Find Success With These Hybrid Fulfillment Strategies

Ever wondered how blending local and China fulfillment could skyrocket your ecommerce growth? Dive into our latest podcast episode where we unravel the secrets of Hybrid Fulfillment!

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In this in-depth episode of The EcommOps Podcast, hosts Dayu Yang and Simon De Raadt dive into the dynamic world of Hybrid Fulfillment. 

 

Throughout the episode, Dayu and Simon unpack the layers of integrating local and China-based logistics strategies, illustrating how this powerful combination can propel businesses into new efficiencies and broader markets. They explore the transformative developments in China’s logistics and discuss strategic approaches for businesses aiming to leverage these advancements for international growth.

 

With Simon’s deep experience in ecommerce logistics and Dayu’s expertise in operational strategy, they share invaluable insights into the nuts and bolts of hybrid fulfillment. They debate the merits and challenges, offering listeners a detailed guide on how to harness these strategies for enhanced flexibility and market responsiveness.

 

The conversation is filled to the brim with actionable advice for ecommerce entrepreneurs and direct-to-consumer brand managers, focusing on the necessity of agile logistics, strategic supply chain risk management, and the critical need to adapt to rapidly changing market demands. Simon and Dayu also pinpoint potential pitfalls and share tips on navigating them successfully, ensuring listeners can make informed decisions about their fulfillment strategies.

 

Key topics covered in this episode include:

  • Unraveling the concept of Hybrid Fulfillment and its strategic benefits;
  • The impact of China’s logistical advancements on global ecommerce;
  • Strategies for balancing cost, speed, and customer demands with hybrid logistics;
  • Success stories and practical applications of hybrid fulfillment models, and;
  • Navigating global shipping regulations and successful market entry strategies.

Join Dayu and Simon for a deep dive into Hybrid Fulfillment, where they break down everything from foundational concepts to sophisticated strategies. This discussion isn’t just about understanding the components of hybrid logistics—it’s about mastering them to transform your ecommerce operations into a global powerhouse.

 

Whether you’re scaling up an established ecommerce platform or just kicking off a new direct-to-consumer brand, this episode is a must-listen for anyone looking to harness the full potential of modern logistics to make a mark on the global stage.

Conversation Transcript

00:04 – Simon De Raadt: We get the question all the time: “Should you use local fulfillment or a China warehouse?” The answer might be a little bit easier than you expect because you can use both also known as hybrid fulfillment.

 

Hi, I’m Simon, and together with Dayu, we are The EcommOps podcast. We’re going to take you on a journey today about hybrid fulfillment, a new episode about a topic that comes up a lot. But on the other side, it’s also a little bit strange why we, as experts on China fulfillment, bring up the topic of using hybrid fulfillment. But before, let’s start with the basics.

 

Dayu, maybe you can give a little bit of background of local fulfillment itself because that’s what it started with.

 

00:44 – Dayu Yang: Yeah, yeah, sure. So talking about this idea of fulfillment, it all started with the DTC ecommerce boom 10, 15 years ago, actually. So back in the day, ecommerce or direct-to-consumer ecommerce was just mostly fulfilled out of your garage if you’re a smaller business or entrepreneur. And there weren’t any warehouses in place. Big players like Spanx for example, or back in the day I used to shop from eBay and people would just ship it themselves.

 

And I sold some stuff on eBay before. Before there was warehousing and then this concept of third-party logistics fulfillment centers came and really changed the industry because it allowed entrepreneurs to focus on what matters, which is building a brand and marketing, and allowed for the fulfillment elements to be done by a third party. 

 

So actually at the time when I started my first brand, Pillar Learning, I utilized what was an early version of ShipBob at a time, and they weren’t quite as big as today, but they were actually quite good at the time and they operated their own warehouses.

 

And that allowed me and the company to really focus on the branding and marketing and actually building the business and not on fulfillment. So fulfillment in general is very, very valuable to any business. Local fulfillment is the concept of you’re based in the US or the EU, for example, but you utilize a locally located warehouse in your local country to ship to your customers. 

 

And that is the traditional model of fulfillment. Now there is a very big trend recently which I consider to be one of the biggest innovations in logistics—it’s the ability to actually directly ship your customers around the world from China.

