Ecommerce remains on a steady rise, growing 2.1% in terms of retail sales in Q1 of 2024 according to the US Census Bureau. However, in the grand scheme of retail, ecommerce still only accounts for 15.6% of total sales, which means around 84% of purchases are still happening offline.
Expanding beyond the digital shelf into other sales channels presents a great opportunity for ecommerce brands to reach new customers and win market share. Caraway is a perfect example of a brand that does this well.
Caraway, a popular brand of non-toxic kitchenware, got its start in 2019 with a heavy focus on direct-to-consumer ecommerce. Evaluating its continued growth, the company made the strategic decision to expand into retail partnerships and other markets through an omnichannel strategy. Within a year, they grew 280% in order volume.
We recently spoke to Caraway's VP of Operations Mark Riskowitz on the company's experience and some of the insights they learned along the way.
Talk a bit about Caraway's journey expanding beyond ecommerce.
Answer: When we started Caraway, we had the intention of being in multiple different distribution channels, multiple sales channels. Finding the infrastructure—from a physical sense, the supply chain partnership aspect, and of course the technology aspect as well—was crucial to paving the way to do that.
And I think we found a lot of success in the fact that ITS had done that before and had worked with a number of different partners that we’re currently engaged with today, especially when it comes to big-box retail, dropship, marketplaces. Working with ITS was a true catalyst to getting to the next stage and expanding to different channels, which is still happening as we speak.
What are some important attributes to have in a 3PL partner?
Answer: In terms of processes, you've got everything from the physical supply chain components to the technological infrastructure. Working with a partner or an ecosystem that can support both, where one aspect supplements the other is important. For us, understanding what we had to do from a physical sense and how that translated into the tech side was significant and a key sort of enabler for our 3PL partnership.
Working with the team on the floor, working with the technological side of the business, has been a strategy that we've employed since the beginning. We continue to find ways to maximize efficiency and find ways to accommodate new retailers as we continue rolling things up.
Describe the benefits of having a single supply chain partner for everything.
Answer: I think the benefit of having a single supply chain partner really comes down to being able to double tap in different verticals and create synergies between each of them. If you're using partnerships where you're moving inventory throughout the system or throughout the network, obviously having everything under the same umbrella makes sense when it comes to an efficiency standpoint—you find those wins, you find those nuances.
On the other hand, if you're introducing multiple partners at different stages, there'll be learning curves, there'll be integrations, there'll be all kinds of different choke points that you might not otherwise experience.
We really tapped into the single partner approach, and we feel like we have a pretty good workflow going. And at the end of the day, if there's a challenge or an issue, it's all down to ITS. So, within the umbrella, it can be solved and should be solved within those confines. We just find that time-to-resolution is quick; understanding challenges and choke points is easy. Pairing that all up with buying power and volume just makes a lot of sense for us.
Can you overview everything that a single source 3PL does?
Answer: If including the direct and indirect partnerships that we have, ITS covers everything from drayage from ports to the two DC's that we operate—the one in Sparks and the one in Whitestown, Indiana—to the warehousing and fulfillment aspect of those two locations. That involves the distribution and fulfillment for ecommerce, wholesale dropship, Amazon—all those particulars.
We have a few vast projects, so special projects here and there, as needed. It’s not a big part of the business, but at least the option to do that is there. ITS handles our domestic trucking as well for activity where we are moving products to and from either our locations to Amazon, or to some of our wholesale customers where we cover and control the freight; we have those activities and those services throughout.
Basically, ITS handles everything before and after the fulfillment location.
Give us your take on having one consolidated inventory to manage all your channels out of.
Answer: It's a great conversation because, even with some of my peers, I talk about the differences of splitting up distribution or inventory management based on their ultimate channel. There's pros and cons to both ways of doing it.
If you can maximize your inventory agility and leverage multiple different options or multiple different products that can be commingled and shared across all the channels that you sell with—whether it's ecom, Amazon wholesale, whatever the case might be—you have more at your disposal as a company. That gives you power as a brand to pull on different levers as needed, when you want to maximize returns, maximize margin, increase attention and marketing efforts in certain channels versus the other.
If you’re operating off a single source of inventory with the same distribution partner, same distribution sites and workflows, you have that agility at your fingertips. I think that’s something where we found a lot of success in doing it that way.
