Direct store delivery (DSD) is the method of delivering products from a distributor directly to the retail store, bypassing a retailer’s warehouse, with the brand or wholesaler managing the product from order to shelf. It could shake up a dangerous unsustainable business model (against small businesses) now with direct to consumer Internet shopping taking over the world in rapid, fast to home delivery. We won’t mention the retailer here so they won’t get more Internet juice than we think they deserve. Because frankly we want real stores to stay in business.
Traditionally the key strengths of this DSD model are that it provides quicker distribution; increased flexibility and reduced out of stocks. However, due to the challenges we will discuss below, the direct store delivery model is now facing competition from alternative distribution options.
So, how can the model evolve to meet present-day challenges and remain a valuable tool?
Up until now, most brands and wholesalers have used processes that offer excellent direct store delivery logistics, but according to experts, future processes will need to combine the capabilities of those logistics with sales and marketing activities to stay relevant.
What are the challenges for the direct store delivery model
According to a survey by Honeywell, 49% of organizations feel increased transportation costs have severely impacted profit margins in the past 12 months. These costs include transport, labor and warehouse costs. In addition, retailers want lower prices due to the increase in competitors constantly attempting to take their market share.
Therefore, to reduce costs, many brands and wholesalers are looking to combine other aspects of the sales process with DSD.
What is the future of Direct Sales Delivery?
To answer this question effectively we can briefly look at the requirements of each of the stakeholders and see how technology can help the DSD model to solve the issues.
What are the objectives of the brand or wholesaler?
- To deliver the right quantities according to each order.
- To avoid empty shelves.
- To receive payment as per agreed credit terms.
- To collect point of purchase sales information.
The latest technology means that sales software is now well equipped to manage all of the above requirements. B2B sales reps can visit each customer in their region and gain a full 360° picture of all the goods and products they have. They can take new orders to ensure there are never empty shelves, check customer payment terms and collect all the point of purchase data they need. All from one device and one solution! In addition, all this information can be seamlessly synced with the office and management to help predict future sales.
What are the objectives of the retailer?
- For goods to be available in the store at the right place at the right time
- To reduce distribution costs
- To reduce losses/breakages during transportation
Again, DSD as a solution can help. It will ensure the right goods are delivered to the right place at the right time. With the DSD model, the supplier pays for the cost of transportation, meaning a reduction in the retailers’ distribution costs thus increasing his margins. By transporting the goods directly to the store there is less chance of damage.
What are the retailers customer’s objectives?
- To always find the goods they want on the shelves.
- To see presentable and attractive displays.
Part of the beauty of a modern DSD solution is that it always ensures the right goods are available at the right place and at the right time.
What does the future hold for DSD?
The direct store delivery model of the future offers much more than just delivery information. With the capability to boost field staff productivity, optimize distribution logistics, provide ERP inventory and sales information, and more, it’s a timeless solution.