 

Now before I talk more about how China’s fulfillment in a pure concept came to be, I think that we have to talk about where it originated from and that’s traditional dropshipping from China.

 

And this is where, Simon, you have a lot of experience before. Maybe you could talk about a little bit of the history of dropshipping from China and how that evolved into just shipping from China today.

 

03:05 – Simon De Raadt: Yeah, actually just before I joined EcommOps, I was for three years at HyperSKU, which is a dropshipping agent. But the trend didn’t start there. It was already long before that. I think it’s like 2015, maybe even earlier, where the concept of buying on AliExpress, I think they have been leading this and then shipping it directly to the rest of the world, to the consumer. The kind of dropshipping model where you don’t work with inventory, but it doesn’t have to be just from China.

 

You can also do dropshipping from any warehouse globally. It doesn’t have to be China dropshipping. It can also be just dropshipping someone else’s stock. The concept is that you’re not owning the stock yet and that you fulfill the orders directly from a warehouse to the end consumer without touching it yourself. 

 

03:49 – Dayu Yang: Yeah, so Simon, that is correct, actually. So traditional dropshipping from China, it has sometimes a bad rep, and you sometimes rightfully so. Back in the day, I actually started operating some of my own dropshipping stores because some of the value propositions of dropshipping was actually very clear and obvious. Not having to hold, sometimes, any inventory at all, very low risk. Right. And you can really just get started. I mean, I got started with pretty much no investment, just drop shipping, and I was able to scale up pretty well. 

 

However, I immediately faced issues with product quality. Not being able to control my inventory, not being able to control really anything about the brand itself, except maybe some simple stuff on the packaging. But at the time, I realized that you can actually separate the idea of traditional dropshipping from China versus just being able to ship or fulfill orders directly to your customers worldwide. And that’s an important distinction. 

 

You do not have to “dropship” from China in order to ship directly to your customers on a small parcel basis from China.

 

And as long as the factories that you’re working with factories that are producing in China, you’re actually able to get a lot of the benefits of this traditional drop shipping model, which we’ll talk about later, and still be able to use shipping from China and get all those benefits as well. 

 

However, be able to address a lot of the common concerns of traditional drop shipping, the lack of control of product quality, and the lack of control over your inventory, as long as you as a brand are actually dedicated to making sure that you manage your supply chain, your factory, and your inventory levels correctly.

 

So that’s actually why I started EcommOps for my dropshipping experience, because the pure value that I saw in China, fulfillment and being able to utilize that without having to feel some of the pains of traditional dropshipping. And throughout the years as well. Actually, and that’s what we’re talking about, this hybrid fulfillment strategy.

 

Now, before we talk about that, actually, Simon, I’m actually curious because you had a lot of experience in China logistics, both from HyperSKU and EcommOps, and your prior experience as well. Before we talk about some of the pros and cons and benefits, maybe it would be great to hear your background in terms of what has actually been happening in China fulfillment that actually has made it more of a chore and made it more stable to use today.

 

06:58 – Simon De Raadt: Yeah, it’s definitely driven by, I would say, entrepreneurship. Because what happened is that when you ship a parcel from China, it tends to go with either an express solution or a postal solution. And the postal solutions, most of the postal companies are government owned and they don’t want to invest in something that is very risky because they both immediately have an impact on their stock listing or their investors have a strong say on this. 

 

Products that are shipped from China, there’s still a risk when it comes to the quality of the battery, for example, or things being mentioned as different names, and then ship perfume globally, counterfeits. You don’t want to link your brand name to something that might be an issue when it comes to your investors.

 

That is something that is just there. But then there’s a level of entrepreneurship as well that, okay, but someone has to do it because there is an opportunity to ship parcels out of China. 

 

Who’s then going to do it? Who has the facility? So there was a bunch of Chinese logistics companies that popped up that started to pick up goods from warehouses all over China, from online sellers, Chinese online sellers or Chinese platforms, bring it to a warehouse, start booking the air freight, and then inject it into the last mile. And this has evolved into a direct injection model from China directly to the destination.

