In the fast-evolving D2C landscape, platforms like Blinkit, Swiggy Instamart, Zepto, and Amazon have redefined convenience for consumers. But for brands, they bring a unique set of challenges, especially in managing multi-city supply chains. When operational inefficiencies start affecting margins, cash flow, and scalability, quick commerce can quickly become a double-edged sword.
The Challenge:
One of the D2C brand scaling through quick commerce platforms faced a series of challenges that disrupted operations and finances:
- SLA Breaches: Frequent missed delivery slots led to penalties and delays.
- Inventory Issues: Overstocks in some cities and stockouts in others due to poor inventory visibility.
- Cash Flow Strain: Upfront logistics costs and delayed payments from platforms tied up working capital.
- High Logistics Costs: Shipping directly from a single location inflated costs.
The result? Shrinking margins, a stretched cash runway, and a frustrated team.
How We Solved These Challenges
When this brand partnered with us, the first step was diagnosing the root causes. We didn’t just fix their supply chain; we transformed it into a profitability driver.
Step 1: Optimize Distribution Models
A one-size-fits-all approach doesn’t work for quick commerce. We analyzed their distribution setup and introduced a hybrid model:
- Centralized inventory in a third-party warehouse for direct e-commerce and bulk orders.
- Regional distributors in major cities to fulfill quick commerce demand more efficiently.
Pro Insight: Evaluate the feasibility of working with third-party fulfillment partners for centralized operations while leveraging distributors for last-mile efficiency.
Step 2: Integrate Technology for Real-Time Visibility
The brand lacked a system to track inventory across warehouses and platforms, leading to frequent stock mismatches. We implemented a real-time Inventory Management System (IMS) to:
- Monitor stock levels across multiple cities.
- Automate replenishment triggers to avoid stockouts.
- Provide visibility to align production schedules with demand forecasts.
Pro Insight: Use inventory management tools to seamlessly track and integrate with marketplace APIs, ensuring better demand forecasting and supply chain visibility.
Step 3: Negotiate SLA Terms and Automate Slot Booking
Delivery failures often stem from tight SLA requirements and manual scheduling errors. We:
- Renegotiated SLAs with logistics partners to align with realistic delivery windows.
- Automated slot booking using platform-specific tools to reduce manual errors and ensure timely deliveries.
Pro Insight: Work with logistics providers who specialize in your target platforms and negotiate SLAs that account for your operational capabilities.
Step 4: Streamline Logistics Costs
Shipping directly from one location to all destinations inflated costs. By decentralizing with regional hubs, the brand:
- Reduced shipping distances for quick commerce platforms.
- Optimized delivery routes through logistics aggregators.
Pro Insight: Use a mix of regional warehouses and local fulfillment hubs to cut shipping costs and meet delivery timelines.
Step 5: Improve Financial Planning and Cash Flow
Quick commerce payments can take weeks, putting pressure on working capital. To address this, we:
- Built a dynamic cash flow forecasting model to account for receivables and upfront logistics costs.
- Recommended consignment-based agreements with distributors to reduce inventory holding costs.
- Introduced credit lines to bridge payment gaps.
Pro Insight: Maintain a 90-day rolling cash flow reserve and explore early payment discounts or invoice financing for quicker receivables.
The Results: Turning Supply Chain into a Profit Center
After implementing these changes, the brand experienced:
- SLA compliance improved from 65% to 90%, reducing penalties and delays.
- Delivery lead times dropped by 30%, improving customer satisfaction.
- Inventory turnover increased by 25%, freeing up working capital.
- Logistics costs reduced by 20%, boosting margins.
- Cash runway extended by an additional 3 months, giving the brand more breathing room for growth.
Key Takeaways for D2C Founders
Scaling your D2C brand through quick commerce isn’t just about logistics—it’s about building a supply chain that fuels profitability.
Here’s what you can do:
- Hybrid Models Work: Balance centralized warehouses with regional distributors for efficiency and cost savings.
- Leverage Technology: Invest in real-time inventory management to eliminate stock mismatches and improve visibility.
- Negotiate Smart: SLAs should align with your operational capacity—don’t let unrealistic terms hurt your business.
- Plan for Cash Flow: Forecast receivables and plan for upfront logistics costs to avoid cash flow crunches.
- Optimize Costs: Use data to identify cost-saving opportunities in your logistics operations.
Let’s Solve This Together
The supply chain isn’t just about moving products; it’s about driving profits.
At ProCFO we work as strategic partners to help D2C brands navigate these challenges with actionable strategies and measurable results.
