damage your reputation.
Because B2C orders are filled as single items most of the time, there’s also a heightened expectation in terms of the condition in which they arrive. Whereas B2B shipments tend to be palletized bundles that feature additional packaging to protect them during shipping, B2C orders must be handled with more care because any damage that occurs during the process will reflect badly on you as a company.
When it comes to selecting a partner to handle this aspect of your logistics, the most important elements tend to be customer support, speed, and value-added services such as free shipping. Offering consumers a means of tracking their orders so they know exactly when to expect them is another crucial feature that can help build confidence in your brand. Providing your buyers a way to communicate if they have questions or concerns about their orders also is another element that should not be overlooked.
Differences Between B2C Fulfillment and B2B Fulfillment
One of the challenges brands may face when comparing B2C fulfillment and B2B order fulfillment is encountering new issues with the supply chain and having to avoid out-of-stock products due to their growth in order volume. This is where efficient inventory management plays a pivotal role.When products go out of stock, they create unnecessary slowdowns in sales for both the brand and the retailer they are selling through. Furthermore, big-box distributors or retailers will impart fines for products that drop below service level requirements. This can prove costly and detrimental to your business’s bottom line if you are not well prepared..
On the opposite side of under-stocking is overstocking. Improper forecasting of a product within a market can backlog manufacturing and operations, and if your product has an expiration date, it can be costly to lose inventory to spoilage. The managing of supply in terms of weeks for large retail outlets is arguably the biggest challenge when it comes to newly retailed products.
Additionally, there are multiple distribution centers, and they aren’t necessarily going to be identical in terms of product consumption. A misstep in any of these crucial phases of B2B order fulfillment without appropriate adjustments can be costly for everyone in the process — the product owner, the distributor, the retailer, and the customer.
Differences Between DTC and B2B Order Fulfillment
A big difference between DTC and B2B order fulfillment when selling through retail outlets lies in fulfillment negotiations. This involves more than a customer checking out their online shopping cart. Sometimes it requires extra time before processing even begins. Paperwork and response time for things like requests for quotes, approval, and negotiations can sometimes take days or weeks.
When a retailer has buyers looking for products to stock their shelves, part of these buyers’ job description is to get the best price on products they think will sell and with the best profit margin. Bulk discounts are part of the game, and it is something that just doesn’t apply to B2C fulfillment.
In addition there are three main stages of any order, whether you are selling to another business entity or directly to a consumer. These are the pre-purchase phase, the purchase phase, and the post-purchase phase. Although each type of fulfillment goes through these stages, there are some significant differences to each approach. Here’s how these shake out:
PRE-PURCHASE
- Pricing: It should go without saying that an order consisting of a pallet of winter gloves will cost more than a single pair. In addition to that, however, there is another key distinction between B2C and B2B transactions. Consumers pay a standardized price for items, but the price for B2B orders may be impacted by several factors such as whether the order is recurring, the quality of the working relationship between the manufacturer and the retailer, or the overall size of the order.
- Revenue: Once again, the nature of the transaction makes the revenue per order significantly different between each type of fulfillment. A single B2B purchase may be in the form of a contract that lasts years and totals millions, whereas a single B2C order is typically a one-off that brings in only the revenue from a solitary item.
- Relationship: Brand loyalty may lead consumers to purchase additional items from a company over the years, but typically this happens on a case-by-case basis. On the other hand, B2B contracts are created with the intent to build long-term commitments for the mutual benefit of both companies.
PURCHASE
- Instigating the sale: An individual shopper might be inspired to make a purchase based on a specific need or whim. Businesses, however, make orders based on extensive planning and forecasting that estimates expected demand and market trends.
- Making payments: Generally, a B2C transaction is as simple as the customer providing payment information and the vendor shipping the item. B2B sales, on the other hand, are based around credit and involve the issuance of invoices to be collected later.
- Order sizes: As mentioned before, orders made by businesses tend to be much larger and more expensive than those made by individual consumers.
POST-PURCHASE
- Fulfilling the order: Because consumer purchases generally involve shipping singular goods, they can usually be filled much faster than those made on a B2B basis. In addition, orders placed by businesses may require specialized shipping and handling methods, such as for perishable items.
- Reverse logistics: If a consumer receives an item that does not live up to his or her expectations in any way, returning it or getting a refund is a straightforward process. In the B2B world, the stakes are much higher. This usually involves the additional wrinkle of insurance and contract language surrounding the process for handling liability and losses.
- Customer service: The relationship between both sides of a B2B transaction is incredibly important, with vendors trying to build successful partnerships that should provide stability and security for years to come. When it comes to B2C fulfillment, all that matters is providing the goods ordered in a timely fashion and leaving the door open to answer any questions or concerns that might arise in the meantime.
Shipping Timelines
Another aspect of B2B order fulfillment that draws out the timeline is shipping. It costs more and requires rules to be met in handling, labeling, invoicing, and routing guides for the various retailers. In addition, there are also federal regulations that must also be met. If these rules of fulfillment that are part of a business contract are not adhered to, the retailers will again impart penalties on top of chargebacks. This can lead to smaller orders in the future or an all-around severing of the business partnership.
Contact WSI for Your Fulfillment Needs
Fortunately, all of these potential obstacles can be avoided, and the best way to handle them is to let a professional FBS assist your company in transitioning over to fulfillment for B2B, so you don’t get behind before you even get a chance. Let WSI help with your transition from B2C fulfillment to B2B order fulfillment. We have the experience and knowledge to provide the service you require to start selling your products at the retail level. Get in touch with us today!