 

That wasn’t the case in the beginning. Sometimes it first went, for example, to Amsterdam and then to Brazil, or sometimes even all the way back to Australia, which doesn’t make sense, but that was because it relied on the injection point, who you’re injecting to, and who is responsible for the last mile when it comes to the efficiency that’s entrepreneurship at the core. It’s like there is a need to resolve something, and that’s shipping from China. And the direct injection has resolved a lot of issues when it comes to transit time. And with transit time, you can please the end consumer.

 

If you can have reliable transit time, you can tell them this is long, how it takes, this is what you want to receive, and this is what it’s gonna look like. That it’s evolved. And I think that’s the trend whenever there’s products that were already produced in China, but the supply chain has never been as optimal as it is now. That’s the whole key concept. And as it’s evolved over the years. And where it became actually the speed became better, the shipping speed became better, the reliability of the shipping would become better, the quality of the products have become better.

 

So we also see, besides that, we see that shipping from China is becoming more and more popular. And I think the evidence is right there. But we also see that it’s also a trending thing. Sometimes it just makes sense to ship locally better versus shipping from China. I mean Amazon had that turning point, right? Remember where suddenly Amazon said okay, everything has to have we track from the first day.

 

So from China, it cannot be sent with USPS and have tracking as well directly in the last mile. Now they’ve allowed it. So that opens up opportunities again to not keep everything in an FBA location but ship partially from China. So the platform’s logic and their rules definitely has also leveraged sometimes to go for one or the other. There are marketplaces that only allow local fulfillment as the only way to sell on that platform.

 

We mainly serve Shopify sellers where there is not this kind of rule where actually fulfilling from China makes sense. And the whole China ecommerce ecosystem is basically also really marked in Kurds with China supply chain itself. But it is a trade-off one versus the other. And I think that’s also exactly what we want to discuss today, like when to use what.

 

10:43 – Dayu Yang: All right. So the point of Simon is that China direct fulfillment is very stable, very mature today, and it’s leading to the ability to ship to most global top ecommerce markets, the US, EU, Australia, Canada, in as fast as four to seven, seven days or five to ten days, depending on the market itself. So look, it’s not Amazon Prime two-day shipping, it’s not next-day shipping.

 

And that’s not the point. Right? The point is that especially if you have a brand that your customers actually want to buy from. And the point is, especially if you have a brand that your customers are willing to buy from, willing to wait a week for, you’re not selling toilet paper that people expect to arrive in two days.

 

Then you can actually manage the correct expectations for your customers so that they are actually willing to wait for that product particularly. And this is going to be one of the key points of this hybrid fulfillment model is if your customers are in a country that is different than your local country and where your local 3PL lies. So Simon, to answer your question: China or local fulfillment? 

 

From my deep supply chain experience and actually running some numbers as well, there is no either—or a mature, stable brand who has enough volume, assuming that your production is done in China should actually be using a hybrid fulfillment model. So having a local fulfillment center wherever your biggest market is, and also supplementing it with direct from China fulfillment for various purposes [is the way to go].

 

And by the way, even though we are focused on being a China fulfillment company, we do not run local fulfillment, local warehouses. I will also go the opposite way as well and tell you that if you are actually only shipping from China and your brand is growing to the seven [or] eight-figure range, and you’re having a lot of traction in some local markets, I will tell you as well, without I think, bias, that actually considering going into local fulfillment to supplement your China direct fulfillment is also the right strategic choice, at least over the long term.

 

12:53 – Simon De Raadt: So I hear you say definitely the transit time has improved, so therefore it’s more attractive. But there is a balance between when to go local and when to go use China. What would be like the main advantages to actually consider one or the other?

 

13:08 – Dayu Yang: Yeah. So at the very foundational level, it really comes down to flexibility and agility, and that’s related to your balance sheet. So if you come from traditional ecommerce, you’re going to be very aware of how important it is to manage your cash flow and to minimize your balance sheet as much as possible. On the other hand, if you’re only experiencing drop dripping, only experiencing maybe direct China fulfillment, this is something that you may not be as concerned about because of really the opposite problem. 

 

And this is where the key comes in. When you are utilizing local US fulfillment, the traditional model is that you’re going to be putting a full container on the ocean, let’s say from Shenzhen going into LA, and then to your local fulfillment warehouse. Let’s just say it’s based in LA. 

