Inventory management was one of retail’s biggest concerns in 2022, but one particular part of the problem cannot be ignored. Younger brands looking to scale often aren’t equipped to effectively monitor inventory—and some don’t want to deal with the burden of deploying multiple technologies.
Purpose-built for high-SKU, direct-to-consumer fashion brands, ChannelApe aims to relieve these sellers with a real-time inventory tracking and order management solution that incorporates a vast third-party logistics (3PL) and warehousing network, along with a fully managed service that enables brands to outsource inventory operations altogether.
“A lot of DTCs we’ve worked with didn’t start to become a supply chain business, and to compete with FedEx. They started as marketing and product businesses,” ChannelApe founder and CEO Mike Averto told Sourcing Journal.
ChannelApe works with some of the top names in the DTC apparel and footwear landscape, including Allbirds, Rothy’s, Chubbies and Birdies. The company’s inventory technology has helped these brands scale fulfillment across new facilities and even offered more control of their orders before a product reaches a warehouse.
Averto told Sourcing Journal that he realized when launching ChannelApe in 2016 that there was room for an inventory management solution dedicated not just to providing visibility to the retailer and lowering fulfillment costs, but also built to generate repeat purchases.
“The highest-level thing that we’re doing is helping to keep net promoter score (NPS) high. Half of NPS is the product, but if you buy a great product and it takes four weeks to deliver, you lose that luster,” Averto told Sourcing Journal. “If you buy a great product and you get it in two days and you love the product and the delivery experience, that’s what gets you to come back and purchase again.”
ChannelApe emerged out of a desire from co-founder and head of partnerships Jason DePietropaolo to take his natural supplements brand VitaminPartners “out of the Amazon ecosystem” and away from the purview of services like Fulfillment by Amazon (FBA). Instead, both Averto and DePietropaolo wanted to provide a similar service to FBA, without requiring sellers to commit to any additional services.
“He had products across a variety of warehouses and was trying to figure out how much he had in each of these warehouses, how much was coming into each of these warehouses, or know how much I have to sell today,” Averto said. “He was always either overselling or running low on merchandise.”
An alternative to ERP
Averto said the company positions itself as a faster, more nimble solution compared to a traditional enterprise resource planning (ERP) technology, which is often more expensive and can require a more complicated integration by a third party or consultant.
As e-commerce caught steam over the past decade and more brands sold direct, many of these smaller players needed more platforms that adapted to their attempts to scale and already have established connections with third-party logistics (3PL) partners.
“In a wholesale world, you had a finite amount of purchase orders from buyers that had thousands of items on them, whereas when you flip into e-commerce, you have tens of thousands or hundreds of thousands of orders that go to individual shipping addresses and the complexity just grows immensely for that reason alone,” Averto said. “That’s what gravitated us towards e-commerce.”
While ChannelApe enables users to view inventory, it also has built-in business intelligence that provides weekly reports that identify sell-through, aging inventory, top sellers and poor performers. Users can get a view of where the inventory comes from, whether it be the manufacturer, another warehouse, or via a return. Beyond providing the inventory’s origins, ChannelApe also displays the status of the merchandise, whether it is currently on hand, on order, reserved or damaged.
“We just want to ensure that people have real-time access to their information so that they know how to run sales or do whatever they want to move that inventory,” Averto said. “We’re making sure once they start getting to the point where it’s not a long inventory cycle anymore, that they can see that ahead of time if this ends up being a cycle where potentially everybody goes short again in six months.”
3PL partnerships deliver inventory flexibility
ChannelApe has more than 70 partners in the 3PL and warehousing space, including Geodis, Quiet Platforms, C.H. Robinson, Radial and XPO Logistics among others, which Averto says enables the platform to centralize data into one source of inventory.
“There’s inbound inventory, which is usually your finished goods or returns, and then there’s the warehouse partner. We’ve learned that people want flexibility, and typically with a 3PL, you’re buying the technology and the actual physical services at the same time,” Averto said. “If for some reason, you need to move to a different coast, and that fulfillment partner isn’t there and the tech isn’t there, now all of a sudden you have to redo all this. Our approach has been that we want to work with as many 3PL partners as possible, so that brands can just use us as one system and then add variety.”
Averto said that many of the brands his company works with partner with two or three 3PL partners at a time, with the ChannelApe technology serving as the glue that holds together this fulfillment network. During situations like the Covid-19 lockdowns, this kind of network would be vital if one facility happened to close and a brand needed an alternative location to procure goods from.
Brands often turn to ChannelApe when they’re making a change to their current supply chain, according to Averto, whether it be outgrowing a previous warehousing partner, adding a new product line or entering a new market.
Outsourcing inventory operations
The software provider also offers a managed operation service, where a DTC brand can outsource operations to the ChannelApe team. This enables brands to focus less on the supply chain side of the business and more on their areas of strength. The company’s operations team can monitor specific inventory and fulfillment metrics daily, provide reports of resolved issues and service level agreements (SLAs) and identify other business improvement opportunities.
“They can send us inventory questions, and they can just tell us if they want to go into safety stock, or if they want to pre-sell, and we just manage that for them,” Averto said. “I feel like operational expertise is the segment of the industry that has been missing for a while.”
Currently, ChannelApe works with brands across the U.S., the U.K., most of the European Union, Canada and South Korea.