A $2.5M Savings Success Story for a Seasonal DTC Brand

Case Study: Seasonal Direct-to-Consumer Brand

A direct-to-consumer (DTC) company with gross sales of more than $200 million engaged Global Logistics, Inc. (GLI) to manage and improve its freight program. GLI worked with the client for more than five years, until the company was acquired by a venture capital firm with its own logistics team.

The client shipped from a distribution center in West Virginia, and its business was highly seasonal: more than 40% of annual sales happened between Thanksgiving and Christmas.

Project 1: Fixing the Inbound Bottleneck

The client had hundreds of vendors, each shipping into the distribution center prepaid (or prepay-and-add) on the carrier of their choice. During peak season, too many trucks were waiting in the yard to be unloaded. Some waited for days.

GLI changed all vendor shipments to freight collect. With freight removed from the product price, the client's purchasing team renegotiated product pricing. And with control of the carriers, GLI cut the carrier base from potentially hundreds to just three: one transcontinental LTL carrier, one regional LTL carrier and one small package carrier.

During a December visit to the distribution center, GLI spotted another major inefficiency. Receiving staff were partially unloading trailers to hunt for back-ordered products, then reloading everything else and sending the trailer back to staging.

GLI worked with the purchasing team to build a simple daily process. The DC team received a back-order report every morning and sent it to the carriers, who isolated back-ordered shipments into dedicated trailers. Those trailers were delivered and unloaded first each day. The change saved the DC team hours per day and got back-ordered products into inventory the same day. GLI also helped purchasing consolidate purchase orders, moving volume from LTL to truckload.

The new strategy virtually eliminated receiving bottlenecks, which meant smoother operations and fewer stock-outs. Other results:

• Far fewer expedited shipments during peak season
• Even with more than one million additional pounds of freight received from October through December, no trailer sat on the property for more than 24 hours
• Net inbound freight savings of more than $600,000 in the first 18 months

Project 2: Redesigning Outbound Small Package

For holiday shipping, the client was using a mix of FedEx, UPS, a mail consolidator and USPS Priority Mail. After a detailed analysis of historical shipping data, GLI negotiated with the parcel carriers and reduced the program from four carriers to three. Along with net savings of more than $500,000 in year one, the client saw:

• An immediate, dramatic drop in customer complaints and inquiries
• One day faster transit time to the West Coast, New England and Florida
• Better visibility on small package shipments

The following year, GLI refined the program again, moving from three carriers to two. The more efficient carriers further reduced customer complaints, improved West Coast transit time by another day and improved shipment visibility.

After the second carrier reduction, the client saved more than $2 million in the first year.

The Bottom Line

By taking control of inbound freight, fixing receiving workflows and redesigning the outbound parcel program, GLI helped this seasonal DTC brand save more than $2.5 million while improving service during its most critical weeks of the year.