 

Depending on your factory lead time, most likely you’re gonna be having to prepare for two to six months’ worth of stock. And that’s a traditional model. A traditional DTC ecommerce brand is going to place maybe two to four to six POs purchase orders per year. The implication of that though is that you’re always holding months and months of inventory, and that means your cash is being tied up in that inventory on your balance sheet. 

 

It is still yours, though. It’s not a loss, it’s not lost money, it’s an asset on your balance sheet. But the big implication is its impact on your cash flow and especially these days. So right now, this episode is in 2024. Interest rates around the globe are still high. The cost of holding that inventory, especially potentially if you have to have a line of credit on it, is extremely high, and it potentially gets higher with time as well. 

 

Whereas in China. So if we use a rather simple comparison, let’s just say that you need to hold ten weeks of inventory on average in your local fulfillment center. Whereas in China, any factory within China is going to arrive to essentially any other warehouse location, anywhere between one to four days. If your factory is based in Shenzhen, you send it to our warehouse. It could take 2 hours. So the freight lead time is almost trivial, depending on where your factory is. So a lot of our EcommOps clients, they’re able to actually maybe one week’s worth of inventory at a time. So ten weeks inventory versus one week of inventory.

 

We have clients who, if they actually directly moved from local to China Fulfillment, you literally could save 90, 90 percent more in terms of your Balance Sheet and Inventory risk. And that’s going to be cash flow. That’s me, cash flow for you to really run your business, right? I think everyone knows the importance of cash flow, and because of that, you’re able to do a couple of things.

 

You’re able to launch products a lot faster, you have a new product launch, you have a new SKU, you have a new color, whatever it might be, as opposed to waiting for two months for it to arrive at your local fulfillment center and therefore start selling and shipping to customers, you’re actually able to ship it directly from China within one day of your factory being complete. So, as a matter of fact, a lot of our clients, they might still focus on shipping that container for a new product to the US.

 

However, in that one to two months in between, they’re actually able to sell, literally, go to market one to two months earlier. And that’s huge. And related to that as well, is the flexibility to have an option to continue to fulfill when your product is out of stock. Now, it could be out of stock for many different reasons. A very common reason is that your demand outpaces what you were planning for.

 

In all my years of supply chain planning, I’ve never seen a perfect projection. And the longer your lead times are, the longer, the more inventory that you have to hold because of it, the more difficult it is to project, and the more costly missing that projection is going to be. And you’re going to have to either worry about overage, which is having too much inventory and therefore dealing with the cost of that, both on terms of your balance sheet and also warehousing costs.

 

But on the other extreme, if you run out of stock, you’re going to have to deal with opportunity costs. You literally can’t sell if you don’t have anything to fulfill. So a lot of our clients also utilize that strategy where as opposed to having to hold three, four months in inventory at a time, if they’re projecting some of the best case demand scenarios, they could hold one to two months at a time and then fully realizing they might run out. And that’s a good problem to have because they can continue to ship from China anyway.

 

So this is one of the big reasons why fundamentally, because of the balance sheet difference, you’re going to be able to see a huge benefit in, again, not one or the other, not us or China fulfillment. But how do you consider both in your hybrid fulfillment strategy?

 

18:18 – Simon De Raadt: Yeah, exactly. So the new product launch and out-of-stock situation, China fulfillment, it is great. I think one, I’m not sure. I think what there was also needs to consider is going global because if you haven’t tested a country yet where you might be selling the product, it doesn’t make sense to put stock there if you haven’t tested it. So testing to test new countries, new destinations before you actually going into local fulfillment, finding that trade-off is a very important component. But the other one is also during the year, there are seasons and there’s also a peak season.

 

And I think for you to consider what are the obstacles during certain times of the year about availability of goods or maybe the transit times or the quality of certain of availability of products. So when it comes to peak season, we also, I always recommend to keep your fast-moving products also in a local warehouse. So you never sell out, because selling out, especially during that time of the year, is just a waste and it’s not necessary. So that timing for you to find the right balance of leveraging the momentum. Also for Valentine’s Day, you don’t want to be shipping from China.

