Dotcom Distribution: Retailers Rake it in, Supply Chain Dish it Out

It’s a BIG year for the dotcom retail industry, not to mention the entire business surrounding dotcom distribution. December 2017 is giving the supply chain industry a run for their money. Tis’ the season to gift and more than ever people are choosing to purchase their items online. You no longer need to head to your local mall or department store. Why would you? You can shop freely online with many dotcoms offering international shipping, secure checkouts and accurate product descriptions. Although online shopping is nothing new, dotcoms of 2017 have managed to sway the masses and even the finickiest of shoppers. Cyber Monday 2017 spoke for itself.

Cyber Monday was reported to be the biggest online shopping day in U.S history at $6.6 billion in spending. “We’re seeing significantly higher growth in online spend this year,” Mickey Mericle, vice president of Adobe’s Marketing and Insights says about Cyber Monday. “Every day in November has been a billion-dollar day, and we’re predicting that we have more than twice the number of $2 billion shopping days this holiday season — that’s an incredible milestone.” Dotcoms are making a killing this season. However, the most fascinating aspect of this is arguably the question of: how will these retailers follow through?

Let’s start from the beginning. You get an email promotion from your favourite retailer, or Facebook and Instagram display a tempting sponsored ad, so naturally you click it. In the past, you might have wasted 20 minutes of your time browsing, before deciding to click out and get back to work. But companies are getting smart. They’re making it easier for us. No more endless scrolling to find the product we want. There’s direct linking to product pages, from apps mimicking Instagram. There are clear product descriptions, with detailed sizing charts for items like clothing, that we would never have tried buying online in the past. Autofill has been king of keeping people loyal to their impulse buy. And most notably, we’re not restricted to buying on our computers anymore. Almost half of online shopping for Cyber Monday was reportedly done on mobile, which would allow a customer to buy whenever they feel like it. All of this to say, the dotcom industry has wooed us into “Checking Out”.

Now, what happens after you receive your email order confirmation? Who are the people that honour Amazon or Walmart’s 10 business day shipping commitment to you. You would be surprised by the process taking place behind the scenes. One way of referring to this is the dotcom distribution. Amazon put together a great advert for this holiday season, showing a little bit of what your package goes through:

Once you submit your order, a purchase order is then processed by the retailer and is either sent to a 3rd party EDI (Electronic Data Interchange) provider or directly to the supplier/3PL. A purchase order communicates requested ship/delivery dates, your address and other details. This starts the chain of command and communicates electronically what the retailer has promised you, the shopper. Seldom is anyone picking up the phone to call another company over your order. Too many orders to process and therefor technology does it for us.

The EDI documents are received by fulfillment and processed in their WMS. Small companies may be able to fulfill online orders using their own resources, along with a shipper such as Fedex or UPS. Larger retailers may rely on third party resources (3PLs). These 3PLS handle inventory, prepare orders and ship. Sounds like a basic structure, but infact is quite interesting to witness. CNBC discusses Dotcom Distribution, (conveniently) the name of a large distribution operation out of New Jersey, dealing with name brands. “Heading into the peak of the holiday shopping season, Dotcom runs operations 24/7 at its 400,000-square-foot warehouse in Edison. The building’s landlord, Prologis, has watched its stock climb more than 25 percent this year because of renewed warehouse demand…Upon entry, the warehouse spans aisles and aisles, with shelves reaching as high as the building’s 40-foot ceilings, each stacked with merchandise. Retailers are sectioned off throughout the floor, keeping inventory organized. There’s also a corner dedicated to handling returns. ” (Thomas, “As Cyber Monday sales surge, the race is on to deliver all those orders”).

It’s pretty impressive how extensive some of these operations are. The reality is, with the quantity of online purchases, businesses and the dotcom distribution chain must adapt. Once suppliers or 3PLs fill the order, a few steps take place. They send an ASN (Advance Shipment Notice) back to the retailer containing shipping and packing information , which is processed through the EDI provider. The supplier schedules a pickup appointment with  carrier’s like Fedex or UPS. An EDI transaction, known as an ‘856’, is also sent back to the retailer confirming the shipping and packing information. The carrier makes a stop at the supplier to pickup the product and drops it off at your front door – or close to it. Alternatively, it could be delivered to you by the 3PL. It’s reported that for the holiday season of 2017, an estimated 2 billion deliveries will take place by UPS, FedEx and the U.S Postal Service System.

Now you have an idea of what it takes for retailers to get little Tommy his remote toy before Christmas Day. The supply chain industry, especially within dotcom distribution, are constantly looking at ways to be efficient and ensure that their clients are happy. They also never want to let the customer down – even with a major surge in online shopping. In a holiday sense, it’s like a modern day Santa’s workshop.