I think being an absolute sort of perfectionist in every single vertical is difficult and a little bit far-fetched. But if you at least have a grade throughout, then you're pretty sorted and can really reap the benefits of fulfilling from a single inventory. It works well for us.
Talk about two-day fulfillment capabilities in today's retail landscape.
Answer: Two-day reach is an interesting component. I'm a big fan of always trying to use the most affordable shipping services out there. When it comes to the industry, I think it's pretty particular based on what products you sell. Kitchenware, for example, doesn't necessarily require same day or next day turnaround for the most part, depending on the ultimate customer situation. But using a multi-node approach to try and capture as many customers as possible, using ground or home delivery services within a two-day or less timeframe allows you to really provide a strong and compelling fulfillment option while not necessarily breaking the bank. With the ITS footprint and multi node approach, it's really served our distribution channels well in that regard.
Describe the process of fulfilling online marketplace orders.
Answer: When it comes to marketplaces, the concept is very similar to other channels—Shopify, BigCommerce, or anything you're doing direct. The concept of an ecom order—single customer, placing one SKU, two SKUs, couple of units, whatever that order pattern might be—is pretty similar regardless of where it's placed. If it is on a marketplace like Amazon or Walmart, the architecture of the order is similar. If you can employ the SLAs, the workflows, or the technical benefits you have on the ecommerce side to those marketplaces, you can ultimately meet the SLA requirements that those marketplaces put on you as a seller.
Doing that with a partner that's forward thinking, tech heavy, and can really hone in on those SLAs and those deliverables just makes things a lot easier and ultimately strengthens your account on those marketplaces as a seller. It works for us, and we're excited to look into more as we grow.
What role does supply chain visibility play in Caraway's operations?
Answer: In terms of visibility, especially from a drayage standpoint and container perspective, we're big into using technology that adds an extra layer of what is happening. What can I understand? What can I find out at my fingertips? By leveraging those kinds of tools and enabling that information to flow between all our different partners, especially the folks that are actually picking up those containers and delivering them to their destinations. Whether it be to warehousing and distribution facilities or ultimate customers, it has been beneficial to have more data, more milestones, more entry points to actually take action on. It’s also beneficial to build and hedge around when you're trying to convey ultimate timelines to customers or internal stakeholders.
We're continuing to find more and more ways through technology to surface actionable information. It’s highly valuable and empowers the operations that much more.
Talk about the business growth that comes with retail expansion and how a scalable supply chain supports that growth.
Answer: That's an interesting question around a lot of companies that are D2C, ecom-heavy and start looking at wholesale operations and partnerships. Once that scale takes off, and you're lucky that it does, it really is something that you have to get a handle on very quickly because it can backfire pretty fast.
It all starts with the physical constraints and physical capabilities of your entire supply chain. And it goes back to one of the earlier points about working with a partner that has done it before and knows what to expect. They can also advise on what the best way forward is, especially as you think about scale and adding more channels. Having an experienced partner is really critical in that sense.
I always want to know that whatever we're setting up and building can be duplicated. It can be three times, four times—whatever the case might be. If it's the number of partners, size of orders, the number of trucks that we're doing, the more you're thinking ahead about what happens if the floodgates open, the better. Being prepared and having those foundations really built in and solid is critical to continued success and paving the way for more growth and diversification of channels. In that regard, partners are everything.
Expand into omnichannel with ITS Logistics
ITS Logistics has decades of experience providing creative solutions that help customers maximize their supply chain and get the most out of an omnichannel strategy. We take the time to get to know your business and customize solutions to deliver a seamless customer experience over every sales channel.
Our nationwide distribution and fulfillment network is strategically positioned to deliver custom, scalable, and comprehensive logistics solutions to increase customer satisfaction. We combine a best-in-class technology ecosystem, expertise, and processes to deliver unparalleled service. The team at ITS strives to improve the quality of life for its partners by delivering excellence at every turn.
ITS Logistics maintains a high standard for distribution and fulfillment:
- 99.6% ASN Timeliness
- 99.8% Load Quality
- 99.8% ASN Accuracy
- 99.9% On-Time Shipping
- 99.4% Fill Rate
- 99.3% Pallet & Carton Labeling
Reach out to learn more about ITS Logistics and find a creative logistics solution to reach your omnichannel customers.
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