 

When you’re still getting orders one week before the dates. You want to make sure that there is still a backup option. So you start selling, for example, from China for the earlier orders and you have some local stock where you can leverage for the last-minute orders as well. It’s very crucial to not only say that this is the whole year, I’m gonna go for one or the other or the mix, but the mix, there is always a balance. Sometimes one needs to scale up and the other one down and the other one. And then you need to actually have a partner and we have these daily conversations with our clients.

 

They’re telling us ‘Hey, our stock arrived in the US, please stop fulfilling from China.’ ‘Okay? Are we running out of stock in China? Okay, let we start fulfilling from the US but also vice versa. Today we’re going to launch to a new country, only fulfill that product for Germany through your warehouse, and the rest of the world I will continue to do from my local warehouses.’ That’s an ongoing discussion that we have every day, which is crucial and is allowing them to scale up for the future.

 

20:28 – Dayu Yang: So, Simon, that’s a good point. I guess I was leading so Simon, [going] global is a very good point and I guess I was leading it for last. It is a obvious example of how directly flying from China can actually open up new markets for you as well. So in a way, it’s not exactly the same as a mixed fulfillment model within the same market. Which is why leading separately. And by the way, we are probably going to have a deeper dive on utilizing China fulfillment to go global, go internationally as well.

 

But the simple consideration you’re going to see if you’re an ecommerce player if you’re a DTC ecommerce brand, and let’s say you already have your local US fulfillment center, why are you not shipping to the UK? Why are you not shipping to Australia or selling to it? At least the answer is probably obvious: it’s going to be too expensive, it’s going to be too slow. You’re going to have to deal with various restrictions on customs and duty and VAT, et cetera.

 

And most of the time you’re either not going to feel like it is worthwhile to start up those operations or because you might have to pass on those shipping costs to your customers and it’s going to take three weeks anyway to get to them. You’re just not going to have a lot of conversions because of that. This is where we see a ton of value in both our clients and really global brands as well. The ability to access at least more than one but 30 and sometimes 100 plus markets shipping from China depending on what logistics carriers that you actually use.

 

Very good examples are everyone probably knows about Shein or Temu these days. Why are they blowing up across the globe? Why is Shien one of the top, if not the top fast fashion players in pretty much in every single country that it ships to? And it ships [to] 100-plus countries, right? Because of the ability to consolidate its fulfillment from China and be able to ship efficiently to all these countries as well.

 

Now we do know that Shein, even though the bread and butter started from direct from China fulfillment, they are investing in local fulfillment warehouses as well. And this is where I will again be honest and have an unbiased opinion that if you’re Shien’s size, if you’re running at eight figures, nine figures, you should definitely be utilizing a hybrid fulfillment model. And probably not only just the US warehouse, maybe you’ll warehouse as well [through an] Australia warehouse as well, but supplement all of it with direct from China fulfillment.

 

And we actually see these examples and maybe you can talk about some more tangible examples from our clients as well. But we’ve seen cases where brands who have a lot of international demand, who just couldn’t ship there, were able to pretty much immediately double their sales within months just by their ability to ship directly from China where they couldn’t before. And our biggest clients, our biggest brands that work with us, they all utilize some form of a hybrid fulfillment model.

 

They might ship 30 to 50 or 60 percent of the orders from China for all the reasons that we actually mentioned, but still be able to ship locally for when the time makes sense when sometimes customers do demand that faster shipping. And also there is a financial consideration as well, which we’ll talk about a little bit later. But Simon, do you have anything to add there in terms of how we operate this model with our own clients?

 

24:03 – Simon De Raadt: Yeah, I think for global brands, it’s partially a mindset thing as well. Like what’s happening now is working. Why would I change it? I’m doing really well in a country that I’m active in. There’s still opportunity for me to grow. Let’s not jinx it. Let’s not go somewhere else. And we always ask, why not? Because check your traffic that’s coming into your store. Are there orders coming in or requests coming in from outside the country that you’re mainly selling to?

 

And most of the time the answer is yes. So basically you’re leaving money on the table. Why are you considering leaving money on the table? Because I don’t understand. Let us educate you. That’s always the conversation and finding that mix. There’s also a balance when it comes to scaling ads. Like at some point, this whole business is driven by traffic. If you get more traffic, you get more eyeballs, you get more orders.

