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How are suppliers, shipping directly to end users, affecting supply chain? Direct to consumer activity is changing how warehousing is done.

Will suppliers who ship directly to customers eventually put brick-and-mortar retailers out of business? Big retail stores might become a thing of the past due to the rise in suppliers’ increased direct to consumer activity. How?
Many suppliers and manufacturers are changing their business model. In the past, they’d sell to large wholesale/retail in bulk sized lots. Now, many sell using an item or case level, directly-to-customer model. This change,of course, affects supply chain.

Direct To Consumer Problems for Retailers

Direct to customer sales changes how retailers function. Specifically, some suppliers no longer sell products by the pallet and truckload. Instead, one purchase order to the supplier shifts pallet or truckloads into individual purchase orders for a large number of items.For example, a pallet of 500 pairs of earrings transforms into 500 purchase orders for 500 pairs of earrings. See the change in business model?
In the Manufacturer – to Wholesaler – to Retailer model, the manufacturer develops key relationships with the wholesaler/retailer. In this model, production and delivery schedules can be negotiated between the manufacturer and wholesaler/retailer. There is a certain consistency and predictability in this model.
Dealing directly with the consumer introduces new dynamics to the manufacturer. Instead of processing a single order for a large quantity of product, the manufacturer is now faced with processing a single order for a single item; increasing the number of orders to process. Ordering through a website may “smooth” the process; it does not eliminate the problems associated with direct to consumer fulfillment.
When a consumer submits an order, the consumer expects immediate fulfillment. That consumer cares nothing about supply-chain dynamics and production woes; he or she simply wants the product now. Thus, the dynamics governing production and scheduling are changing.
Will places like Costco and Sam’s Club soon be a thing of the past? Only the future will tell. The power is in the hands of suppliers and consumer behavior.

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