Tech Bytes: Three Reasons to Consider Direct Store Delivery

Direct store delivery (DSD), which involves shipping products directly to stores from suppliers and bypassing the retailer’s warehouse or fulfillment center, is not a new idea.



However, several industry developments have made DSD a more attractive and feasible option in many instances. Here are three reasons for a retailer to consider launching a DSD program.



Share and Share Alike

Effectively managing a DSD effort requires a large amount of data-sharing between retailers and vendors. The idea of sharing anything resembling competitive information with a supply chain partner was long anathema to retailers. However, in the last 10-15 years, supply chain data-sharing has increased.



This base level of shared data eases the process of starting up a DSD program. In addition, cloud-based interconnectivity and the emergence of solutions that process, store and distribute mass quantities of data make sharing information more practical. Add in a plethora of collaborative dashboard tools that provide multiple users one real-time “version of the truth,” and advanced data-sharing becomes a reality.



Turn, Turn, Turn

Traditionally, DSD has been primarily used as a strategy in retail verticals with frequent product turns, such as grocery and fast fashion. However, the entire nature of the “product turn” has been altered enough by the emergence of omnichannel to make DSD applicable to almost any vertical.



Traditionally, most retail verticals have sold products with the idea the consumer will not need to replace it for at least a season (as in apparel) or even longer (as in consumer electronics). There was no great need for DSD in these verticals, as products could be delivered in bulk from the warehouse and not replenished for an extended period of time.



However, with consumers now often able to reach a retailer’s entire inventory at will, the whole notion of preplanned product turn is almost obsolete. In the old days, consumers understood that once winter items were sold out of stores they were gone until next winter, even if unseasonably cold weather lasted well into the spring.



Today’s omnichannel customer expects to be able to buy the products they need, when and where they need them. DSD enables retailers to keep their brick-and-mortar stores nimble and responsive. This is especially important as frustrated store shoppers can easily turn to online retail platforms and marketplaces, where general product availability is much higher.



Here and Now

As part of the move to an omnichannel retail landscape, stores are increasingly taking on the role of fulfillment centers. Customers have come to expect “buy online pickup in store” services with very short windows to have products ready and waiting for them, and in-store return of online purchases is also becoming the norm.



In addition, customers who enter a store and are told the item they want is out of stock expect the retailer to fulfill their order from a nearby store. Failure to do so can result in permanently losing the customer, let alone the sale.



Thus product needs to be delivered to the store as quickly and efficiently as possible – with DSD one valid option. DSD is not the right answer for every retailer or every product, but is worth investigating even for retailers who don’t sell perishables or teen fashions.