Retail fulfillment is complex–a delicate symphony that requires perfect timing and orchestration to get products where they need to be efficiently, cost-effectively, and intact.
When an ecommerce brand expands into brick-and-mortar retail, they must start looking at their fulfillment as business-to-business (B2B), not just direct-to-consumer (DTC).
With DTC, a business sells products directly to the end user through its own ecommerce site. However, when it’s time to spur growth, many DTC brands venture into other channels, such as marketplaces (Amazon and Walmart) and brick-and-mortar stores (Target, Whole Foods, Costco).
This means increasing logistics capabilities as well. And with more logistics to handle, the role of a strategic partner becomes critical to streamlining retail operations. A 3PL’s retail fulfillment playbook can make all the difference in successfully expanding into a new sales channel.
What is retail fulfillment?
With DTC fulfillment, each customer order is sent directly from the warehouse to the customer, while in retail fulfillment, the orders are typically larger, sending many items to retail establishments where consumers can browse and buy in person.
Retail fulfillment (B2B) differs from ecommerce fulfillment (DTC) in scale, complexity, and compliance. While DTC fulfillment involves shipping individual orders directly to consumers, B2B fulfillment requires processing bulk shipments that must meet strict retailer requirements, including specific packaging, labeling, and delivery schedules. In addition, B2B fulfillment often involves EDI integration, coordinated logistics, and strict compliance standards to avoid costly chargebacks and help streamline retail distribution. This creates a difference in fulfillment methods.
Because B2B fulfillment requires more operational savvy, there can be additional challenges and complexities.
The challenges and benefits of retail fulfillment
Retail fulfillment challenges span everything from complicated retailer requirements to handling returns. Understanding how each will affect and add to your current fulfillment operations is essential to creating a successful strategy.
Challenge #1: Navigating retailer requirements
Each retailer has its own set of requirements, including:
- Order formatting. Retailers require that brands adhere to specific order formats. This includes EDI-compliant purchase orders, invoices, and Advance Shipping Notices (ASN). Fulfillment operations need to standardize order processing and automate where possible to prevent delays and transmit data seamlessly.
- Packaging. In retail fulfillment, brands must follow retailer-specific packaging guidelines. This may include everything from carton sizes and weight restrictions to protective materials. The goal is to prevent damage and meet compliance standards.
- Labeling. Retailers need barcode labeling–UPC, GTIN, or SSCC codes–to track inventory and facilitate receiving. Each label should be applied correctly to help distribution centers scan quickly and accurately.
Challenge #2: Maintaining inventory accuracy and demand forecasting
Impeccable inventory management is crucial for retail fulfillment. This consists of inventory accuracy and demand forecasting. Think about a restaurant: if the ingredients the kitchen orders and keeps in stock for the chef are wrong, over-ordered, or under-ordered, then you risk not having the right ingredients for the menu, running out of food, or food waste.
Sending the wrong or inaccurate amount of stock can cause brands (and retail stores) to have empty shelves, missed sales, or overstock. Accurately forecasting and maintaining inventory leads to better partnerships and happier customers because the right stock and amount of items are available during the right seasons.
Challenge #3: Meeting delivery timelines
On-time shipments are critical in retail fulfillment. Large retailers will often require strict delivery windows to prevent missed sales opportunities or seasonal and promotional windows. When things aren’t done in a timely fashion, there’s a risk of stockouts, chargebacks, lost shelf space, contract termination, fines, or rejection of late shipments.
Long story short? It’s in everyone’s best interest to adhere to timelines. Otherwise, both the brand and retailer run the risk of loss of profits and reputation issues.
Challenge #4: Handling reverse logistics
Unfortunately, returns are a part of retail. Late last year, the National Retail Federation expected returns to reach $890 billion in 2024, and retailers estimated that 16.9% of their annual sales in 2024 would be returned.
So, who handles returns made to a retail store? When a brand’s item is returned to a large retailer, like Walmart or Nordstrom, the brand still incurs some of the costs and logistics. For example, inspection, restocking, or shipping.
While the challenges can be minimized with a solid strategy and strong operations, brands can also reduce the learning curve and minimize disruptions by working with a strategic partner, which is why it’s important to know when it’s time to partner with a 3PL.
The Benefits: New channel, potential growth
Brands looking to grow must find new ways to generate revenue. Expanding into brick-and-mortar stores can be an excellent channel that benefits the bottom line. Not only does it widen brand presence and customer reach, but it can increase order volumes and revenue growth. Working with retail partners can strengthen brand credibility as well. And as many brands learned during COVID-19, diversifying sales channels is essential for reducing reliance on a singular sales stream.
It’s also a good time: According to MIT Sloan, shoppers are finding their way back to brick-and-mortar stores. Despite the higher growth rate of ecommerce sales, Forrester forecasts that physical retail will make up almost 80% of global retail sales in 2025, which is why more brands are expanding into retail.
Retail compliance and EDI
Retail compliance means adhering to rules that retailers set. In retail fulfillment, this covers the packaging, labeling, and timelines. For brands to stay on a retailer’s shelves, they must comply or run the risk of chargebacks, rejected shipments, or worse, losing a partnership.
That’s where Electronic Data Interchange (EDI) comes in. Think of EDI as a universal translator between your business and retailers, automating order processing and eliminating the need for manual data entry. It ensures that purchase orders, invoices, and shipping notifications are sent quickly, accurately, and in the format retailers expect. Without EDI, keeping up with large-scale retail fulfillment would be a logistical nightmare filled with costly errors and delays.
But, not to worry! Retail compliance is made easier with an experienced fulfillment provider. A 3PL featuring EDI integration and retail compliance expertise helps brands keep orders accurate and on time, handling the logistics and letting businesses stay focused on growth.
How to get started with retail fulfillment
With the right approach to retail fulfillment, brands can set themselves up for success from day one.
Step 1: Organizing your retail fulfillment strategy
Know your retail partner’s requirements before creating a strategy–these rules will direct how you’ll handle each order’s packing, labeling, and shipping. Establishing a system beforehand to manage inventory across all your sales channels is also crucial to prevent overstock and stockouts.
Step 2: Optimizing order processing and logistics
Efficiency is vital to successful order fulfillment, especially as you scale and grow. Brands often turn to fulfillment partners that are highly experienced in retail logistics to get help with scaling operations while maintaining speed and accuracy. However, if a brand chooses to go it alone, it’s important to optimize each phase of the order process, from picking and packing to shipment, making sure that each order is retail-ready.
Step 3: Managing retail shipments and deliveries
Visibility has become a central strategy in fulfillment operations. In an omnichannel world, brands want (and need) to know where inventory is in real time. It allows businesses to keep track of when orders are packed and shipped and when they need to reach their destination.
While following these steps puts brands on the right path, partnering with an experienced 3PL can make all the difference.
Partnering with the right 3PL for retail fulfillment
An experienced B2B fulfillment partner can optimize your operations. They bring expertise that allows you to better navigate retailer requirements, helping you avoid challenges and the consequences that come with them.
With so many options available, evaluating a 3PL based on key factors is crucial to finding the right fit for your business. Here’s what to consider:
- Proven experience in B2B and retail fulfillment
- Technology and system integrations for real-time tracking
- Scalability to support growth and seasonal demand
- Customization options for kitting, bundling, and packaging
- Performance metrics like accuracy rates and on-time deliveries
- Strong retailer relationships and compliance expertise
Get started with an experienced 3PL retail fulfillment partner today. Connect with a Kase B2B order fulfillment expert here.
