Back in November, Amazon announced its latest game-changing industry penetration, into the $300 billion pharmacy market. Amazon Pharmacy, according to the company, will allow customers in the U.S. to order prescription medications for home delivery, including free delivery for Amazon Prime members. This move comes just a little over two years after its $753 million acquisition of the prescription medicine delivery service PillPack.
While Amazon’s latest announcement is exciting for the pharmaceutical sector and consumers, it does present questions as to the technical sophistication of the fulfillment services industry, valued at approximately $55.6 billion.
One month into 2021 and COVID-19 hasn't let up. And as another new year begins, we are again facing second and third-rounds of supply chain shortages. Think back to Costco and Amazon selling out of common household items, like toilet paper. Hell, even a brand like Seventh Generation toilet paper is “temporarily out of stock” on the Prime marketplace.
For most of 2020, consumers had to fight their way to the grocery stores, however early (or late) just to get toilet paper, hand sanitizer, or clorox wipes. As bad as it has been for consumers not able to purchase these common items, it's been just as bad for ecommerce sellers who have either run out of products, while working with manufacturers, or those who have continued to suffer shortages, convincing themselves they can stay afloat.
No matter which way you slice it, fulfillment has been an industry-wide dilemma that manufacturers and sellers in 2021 can no longer afford to endure. And with the Biden-Harris Administration finally making its way into The White House come January 20, it will be interesting to see how small businesses can (hopefully) make a speedy recovery.
So what have we learned from the supply chain infrastructures over the course of a tumultuous 2020?
#1 - Fulfilment Software is Archaic and It Blows
Eight years ago, Rick Nelson and a former partner launched The Fulfillment Lab because they noticed that e-commerce sellers were always running out of products while working with manufacturers, similar to what’s been happening for well over a year now, with the ongoing COVID-19 pandemic.
The problem, which Nelson and his team discovered, resides with the actual fulfillment software on the market, which is fulfillment center-centric, rather than client-centric. “We started looking at the software,” he says, learning that “the software was written for many different types of fulfillment centers to fit their models. But it wasn’t written for many different types of clients.”
I spoke with Nelson and his team about the frustration that was walking into a store, only to find essential household items sold out, and why there wasn't a quick solution to get these items to the consumer in the middle of the biggest pandemic we have seen in decades.
Currently, shopping experiences on platforms like Amazon are “plain wrapper” and “generic,” Nelson told me. From a branding perspective, there’s no ability for companies to insert customized printing and labeling to the actual fulfillment process. The industry, according to Nelson, has been missing an essential piece to the puzzle: fulfillment software that doesn't blow; which brought us to Nelson’s own proprietary Global Fulfillment Software™, which allows TFL to provide insight into the fulfillment process, so its clients can customize their packaging to provide an entirely unique experience that increases brand awareness and end-consumer loyalty.
The company was previously listed on the Inc. 5000 for two years, in 2016 and 2018 for one of the fastest-growing companies in the Tampa Bay and Salt Lake City regions.
#2 - National 'Food Insecurity' Needs to Be Swallowed Up and Fast
For nationally recognized meal kit company, HelloFresh, its portfolio just got $177 million larger, announcing on November 23, 2020, that it would be entering into an agreement to acquire Factor75, Inc., a Chicago-based ready-to-eat meal startup. And what a perfect time.
The acquisition will expand HelloFresh’s presence in the United States, the companies said in its press release, joining three other brands in HelloFresh’s US portfolio, including HelloFresh, EveryPlate, and GreenChef.
As of November 2020, experts projected over 50 million Americans would be “food insecure” by the end of the year, including about 17 million children. Based on Map the Meal Gap, an interactive model developed for Feeding America, a nationwide network of more than 200 food banks in the U.S., there is a disproportionate ratio of food insecurity by state. Nevada, for example, jumped from 20th to eighth for the highest food insecurity rate by state.
Specifically, those states like Mississippi, Arkansas, Alabama, Louisiana, and New Mexico who were the hardest-hit states, are the same as they were prior to the COVID-19 pandemic. The report revealed that Jefferson County, Mississippi has the highest food insecurity rate in the country, with a 30.4% food insecurity rate.
Direct-to-consumer ready-to-eat meals are a “nascent food vertical,” according to a HelloFresh executive, which is estimated to grow into a multi-billion dollar category over time. “We have four high-growth food brands in our group, all benefiting from our strong growth engine, technology, and supply chain infrastructure,” said Uwe Voss, chief executive officer of HelloFresh US.
If the global pandemic has revealed anything about the food-service industry, it’s that demographic groups across the country have been impacted differently. Individuals with a college education, for example, have not seen much of an impact on either unemployment rates or incomes. But people in lower-wage jobs tend to be impacted a lot more.
#3 - We Can Still Clean Our Clothing While Keeping the Environment Clean
If a 17-year-old girl can create, build, and grow a platform that challenges our world's leaders on the importance of climate change, it's pretty safe to assume that industry-leading brands can take a hint and scale their own products to be more "environmentally friendly." You go, Greta!
Laundry care is undoubtedly archaic and commodified. I mean, come on, at one point, Millennials were eating Tide Pods, because some moron thought it was okay to create a viral deadly social media challenge. Unreal.
Since 2016, FREY has converted the archaic and commodified laundry care industry into a D2C service, delivering products made with natural ingredients and top fragrances directly to their customers’ homes. Back in 2019, I spoke with FREY's founders, Erin and Leif Frey, two brothers, who shared a vision of providing a better world for consumers and their garments. When I first spoke with them, they had just launched their Kickstarter campaign from the basement of their Maryland home, revealing the wide-spread mistrust throughout the industry.
Two years later, FREY has continued to grow and succeed, making it to national media platforms that arguably, Greta would be proud of! It recently expanded its business model to include a new personal care line to bring FREY’s fragrances outside of the laundry room, with its latest partnership with OceanX, a modern fulfillment provider for industry-leading brands like Allergan, Proactiv, and Glossier, which all help scale fulfillment operations with a suite of DTC, B2B, and Amazon 3rd-party services.
OceanX brings fulfillment-as-a-service (FaaS) solutions to companies, along with a real-time business intelligence platform and scalable customer care service. Leveraging such technology, companies like FREY will be able to offer an approximate 99.5% same-day ship, two-day nationwide shipping coverage, while claiming an approximate 99.8%+ order accuracy, capturing over 3,000 eCommerce orders per minute.
One of the biggest nightmares for e-commerce brands is managing inventory for recurring orders and trial sign-ups that they cannot adequately and efficiently track (in real-time). Leveraging OceanX’s technology and fulfillment service, FREY will be able to utilize the company’s real-time business intelligence platform which will allow it to upload and maintain product master data, manage inventory quantity, view shipping, and carrier status, and track trends on order returns.
“This will be a game-changer to maintaining adequate inventory levels in the fulfillment centers,” OceanX CEO George Richter shared in a press release.
“We are in this modern era of the conscious consumer—everyone is paying attention to their clothing, fragrance, grooming products, and what they are putting in their hair and on their skin,” FREY told me. “For almost 99% of an individual’s life, they are exposed to the harsh chemicals engrained in laundry detergent—wearing clothes, sleeping on sheets, using towels—all of which goes through the cleaning process. Yet, the entire industry is filled with toxic products.”
