The Ultimate Guide on What is Direct Store Delivery (DSD)?

With the increasing demand for online purchases, running a retail business requires extra effort to hold its position in this competitive market. Because of this, companies are more focused on providing customer-friendly services. This is why most retailers switch from multi-stage distribution to a direct store delivery model.

Direct Store Delivery products contribute 52% sales margin at the store. Some habits retailers adopt such as reducing inventory costs, reducing delivery time-frames, and responding quickly to customer demands.

In this article, we will discuss below in detail what is direct store delivery DSD all about.

What is Direct Store Delivery?

Direct Store Delivery is a distribution model adopted by retailers. Under this delivery model, retailers directly deliver to retail stores from manufacturers or suppliers instead of sending them to warehouses or distribution centers. It helps businesses to reduce labor costs, warehouse maintenance, and wholesale-retail distribution costs.

Direct store deliveries are a boon for retailers selling perishable items and having tight delivery windows for their products. This model is suitable mainly for pharmacy stores, convenience stores, gas stations, soft drinks & beverages companies, and organic food productions.

Benefits of Direct Store Delivery

Let’s check out some of the benefits of direct store delivery DSD.

1. Effective handling of perishable and fragile items

The DSD model is adequate for perishable goods such as fruits, vegetables, poultry items, flowers, and bakery products that are time-sensitive and require careful handling. These are sometimes carried in special containers like wooden trays or refrigerated trucks. 

Fragile goods like wafers, potato chips, and biscuits also need special care during packaging and shipment. With DSD, the time spent in the supply chain is reduced, giving longer shelf life to perishable and fragile items. 

DSD channels are the most popular in the food, beverage and grocery industry where the risk of damage to these items is reduced. Thereby improving the efficiency of handling the goods at grocery stores.

2. Minimized labor and logistics costs

With a direct store delivery DSD program, consumer products are neither transported to nor stored in a warehouse or distribution center. This cuts your logistics costs since you don’t have to spend money on transportation expenses (including gas or driver wages), or on renting, maintaining, or staffing a warehouse.

Hence, it cuts down the costs involved in logistics and the overall transportation expenses including store labor costs. On average, 25% of labor costs are saved using the DSD model.

3. Quicker deliveries to retail stores

This model eliminates warehouses and distribution centers. It significantly reduces the overall time on the market and gets to stores faster. Consumer goods take less transit time to ensure a high rate of product availability.

It also helps the storekeepers to keep the inventory stocked up sufficiently at all times.

4. Increased customer satisfaction

A valuable strategy for any business is to put its customers first. With faster and sufficient stocking at retail stores, customers are less likely to experience stockouts. 

It helps customers to find the desired products more quickly, increasing customer satisfaction. This, in turn, results in a better customer experience and a more loyal customer base.

5. Stronger relationships with customers

This delivery method directly connects a brand to the retailers building a better relationship with the end customers. 

For instance, when brands sell goods to retailers, it helps them to get the market insights like what the customers are purchasing more, the recent market & trends, and which product is not performing well in the market. This information helps the brand or business to make communication easy. 

Moreover, they get an idea to strategize and sell effectively, considering better customer service and business success as a top priority. Hence, a successful brand-retailer association is established. 

For any business, benefits and challenges both go hand on hand. 

Challenges of Direct Store Delivery

You can find below the challenges for any direct store delivery.

1. Higher transportation cost

When any business adopts DSD, the supplier has to look after end-to-end shipping and transportation of the goods. 

Although it is faster and more transparent still, the cost of transportation cannot be discarded. Known for the fact that it eliminates warehouses and reduces labor costs, but the overall supply chain’s operating costs are still high.

2. Unexpected shipping process changes

Businesses new to this model find it difficult to accommodate real-time order requests or changes in the delivery schedules. As the market has become more complex and competitive, there is a need to increase operational efficiency as well. 

The inflexible supply chain makes it difficult to find potential business revenue. Therefore, there is a need for tools that help to add transparency, convenience, responsiveness, and flexibility.

3. Lack of proper communication 

It is challenging to connect the dots between the brands (suppliers), distribution center staff, and the retailer. Similarly, the lack of coordination on delivery status, product inventory, and pricing changes can be due to a lack of proper communication. This will heavily impact the profit margin of the company.

4. Difficulties in fleet management and monitoring

It becomes difficult for a Logistics Manager to manage and monitor fleets running in multiple directions for retail distribution. They have the responsibility of delivery reaching the retail locations within the registered timelines, plus there should be no latency in the process. They also need to ensure that delivery staff perform their duties efficiently.

