The traditional model
Traditional models of distribution are expressed in a linear way – the relationship between manufacturer, wholesaler, retailer and the end user: a one-way journey with little room for imagination. People made a product, people sold a product, different people on-sold that product.
It meant that once a deal had been sealed with a retailer, particularly a large one, manufacturers could feel safe in the knowledge that there was a revenue stream coming in.
Commodities meet communities
A 2012 PWC report, The future of retail – Consumer adaptive retailing, highlighted the importance for retailers to exist in the same world as their customers, making distribution and the supply chain an integral part of the customer experience, sitting alongside support functions, marketing and the in-store environment.
It stated that “With the advancement and penetration of digital mediums, retailers looking to future proof their businesses not only need to provide customers with a seamless experience across multiple touch points, but must integrate all processes and business systems.”
Further, they stated that “Businesses with an inability to recognise, enable and efficiently manage new channels put themselves at risk of being targeted and outplayed by disruptors and channel specific intermediaries that focus on uncovering these weaknesses and providing solutions for gaps in the market.”
For direct-to-consumer beauty supplier, bellabox, the distribution method is included in the marketing strategy. CEO of bellabox, Sarah Hamilton, says that posting photos of the boxes leaving in the warehouse generates strong engagement from their community.
“bellabox allows people to slow down and give serious consideration to the products included, we protect the opening experience by creating a consistent product that is delivered to their door after anticipation is built through tracking updates.
“Our ‘shipping photo’ on Facebook results in the highest engagement, members are excited as soon as they know that their bellabox is shipped until well after it arrives.”
And so, the direct to consumer model was born, and businesses like Catch Of The Day, a direct-to-consumer deals website, arrived to create experiences for their customers that weren’t reliant on the traditional touch-points or bricks and mortar stores.
Head of Logistics & Supply Chain Operations for The Catch Group, Jon Northorpe, said technology had drastically changed how they do business, eventually resulting in robots to pick stock.
“The mainstay of the Catch product based businesses, Catch of the Day, had traditionally operated as a “flash” sale business. Put a “Great Deal” on the website, leave it there for three days or until it had sold out, process the customer order, pick, pack and ship.
“As the business model matured, the number of products available for sale increased and through 2013 grew from 7,000 to 13,000 items. By late 2013, the operation was picking orders from approximately 3,000 unique products a day.
“Ultimately the only real way forward was the introduction of technology to assist with the picking process. To this end the Catch Group has installed a 25,000 tote AutoStore robotic picking system.”
The system, which picks and delivers product to four operators who manage them out of the building has had dramatic efficiency gains.
“These four operators now pick the same volume of orders 60 staff used to pick in a “Goods to Person” environment.”
Go to your future customers
But the evolution is not complete. Businesses are continuously searching for new ways to get their product out there, forming partnerships, utilising new technologies and seizing opportunities to talk to a new audience.
One example is gelato retailer, Gelato Messina, who partnered with Uber last year to deliver their renowned product to Uber customers in celebration of an international Uber Ice Cream Day. As well as the positive press they got out of the partnership, they put their product into the hands of customers across the country.
It shows how much distribution has changed: Products used to be delivered by trucks to retailers. With a bit of creativity, Messina used limousines.