 

If you don’t have enough budget to be able to scale your ads at the right time, so you have a momentum you want to scale up. But if you’re in a cash flow squeeze because you invested everything in inventory and therefore are not able to grab that momentum. It’s normally a momentum, then you’re also missing out. And that’s I thing is that missing out on orders that you could have grabbed either by having a health for your balance sheet or actually launching globally. 

 

25:23 – Dayu Yang: All right, so now let’s talk a little bit about actual, more direct cost comparisons. So I will be transparent, though it’s very difficult to actually compare exactly apples to apples, especially if you have different products, different weight ranges, and different countries that you’re shipping to. But even if you’re thinking about within the same country, either local fulfillment in the US or shipping from China into the US for most consumer product weights. So anything under a couple kilograms or a pound or a couple pounds rather, you’re going to see that shipping directly from China to your customers is going to be cheaper than an option of utilizing air freight and then adding local fulfillment once you actually fulfill to the customer. So that end-to-end cost is actually cheaper from China.

 

Now, to be completely honest, China direct fulfillment to customers in the US is still going to be a little bit more expensive than the absolute cheapest model, which is if you’re filling up entire containers on a slow boat and waiting or planning two or three months in inventory because of that. So on average, China fulfill is going to be cheaper than that method. And this is actually one of the reasons why I think the hybrid fulfillment model within the same country is the ideal strategy.

 

Put on some containers if you have that scale. And by the way, they have to be full containers, less LCL, or less than container loads. That’s where the economics get a little bit different as well, right? So put full containers on the boat, but do it less often than you need to. And then usually if you run out of stock in that model, you have no choice, but it utilizes very expensive air freight to get it to your warehouse.

 

So direct from China fulfillment essentially completely cuts out that element. Why do you have to do that when you can actually just ship directly from China to your customers for cheaper? So most of our clients utilize this model where they’re able to under-prepare or under-plan how much inventory they hold locally in order to supplement with China fulfillment. That might be slightly more expensive.

 

However, in terms of average costs throughout the year, it’s usually lower actually, especially running out of stock and having to use air anyways. And usually a massive difference on your balance sheet. So we’re not talking about maybe an extreme 95 percent decrease if you’re using a hybrid fulfillment model. But a lot of our clients, they’re literally having to hold like 50 percent less inventory. And that’s a huge impact on your balance sheet and eventually, bottom line.

 

Now, that’s only within a mixed market for international markets. I mean, that’s where the difference becomes really huge because most of the time you have no viable option to ship to an international market anyways in terms of cost. And actually shipping from China to the UK, for example, is actually cheaper and faster than shipping from China to the US. So something like international expansion is really a no-brainer.

 

And the point I want to make around cost here is too often when you think about logistics, you’re comparing in too much detail the actual unit cost comparisons. How much does it cost end to end and not considering really anything else? This is where for the hybrid fulfillment model, you have to consider what is the impact on your balance sheet. How does China fulfillment dramatically reduce that balance sheet risk?

 

And how do you potentially, literally, almost overnight, be able to access new markets and expand your sales without really much work other than just using a China warehouse and opening up those countries in your marketing and your fulfillment options?

 

So, cost is obviously important. But I do want to emphasize that the reason why this hybrid fulfillment model, especially if you’re looking to expand to different geographies, is not just a cost optimization exercise, but it is really a very big, potentially strategic value add on your supply chain strategy. That if you’re thinking about it in the right way, then over the long term it will, I almost guarantee it. Depending on your brand and your model, of course, that is going to add a lot of value to your business and help it grow and scale probably more massively in the long run.

 

29:55 – Simon De Raadt: We have DTC brands that actually have shared the story of us for their stock being stuck on a boat and therefore not being able, able to pay their service providers and just going bankrupt. And that’s something that is always a very thin line when you scale, your investment needs to go up, then your money reserves are running low. And to be able to mitigate that it makes sense to ramp up from China first, and then you have a solid base.

 

Then you start to consider, okay, let’s go there locally with these products that go well. But I still want to have a tailored approach. I still want to create new products for this audience and I want to test what these products could be for them. Different color, different size, different model, something new. But you don’t want to put that directly in the warehouse. And that’s always a discussion that we have. We have these daily calls with clients to just to ask them some counter questions like, why are you not doing this? How about this?