Additionally, manually coordinating with the on-ground staff and keeping records of delivery information can sometimes be inaccurate. Hence, there is an absolute need for a supply chain visibility tool to solve this issue for the suppliers.

For the success of DSD, it is important to work on the challenges and try to improve them. 

Improving Direct Store Delivery

Below are the ways to improve direct store delivery for many suppliers.

1. Establishing omni-channel visibility

To improve and maintain direct store delivery standards, it is important to manage inventory, fulfillment & shipping, and order management in one place. It should also be required to collect details of all retail locations from all the sales channels. For collecting and managing all this data, you can use retail CRM software solution.

The omnichannel visibility will help to monitor inventory across all the retail stores. This will help to find inventory turnover and average sales data for each retail store and collectively too. All this information will gradually help to identify the areas of improvement in the sale growth.

2. Optimizing customer service

Good customer service and customer feedback are essential elements for any business. Customer service can be optimized by bringing a customer feedback system into the process. This will ensure that direct store delivery is effectively done and the orders are delivered to the customer’s hands.

Working on customer feedback will help you to learn more about customer trends. This will provide a forecast of the customer’s demand helping to manufacture accordingly.

3. Ensuring team access to necessary information

It is important to streamline every process for the warehouse or retailer’s distribution center. There is a possibility of losing information even for a supply chain system. Therefore, to avoid any miscommunication or mistakes between DSD suppliers and retail stores, easy-to-use route scheduling software can be utilized. This will keep all the real-time and updated data of both parties (Supplier and Retailer).

4. Implementing a transport management framework

A transportation management system helps to get full insights into every aspect of your supply chain. This system provides shipment optimization, visibility, and global supply chain access. It helps to reduce costs, improve efficiencies and gain a competitive advantage in the market.

This framework can help your business to ensure that you are being charged the correct rate, and optimize goods and routes too.

5. Focusing on inventory management

For the DSD system, it is the sole responsibility of the brands to distribute the goods to retail stores and consumer markets. Therefore, proper planning and management of the delivery fleet are very important. This will help to smoothen the delivery process and make it more efficient.

Managing a delivery fleet may include information like how many vehicles are owned vs. how many are rented, as well as how to deploy them for faster delivery, and how to manage these vehicles after they hit the road. 

These above things can help to improve your direct store delivery process. But, there is another distribution system called centralized distribution. So, let us find out how direct store delivery differs from centralized distribution.

Differences between Direct Store Delivery and Centralized Distribution

In a DSD model, it is the responsibility of the manufacturer or supplier to deliver goods to retail stores. The DSD suppliers only need to handle the inventory management and shipment. They need to check inventory, and stock-keeping units, remove expired stocks, unpack pallets, and price.

In a centralized distribution model, the supplier representative (brand) will ship the products to a primary warehouse. From the warehouse, it is then transported to various distribution centers or directly to the retail shop. 

It is a typical process wherein the store manager calls the warehouse to place the order. Then the ordered quantity is shipped from the distribution center to the retailers to fulfill their stock. In this model, it is the complete responsibility of the retailer to handle shelf inventory management.

When it comes to inventory management and delivery route planning, Upper can help you carry out delivery operations smoothly. Let’s move on to find how Upper can be your go-to tool for performing multi-stop deliveries.

Utilizing Upper to Enhance Direct Store Delivery Performance

Upper Route Planner is an advanced software for delivery route planning and optimization. It offers automated route planning, route scheduling, delivery notifications, and proof of delivery, among its main features.

Being a direct store delivery driver, you can use Upper Route Planner to make on-time deliveries following the faster routes. The route planner helps you churn out optimized routes for your hundreds or thousands of delivery routes. Upper helps you reduce the overall transportation costs and increase profits for the business.

Upper’s route optimization helps the drivers to complete the delivery within the deadline. With Upper, you can send delivery instructions directly to the drivers throughout the delivery process. It minimizes the time and effort required to ensure a great customer experience.

To explore more about  Upper Route Planner, start with a 7 days free trial.

Conclusion

In today’s retail world, there is an increased number of product choices, and hence it is becoming difficult to manage store-specific products. DSD allows smaller retailers to take charge of their growth. This model helps to increase sales, improve profit margins, and build customer loyalty with a better shopping experience.

If you are willing to launch direct store delivery, you can use Upper to schedule your multi-stop deliveries. This step will help you save more time as there will be no room for human errors and manual calculations. Hence, your delivery process will be simplified in such a way that you can carry out on-field operations with fewer resources. Book a demo with us to find out how much time and money you can save.