Progressively, companies are looking for ways to keep up with evolving market demands while reducing operating expenses, and more distribution methods are being explored. Recent decades have seen retailers of all sizes take a more active role in controlling their supply chain. One of the most common trends retailers are leveraging is the concept of direct store delivery.
What is Direct Store Delivery?
Direct store delivery – or DSD – is a term that describes the process of delivering products through a full-service distributor. This process, which bypasses the retailer's distribution center, is efficient and ideal for high demand products. In the grocery industry, DSD accounts for over half of retail profits. This model ensures greater control over retail shelf space, which improves sales and profit margins for retailers.
Overseeing pricing and promotions, in addition to providing DSD, distributors often provide
- Shelf inventory management
- Store ordering
- In-store merchandising
- In-store forecasting
Direct store delivery is the ideal distribution model for perishable items because it greatly reduces the time products spend in the supply chain. This ensures less waste, as well as a higher profit margin for the retailer.
What Are the Benefits of DSD?
In today’s retail environment, there is an increasing number of product choices and difficulties managing store-specific product offerings. DSD provides retailers the opportunity to take charge of their own growth. This model can power sales, improve profit margins, improve trade effectiveness of promotions, and build customer loyalty by creating a better shopping experience.
Operating a business is very demanding, and while it is impossible to outsource every job, there are some instances in which exploring alternative delivery models can have a great impact. The DSD model has several benefits for retailers interested in running their businesses more efficiently and having greater control over their merchandise.
Overall, the DSD model drives a better bottom line for the retailer and a superior shopping experience for the customer.
1. Improve Cycle Times
When products that are supplied from a DSD partner are delivered twice weekly, their replenishment cycle is five times faster than other grocery items. Because the distributor maintains ownership of all upstream inventory, the products generally move much faster and the retailer can commit less working capital to the inventory. Most retailers also experience positive cash flow, because DSD merchandise is likely to turn several times before payment is due to the distributor.
2. Take the Guesswork Out Of Merchandising
As most retailers will tell you, the labor that is required for merchandising product is a significant expense. Direct store delivery greatly reduces the time and manpower spent merchandising, because it is handled by the distributor, not the retailer. Since DSD products like coffee and energy drinks are among the fastest moving and most profitable products in most convenience stores, effective merchandising is critical. DSD partners make sense for retailers because the distributor covers upstream costs.
3. Promotional Effectiveness
Many DSD products are impulsive buys purchased by the shopper during every trip; most consumers drink their purchased energy drink, coffee, bottled water, or Pepsi right away. Because of this, trade promotions can have a huge impact on the sales of these types of products. Effective merchandising, combined with promotions, can improve the sales of these profitable products.
Your Direct Store Delivery Solution
Bernick's is a DSD partner that does it all. As one of the most innovative distributors regarding merchandising and customer service, we specialize in developing new ways to generate brand awareness. From organizing promotions to managing shelf inventory, we provide the services your business needs for optimal productivity.