 

What I was fascinated about is that China is actually a great playground. It was a playground for brands to launch into that market. And I have a point here, so bear with me. There are actually European brands that actually were competing on a local level. They were known or well-known in their own country. They were semi-known in Europe, but they were unknown in China. And suddenly they went into the Chinese market competing with, with global brands from the same niche. 

 

That was a competition they were never familiar with and they never ever experienced because suddenly from a European brand going to China, you’re competing with Japan, with Australia, with New Zealand, with the US, and many, many more. And that playground that was happening in China, I see this kind of like a vision of how it’s going to be global. And you heard today in the episode about the economics of using hybrid fulfillment, the logical operational concept. 

 

But there is a macroeconomic concept as well behind because you have to start thinking global to be able to matter. You can be in a local niche brand, but all of the global brands are going global and you will have to differentiate from them. You’re still not too late, there is still an opportunity for you to become one of them. And that’s something that we really want to encourage you to actually become one of these global brands and leverage what’s out there so that you don’t miss out.

 

And that’s also why we do this podcast, why are we trying to give you that value? Why do we want to inspire our clients? Because we truly believe that there is space for any DTC brand to become a global one and actually matter and drive value and build something great. And I’ve seen it happening in China. It’s very competitive. But you’re not too late. Now, going into China is different, but going into the global space, it is still a very blue ocean.

 

So leverage that, think about it, dream big and really start thinking about, okay, I have a strong presence here. How can I become global? It doesn’t have to be tomorrow. It can be one country at a time. You can just do some research.

 

Okay. So, Dayu, we’ve discussed a lot of stuff. Maybe just to summarize, what will be the main takeaway of this journey toward hybrid fulfillment?

 

33:53 – Dayu Yang: Yeah. So, I think the most important takeaway, first of all, is it’s not either or. That’s why we emphasize it’s called hybrid fulfillment. It is a combination of local warehousing, potentially multiple local warehouses, and also utilizing China fulfillment as well. Now, part of the important consideration is how to use it strategically. And it all ties back to what the true value drivers of shipping from China.

 

It’s going to be the agility and the flexibility driven by the massive impact on your balance sheet considerations. And this means that depending on your business itself, it’s really going to depend. Right? So if you are actually a new brand, for example, or maybe a brand is launching a new product line, then it is usually very smart to ship from China at the start because of how much quicker it is just to get it out there and start shipping, and potentially months before you’re able to actually ship.

 

If you’re shipping, if you’re waiting for your containers to arrive, in the US for more established brands, then definitely adding either China fulfillment or local fulfillment to the mix in order to lower your average end-to-end cost because you’re utilizing the cheapest option once in a while, filling up full containers and then supplementing it with China fulfillment for the flexibility and also accessing new markets as well. Right.

 

And that on average is going to lower your average cost and reduce your balance sheet as well. And then finally, even if you’re a very established brand in your local market, you are a big DTC brand. In the US. However, international sales are either zero or a tiny portion of your sales because you simply can’t fulfill your orders efficiently to those markets. But you know, the demand is there because your brand is good.

 

This is where China fulfillment can almost immediately unlock a lot of strategic value by even allowing you the ability to actually ship and fulfill to those markets. And that is, again, one big takeaway. Do not think about this option as necessarily just a pure cost optimization play. It’s not just about reducing costs, but it’s actually about fundamentally changing your supply chain strategy and model to actually add value to your business over the long run.

 

36:27 – Simon De Raadt: Yeah, I totally agree. It’s a journey, Dayu, to get to hybrid fulfillment. You don’t start with either fulfillment. That’s kind of like the end game. I really enjoyed this episode. I also get a lot of good knocks out of this. I hope you have as well. And I hope to see you guys all in the next episode. Thank you for listening to The EcommOps podcast. Don’t hesitate to like, share, or leave a comment. 

 

This episode was about hybrid fulfillment. If you have questions about it, please do reach out to us. We’re on all social media channels. And don’t worry if you haven’t figured it out, many haven’t. But it’s not too late to get started. Thank you for listening.