Optimized Virtual Inventory Logistics Will Keep Dads Happy on Father’s Day
Consumers spent approximately $13.3 billion on Father's Day gifts last year, and 30 percent of that came entirely from online purchases. That number will only increase this year, and CommerceHub estimates that one-third of the products consumers order for Father's Day this year will go untouched by the retailers that sell them. Instead, suppliers will warehouse this virtual inventory and then deliver products directly to consumers through third-party fulfillment via drop shipping or marketplaces.
Leaving one-third of inventory untouched poses risks for any brand. Maintaining retailers’ levels of customer service, quality and shipping standards are just a few of the issues left up to chance with this practice. The biggest issue left unresolved is on-time delivery. While typically an issue we only associate with during the holidays, all major gift-giving holidays experience the same chaos.
Delays in delivery typically result from retailers that aren't handling their own inventory. These retailers are often unaware of where their inventory is actually located. This lack of information makes it impossible for them to give accurate delivery estimates. In effect, consumers suffer in one of two ways: their orders arrive late or they overpay for expedited shipping. Consider the following possibilities:
- Late arrivals: If the products originate in a location far from the destination, the shipping process takes longer. That's no surprise. The problem ties back to the fact that many retailers don't know the origin of the goods being shipped by third-party sellers, so they can't give accurate delivery estimates.
- Overpaying: To avoid the first pain point, many consumers are willing to pay for expedited shipping to ensure their Father's Day gifts arrive on time. However, sometimes they unnecessarily pay for this service. If the supplier is close to the customer, shipping takes less time, so their package would arrive in the standard shipping time.
With the growing popularity of virtual inventory, which allows retailers to expand their product assortments by routing orders to manufacturers or distributors for direct fulfillment, brands have lost control over the shipping process. With less than one week to Father's Day, that means retailers could be challenged to ensure their products are delivered by Sunday.