Popular jeans retailer Levi Strauss is changing its logistics approach, going for a hybrid model that includes third-party logistics (3PL) providers.
The retail landscape is changing fast with increasing consumer demand patterns. Levi is tailoring its supply chain to adapt to the direct-to-customer (DTC) approach.
Supply Chain Dive is reporting that this move is designed to enhance Levi’s market position by:
- Reducing capital expenditures.
- Improving distribution.
- Focusing on the DTC channel.
Why is Levi Strauss changing its logistics model?
In a fast-changing retail environment where 41% of customers are abandoning their baskets because “delivery is too expensive.” DHL has researched an e-commerce trends report, in which they surveyed 12,000 shoppers in 24 countries.
There are three reasons that contributed to Levi Strauss’ decision to divert from its insourced logistics approach.
Cost efficiency
With a hybrid approach, Levi Strauss will now incorporate 3PL partners to save costs. This could potentially lower the retailer’s capital outlays while boosting its distribution skills.
There seems to be a general shift by businesses to using 3PLs in a bid to gain greater control over their operations.
Businesses rely heavily on third-party logistics businesses to fulfill orders efficiently and effectively. These 3PL businesses offer services from storage and shipping to inventory management and fulfillment.
Focusing on customers
Outsourcing parts of the logistics process will allow Levi to allocate more capital and resources to invest in its customers’ experience and DTC strategy. With customers demanding more personalized and sustainable shopping experiences, DTC is vital.
Shopify believes DTC brands can establish direct relationships with consumers, which can lead to greater valuable insights. This allows a retailer to improve or change the customer experience.
DTC brands manage their own product stock levels, and they communicate with customers directly.
Improving distribution
More companies are changing their logistics models to better control balance, cost, and fulfillment operations. Supply Chain Dive recons if Levi Strauss is successful, it could set a precedent for the retail industry, showcasing how to be competitive.
Third-party-logistics options
There are four types of popular third-party logistics providers. Each business’s needs and requirements determine which model will suit it best.
- Standard 3PL providers: These businesses provide basic services like product storage and transportation. They also offer clients shipping tracking and compliance management.
- Customer adapter 3PL: These businesses take care of most of the client’s needs. This includes the entire shipping process and may include managing rates and negotiating with carriers.
- Customer developer 3PL: There are fewer of these businesses, but they are the largest. They take over the entire logistics operations.
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Mia is a multi-award-winning journalist. She has more than 14 years of experience in mainstream media. She's covered many historic moments that happened in Africa and internationally. She has a strong focus on human interest stories, to bring her readers and viewers closer to the topics at hand.
