Retail Distribution And Order Fulfillment: What You Need To Know


Retail Fulfillment TipsAs a product supplier looking to enter the retail market, you understand that retail distribution and supply chain management are incredibly complicated.

To successfully navigate the retail supply chain, there are three core components to the process you need to know. Once you understand the complex aspects of the retail distribution business, you’re then highly capable of achieving growth while maintaining a competitive advantage.

Chargebacks: Don’t Fall For It

Retail chargebacks from the retailer’s distribution center are similar to a bank’s overdraft fees, and they represent a significant drain on your profitability. These chargebacks are a major moneymaker for retailers.

Each retailer has its own set of shipping rules, and if you don’t follow those rules, you incur a chargeback. Each store also has its own set of penalties for various infractions.

As a vendor, handling these deductions is a never-ending battle. You need to fight chargebacks with documentation or data, and some retailers are easier to fight than others.

It’s better to fight the chargebacks, even if you’re not refunded for them. If the retailer knows you’re going to fight its chargebacks, it is less inclined to charge you going forward. But, don’t just fight every single chargeback – only do so when the charge is wrong or it would seem the retailer is just fishing for chargeback payments.

When you partner with the right third-party logistics (3PL) provider, they are familiar with the various retailer chargebacks and are capable of effectively fighting these deductions for you.

Trading Partner Familiarity: Each Store Has Its Own Requirements

Every retailer’s store requirements are unique. The retail supply chain involves thousands of retailers around the world that are supplied with goods from tens of thousands of suppliers like you.

Participants in this retail supply chain include distributors, carriers, expeditors, freight forwarders, consolidators, manufacturers, order fulfillment providers and sourcing companies.

Along with labor-intensive processes between trading partners, each retailer imposes its own set of specific workflow rules and data standards. These “rulebooks” vary based on a retailer’s size, industry and technological capabilities. As a supplier, you must accommodate different rulebooks for each retailer.

Some major differences among retailers:

  • Timing – Stores want the product delivered within a very small and exact window. They don’t want it early (that creates a problem of where to put the inventory), and they don’t want their stores running low on product and high on empty shelves.
  • Splitting Orders – There are a variety of retailer rules dictating when to either 1) consolidate multiple stores’ orders into one and then ship to the store’s distribution center or 2) split orders out to each store and then ship directly to the stores.
  • Transportation – Some retailers have specific trucking companies they want you to coordinate with, and those trucking companies each have their own way they want you to communicate and manage the order status.

Partnering with a 3PL that already has trading partner familiarity is going to simplify (and even enhance) order fulfillment for retail distribution significantly.

EDI: Experience And Easy Integration Matter

Since big box retailers have such specific requirements with no margin for error, accuracy is paramount. Trading documents such as orders, invoices and delivery schedules weave a complex tapestry of order fulfillment.

The only way to truly navigate this process is to partner with a 3PL that is capable of handling or interfacing with a third-party EDI provider for complete integration of every link in the retail supply chain.

When you partner with a 3PL with the best EDI technology, you’re ensured accurate retail distribution, as well as a retail supply chain that’s smooth and predictable, while also keeping your shipping costs competitive.

Ready to learn more about optimizing your retail distribution and order fulfillment? Call 800-808-3304 or click here to speak with a 3PL expert at Moulton Fulfillment


About The Author

Patrick Moulton specializes in logistics and marketing with 15 years of industry experience. He is currently enrolled in the USC Marshall School of Business Executive MBA program.