Diversification reigns supreme in today’s modern age of selling. While most companies loathe putting all of their eggs in any single basket, exploring alternative opportunities—and using the latest technologies to do so—are imperative to business planning.
Direct-to-consumer selling has garnered its fair share of headlines for disrupting the apparel and fashion industries, compounded by the fact that many digitally native retailers are opening physical stores to complement their online efforts. But for many apparel retailers, wholesale distribution has become a critical component to their larger omnichannel strategy, as per the 2019 Supply Chain and ERP Trends Report from business applications and enterprise learning company CGS. Even as e-commerce continues its own retail disturbance by epic proportions, wholesale can serve as an opportunity to expand a company’s reach without incurring the costs typically associated with traditional retail expansion.
More than 80 percent of respondents surveyed in the report already have a wholesale business, according to Tommy See, director of product marketing at CGS. What’s more, over 40 percent named wholesale as the second-largest opportunity for growth this year behind e-commerce.
Managing these different channels simultaneously, however, is where many companies often get tripped up. Production timelines and inventory requirements are frequently out of sync, and companies may find themselves juggling competing priorities, unable to scale. Successfully navigating the path of a new channel comes with a daunting learning curve.
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For HUF, an apparel brand with San Francisco skate shop retail roots, balancing the demands of its eCommerce site and retail stores with its wholesale partners has been facilitated by CGS’s BlueCherry® end-to-end platform. The solution has enabled the company to expand its domestic and international reach without taking on the start-up costs of opening new retail doors. As the HUF brand grew, national chain stores were added to support its growth initiatives and further broaden that reach.
In addition to scaling, this wholesale strategy also permitted the brand to remain loyal to its roots by supporting independent skate shops at the local level. Meanwhile, the company’s own retail stores and website still offer the irreplaceable opportunity of curating its offerings, telling the brand’s story and providing consumers with one-of-a-kind shopping experiences.
Change and challenge management
But to realize these benefits, HUF needed a solution that could help coordinate all of its sales efforts. Richard Gomez, director of operations at HUF Worldwide, told Sourcing Journal, that the BlueCherry ERP solution afforded it the tools required to manage and execute its planning and forecasting requirements, helping the company optimize demand to avoid mark-downs and stock-outs.
Retailers face many challenges when moving into the wholesale business. Firstly, the planning calendar must be moved up by three to four months to satisfy wholesale needs. Everything from pricing and margin calculations, monitoring the aging of the product and measuring product performance—are different across retail and wholesale. In an environment where products can live in multiple channels, routine processes can become very complex.
While HUF runs production for wholesale and retail together, the company does offer a small percentage of direct-to-consumer items produced on a slightly accelerated timeline.
To determine how much to cut for wholesale orders, HUF starts by analyzing historical data, which allows the company to forecast demand for hot items above retailers’ initial orders. For the company’s direct channels, HUF orders in bulk and introduces items in waves. Through its POS system, the company tracks sell-through and empowers store managers to place replenishment orders as demand dictates.
Scaling hurdles
Perhaps the most significant wholesale obstacle for the apparel company has been on-time and complete fulfillment of orders, according to Gomez. “Over the years, our supplier base has grown alongside our international customer base, which compounded the complexity of that channel of business,” he explained.
To combat this, the company began leveraging virtual warehousing locations and an automatic allocation process within the BlueCherry ERP software. This process lets HUF more accurately handle drop-ship customers and better prioritize customer shipments based on product availability and customer requirement. It also allows the company to handle its small wholesale customer orders virtually the same way as its larger retail chains.
“The BlueCherry B2B eCommerce integration with HUF’s B2B and B2C solutions also lets us focus more on service and less on manual tasks,” Gomez said.
“Our warehousing and shipping terminals are integrated using the SPS Commerce inbound and outbound processes, and we utilize the EDI functionality with some of our larger national chain customers,” Gomez noted. “This, coupled with the production and import tracking modules, allow us to track our inbound product more accurately and easily convey this information to our teams and customers.”
The company has also realized greater efficiencies by consolidating legacy tasks into a central platform. For example, Gomez said HUF can now accurately and efficiently manage inbound and outbound shipments while its UPC catalog is housed and broadcasted automatically to its trading partners and other customers.
“Manual production and sales order entry has been almost completely eliminated using the auto create production modules in BlueCherry ERP and integrating our B2B and B2C websites,” he added. “The customizable product hierarchy and numerous attributes in the ERP allow us to track trends and historical data in almost every conceivable way, enabling us to make better and more accurate forecasts.”
All of these efficiencies combine to foster a more predictable production cycle and let HUF focus on what’s important: diversifying and growing its business.
To learn how the CGS BlueCherry platform can help your business expand through new channel opportunities, visit www.cgsinc.com/bluecherry.