A Guide to Implementing Retail Consolidation
5 min. read
Supply chain fun fact: The most commonly shipped goods in the U.S. are food, furniture, electronics, and clothing—some of the biggest staples of the retail industry.
Retailers receive goods from hundreds of smaller suppliers, many of whom don’t ship enough product to get the benefits of full truckload yet face fees and penalties for late and noncompliant deliveries.
What’s a shipper to do? That’s where retail consolidation comes in.
What is retail consolidation?
Retail consolidation is the process of combining smaller shipments from multiple suppliers into one large shipment before delivering it to a retailer. It’s an essential strategy in e-commerce: Many suppliers need to send less-than-truckload (LTL) shipments, which aren’t always cost-effective and can cause delays. Retail consolidation services help shippers fulfill retailers’ strict, on-time, in-full (OTIF) requirements and streamline their operations.
What is freight consolidation?
Freight consolidation has a similar definition as retail consolidation: It refers to smaller shipments being consolidated on a single truck and delivered to the same place. With freight consolidation, multiple shipments are brought to a warehouse to create a full truckload with other shipments heading to the same place.
The difference is that freight consolidation typically refers to any type of freight—not just retail products—going to any destination—not just a retailer. Freight consolidation could mean fabric going to a clothing manufacturer, tires going to a car maker, or food going to a wholesaler. Retail consolidation means products being pooled to go to a store that sells directly to consumers.
Key features of retail consolidation services
Many small businesses choose retail consolidation because it helps them better plan and streamline their deliveries through the following key features.
Thanks to retailers’ OTIF requirements, consolidators typically run a tight ship. Participating manufacturers and suppliers will have a predetermined pickup and delivery schedule that runs like clockwork. Regular scheduling helps businesses plan for shipments, speeds up delivery, improves on-time performance, and ultimately optimizes the supply chain.
OTIF is just one retailer requirement. They may also have compliance standards around label placement, pallet creation, communication, tracking, supply chain technology, and more. Retail consolidation services can help you manage these requirements and even act as a freight class guide, so you don’t end up with violations and fines.
Retail consolidation connects the dots between manufacturers, suppliers and vendors, carriers, and retailers. The consolidator will typically let you track your consolidated shipments, confirm when they’re delivered, and communicate with all parties regarding status and delays. That visibility into your shipments can give you peace of mind.
The retail consolidation process
While retailers have different compliance standards and different approved partners, the traditional process remains the same—but there are other options.
Traditional retail consolidation model
In the traditional model, the retail consolidator schedules pick-up and delivery appointments based on orders received and the needs of the retailer. The supplier gets the order ready for pickup, and the carrier picks up according to the schedule. The carrier brings them to a consolidation warehouse, where they are unloaded, scanned, picked, repacked into a full truckload (FTL), and delivered to the retailer.
Benefits of retail consolidation
Whether you choose the traditional model or the Flock Freight’s alternative, there are many benefits to retail consolidation—including speed, cost savings, and connections.
LTL doesn’t have a great record when it comes to on-time pickup or delivery. But the defined, reliable schedule for retail consolidation can improve speed and on-time performance. That, in turn, can lead to happier customers and better inventory management for you.
Consolidated retail shipments help you reduce costs in a few ways. More on-time shipments and increased compliance can mean fewer OTIF penalties and other fees, as well as fewer lost sales due to delays. Moving inventory faster and managing it better can mean lower carrying costs like storage, depreciation, and spoilage. Less handling means less chance for damage or loss. Most of all, you no longer have to pay for multiple LTL shipments, which can really add up.
Connected supply chain partners
Relationship building is logistics 101: Shippers may work with manufacturers to make their goods, brokers to arrange deals, carriers to transport, and retailers to sell. Retail consolidation has these relationships already in place, connecting supply chain partners and other shippers and coordinating the details. That integration can mean more transparency and better communication.
Retail consolidation with Flock Freight
Flock Freight has pioneered a new way to consolidate freight: shared truckload (STL). STL uses patented technology to pool freight without sending it to a warehouse.
Instead, pooled freight stays on the same truck all the way to its final destination. That can help you avoid some of the downsides of consolidated retail shipments, like increased handling that could cause damage.
How to choose: Retail consolidation vs. shared truckload
The difference between consolidation and STL comes down to optimization. With STL, there’s no consolidation warehouse, and freight is loaded last-in, first-out (LIFO) to minimize handling and keep your products together. That’s why STL has such a low risk of damage and split-up shipments.
And it isn’t just retail. Before you make your decision, check out our industry hub page to see how STL is making a difference in many industries.
What is an example of retail consolidation?
Many 3PLs offer retail consolidation services, and many retailers have certification or approval processes for consolidators. Some retailers also have their own consolidation centers. For example, Walmart has ten consolidation centers where suppliers can ship their goods. Walmart consolidates the products into full truckloads and sends it to their regional distribution centers, which then distribute it to stores.
How can you implement retail consolidation?
The key to retail consolidation is to find a good provider. Check their references and compliance record, and make sure they have experience with your type of product. Their warehouses and carriers should use the latest inventory and tracking technology, so you can stay informed. And consider other options, like shared truckload, which has similar benefits and fewer drawbacks.
What are the pros and cons of retail consolidation?
The pros of consolidated retail shipments are clear: increased delivery speed, decreased costs, and better connectivity and communication. One of the biggest cons is increased handling, because your product is unloaded and reloaded at a consolidation warehouse. Without the right expertise, consolidators can lose, damage, or delay your shipments and cause headaches.
How does retail consolidation make things easier?
Retail consolidation makes shipping and receiving goods easier for both suppliers and retailers. Suppliers who can’t fill a full truckload save money over LTL modes and get predictable pick-up and delivery schedules. Retailers also benefit from predictability, minimizing supply chain disruptions so they can focus on their customers.