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There has been a lot in the news about the growth of ecommerce lately, especially in the past quarter. All this despite the recession. When the storm hit the east coast last week, ecommerce saw a spike in growth never seen before as people were locked in their homes where they had to finish their xmas shopping.
Consumer Electronics has been reported to be the fastest growing ecommerce category. Out of all online Consumer Electronics traffic to retail store sites, close to 50% chose to go to bestbuy.com followed by walmart.com at 20%. It is amazing that close to 70% of all Consumer Electronics ecommerce traffic goes to these two sites alone.
This is just the beginning of ecommerce which will be further evidenced at next weeks Consumer and Electronics Show (CES) in Las Vegas, NV. Representatives from DCL, a California fulfillment company with offices in Northern and Southern CA, will be attending the show.
Just my 2 cents for the day.
This past Thursday, DCL celebrated the grand opening of our new Ontario fulfillment center with an open house celebration. Many of our customers, vendors and key partners were able to join us for the festivities where we celebrated with lunch and mini tours for everyone. Our new home is still only a few miles from the Ontario airport and is a 150,000 square foot, state-of-the-art facility, complete with fully automated assembly, packaging and distribution lines. We have over 12,000 pallet spaces and of room for growth in the next few years.
There are things everyone hates about their jobs, but there are also things that everyone loves. Let me share with you what gets me fired up about DCL. As a supply chain service provider in Silicon Valley, DCL is located at the heart of global innovation. We are at the center of some of the greatest technological minds and the venture capitalists that fund their creations.
What this means is that there is no shortage of leading technology companies, some globally recognizable, that have leaned on DCL for operational advisory and execution. Whether it’s convincing and eventually helping execute a global GPS brand from moving from in-house fulfillment to outsourcing fulfillment to DCL, or seeing a now booming green-tech startup go from their garage to high level distribution through DCL, it’s cool to not only see the great technology and products in person, but even cooler when you are able to create operational solutions that help take their companies to the next level. The list of my favorite products from DCL customers is lengthy, but I can’t reveal much detail…I have competition reading this blog.
A common question that is often addressed to us is “who does DCL compete with?” The answer is not so simple. By itself, “pick, pack and ship” can be offered by nearly everyone. Depending on the opportunity, DCL sees competition from freight forwarders, CD replicators, packaging suppliers, ecommerce companies, warehousers, call centers and traditional 3PLs.
Just as DCL started as a diskette duplicator a quarter century ago, other companies are experts in their core competencies but have extended their offering to include fulfillment. My advice to companies looking at outsourcing their fulfillment: look beyond the website and the marketing brochures, do your homework and dig deeper into their core capabilities. Remember, anyone can “pick, pack and ship” a product, but how many can ship accurately, on-time, and within a short time frame?
It’s hard not to know about the difficulties of our current economic environment. If we haven’t been personally affected by it in some way, we hear about in the daily media and it’s standard water cooler discussion these days. All companies are feeling the affects of this recession, but how does this economy influence the current fulfillment industry.
It’s very simple actually. The state of a fulfillment company is actually more reflective of the overall economy than looking at the state of a specific company by itself. You see, if you are looking at one company, you could be looking at a relatively small slice of the entire demographic pie - one market segment, one socioeconomic class, one ethnic group, etc. In general, fulfillment companies such as DCL can service many customers across a broad spectrum of industries, which is probably a more accurate reflection of the economy as a whole. Here at DCL, we service approximately 40 customers across the consumer electronics, software and healthcare/medical industries. Some customers are struggling in this environment while others are growing by leaps and bounds. We must manage our business like a portfolio of stocks with one important thing in mind: diversification. You always plan to bring on new customers with winning products in any industry, however, you expect that some customers (for whatever reason) will just not make it.
Today especially, companies are analyzing outsourcing within the context of their strategic direction. With the debt markets tightening, companies that are straddled with any types of debt and fixed costs are having challenges and are seriously considering a variable cost model. More than ever, DCL is uncovering situations where companies have been operating in-house for years and are finally considering outsourcing as a strategic option.