Balancing Your Direct-to-Consumer
and Retail Business: An Operations
By Tony Sziklai
Many DRTV marketers consider in-store retail a key plank in their strategy. Finding it
harder to profit (let alone break even) on
traditional DRTV, these marketers are developing more sophisticated, multi-prong campaigns that
include Web marketing, upsell, continuity and retail push-es. They are launching more products and testing more offers, all to create a “long tail” business that is not dependent on a hit and that can thrive long after a spot or
infomercial runs its course.
Few will deny that these types of campaigns can be
complex and operationally challenging. Nowhere is this
more evident than retail, where marketers are faced with
get-it-done-yesterday trading partner setups and unreasonable shipping deadlines, among other issues.
To be successful, multi-channel DR marketers must understand how retail distribution works. Following are a few
tips for both the novice and seasoned DRTV marketer:
1Know how retail works from cradle-to-grave.
Direct-to-consumer marketing is very different from retail distribution. Before jumping into retail, learn how retail buyers,
trading partners, rep firms, vendors and third-party fulfillment companies work together to generate and fulfill orders. Understand the rules of engagement, the roles and
responsibilities and each trading partner’s contract terms
and policies. And finally, know your limitations.
2Understand what your third-party fulfillment partner offers in systems and operations. Third-party fulfillment
companies play a critical role in the retail distribution
process. Marketers must learn how their EDI and order
management systems work. Determine whether they provide online reporting, real-time inventory tracking,
scanned receiving reports and bills of lading.
3Involve your fulfillment partner early in the setup process
with your trading partners. After you negotiate a deal
with a given trading partner, pass the item setup forms,
freight terms and vendor compliance
guides on to your fulfillment partner.
Some retailers, such as Wal-mart, are
strict about who can access their sites. If
your internal employees are the only ones
allowed to access a site, make sure they
are passing the relevant information on
to the fulfillment partner in a timely
4Help your fulfillment partner establish healthy relationships with the logistics and chargeback departments of
your trading partners. Make sure you distribute contact information to everyone involved. Set up a meeting before
the first order drops to make introductions and discuss expectations. A relationship vacuum can often result in
5Before the first purchase order (PO) arrives, know
whether it will be automated or whether it will require
manual data entry. You may need to set up EDI for the first
order, or you may be able to exchange documents using a
Web portal, where you can download and upload documents manually. If the retailer is small, you may receive
purchase orders via E-mail or fax. Make sure you have a
foolproof system for tracking and entering these orders.
6Know the inventory demands of trading partners and what
manufacturers can handle. Take into consideration your
media schedule and plan for direct-to-consumer order
spikes. If your inventory is stuck on the water and won’t
get to your fulfillment partner on time, work with them to
establish a realistic timeframe and get an extension.
7Over-communicate with your fulfillment partner on forecasts and trading partner expectations. Marketers that
are disorganized often surprise their fulfillment partners
with orders that need to drop in less than 48 hours. This
can lead to extra rush charges and put orders in jeopardy
of not hitting their delivery dates.
8Understand each trading partner’s distribution requirements. While it is the fulfillment company’s responsibility to know how to pack, palletize, label, mark, route
and ship product, it is important that marketers familiarize
themselves with each partner’s distribution requirements.
9Work closely with your fulfillment partner on chargebacks. The most important thing you can do to reduce
chargebacks is maintain constant communication with
your fulfillment partner. Use the fulfillment company’s on-line reporting system to track new purchase orders and
make sure acknowledgements, advanced shipping notices,
invoices and other EDI transactions are transmitted within the required timeframes.
DRTV marketers who want to develop a retail business
need to understand how retail works from the moment a
deal is cut to the moment goods land at a store or distribution center. The marketers who are masters at this are the
ones who know how to turn DRTV into retail gold. ■