Getting Up on the Right Side of the Bedding
Direct-to-consumer bedding e-retailer Buffy Inc. woke up in a logistics world where quick-turn, no-hassle deliveries and returns have become routine.
More to the Story:
Buffy Inc., a direct-to-consumer e-tailer offering the Cloud Comforter product. Free shipping, a 30-day trial program, and free returns created logistics challenges.
Boxzooka, an e-commerce order fulfillment, WMS, and global selling partner.
In December 2017, Buffy launched with a single product, its Cloud Comforter, offered in three sizes. As orders increased, the company realized early on that it needed a better way to optimize warehouse and order fulfilment operations. Buffy wanted a logistics solution that would meet its business requirements and help it grow in the unpredictable business-to-consumer space. It found what it was looking for with Boxzooka, a third-party logistics (3PL) and warehouse management system provider.
"Our model is different from other B2C companies because we offer a free 30-day trial for customers," says Jordan Bloom, Buffy's director of operations. "That means we had to figure out both the outbound shipping and the returns process. Customers have the option of testing our product, and sending it back if they don't want it.
"Luckily, most of them keep it, but it's critical that we have a good return platform in place," she adds.
Buffy's try-before-buying direct-to-consumer (DTC) model aims to create a personal relationship with bedding customers looking for an eco-conscious comforter. But that concept presented the New York City-based startup with several logistics challenges—most notably its ability to compete and scale in a business environment growing ever more comfortable with the Amazon Prime model of hyper-fast delivery.
"Our main logistics worry is that we need to compete in an Amazon Prime world," says Bloom. "Our customers expect to get their product in two days. We try to optimize for customers getting their product as soon as possible while ensuring that they have a great unboxing experience." She notes that the company's initial shipments arrived two to four days after order placement.
Meeting customer expectations sparked the search for a 3PL partner and a strong technology-based warehouse management system (WMS) solution.
The Startup Crunch
Like other young DTC e-retailers, Buffy had to face the unknowns associated with securing supply and manufacturing capacity, managing inventory, processing and fulfilling orders, satisfying customers, handling returns, and developing brand recognition.
On the supply planning and manufacturing side, Buffy had an advantage. One of its founders, Leo Wang, comes from a family that has been in the bedding industry for more than 30 years. His family makes pillows, sheets, and comforters for big box retailers, and has strong relationships with Chinese manufacturing companies. Buffy was able to tap into this industry expertise and build on that tradition as a way to carve out its own niche in the luxury bedding product segment.
The overall bed linen and bedspread industry is projected to reach approximately $61 billion by 2020, according to Statista. However, the global luxury bedding market, a smaller part of the pie, was valued at $2.02 billion in 2017, and revenue is expected to expand at a compounded annual growth rate of 2.6 percent between between 2018 and 2025, according to Coherent Market Insights.
The tougher piece was getting comforters out the door as quickly as possible during the first Christmas holiday and winter season Buffy was in business. The company, which started in San Francisco before the founders moved and launched the business in New York, used a small Bay Area 3PL for a short time to get things going.
Simultaneously, Buffy had to set up an easy returns process, and then do something with the returned comforters; discarding them in a landfill was not an option for a company marketing itself as an Earth-friendly business.
Buffy opted not to refurbish its comforters; a host of hygiene-related bedding-specific regulations that vary from state to state made refurbishment unfeasible. Instead, it set up a donation program that distributes returned comforters to homeless shelters and food banks via a partner community organization.
Although Buffy's returns rate runs about five to six percent, lower than the standard direct-to-consumer volume of around nine to 10 percent, this part of the equation required attention, strategic insight, and an experienced logistics partner who could accept and reroute returns to the appropriate recipients.
Post-launch, Buffy's branding and marketing position as a high-quality comforter maker generated social media buzz, and orders began to grow. Buffy now averages between 12,000 to 14,000 orders monthly.
Off the Start Line
A few months after launch, Buffy's sales volume outgrew its 3PL's order management and fulfillment capabilities. As a small operation, the 3PL struggled to get orders out quickly, on the same day they were placed. These delays caused Buffy to fall short on its delivery commitments to end customers.
Buffy also wanted to set up bicoastal fulfillment capabilities, holding inventory on both the West and East coasts to ensure speedy delivery almost anywhere in the United States, but the initial 3PL set-up was unable to manage that kind of expansion.
Bloom, who joined the company around the time it launched, was charged with finding a 3PL that could handle Buffy's increasing order volumes.
To start, Bloom asked for recommendations from others working in the B2C space and researched companies online. Working off a list of 40 3PLs, Buffy narrowed the choice down to two or three providers, ultimately selecting Secaucus, New Jersey-based Boxzooka as its 3PL fulfillment and WMS provider.
"We picked Boxzooka for a few reasons," Bloom says. "First, after visiting its facility, I felt they could help maintain our high-quality standards for product packing. Our branding and unboxing experience is a big part of how customers get to know us.
"Second, I felt Boxzooka could help us grow, and that we could go to them with any challenge and they would help us solve it," she adds. "We are a young company and needed an experienced logistics partner.
"The third aspect was its WMS solution," Bloom notes. "Boxzooka's software was the most user-friendly, and allowed us to easily do what we needed to. It was also the most technology-focused solution for us as a business-to-consumer startup. Our whole business runs online, so it was important to work with a 3PL that was technology-focused."
The two companies teamed up in July 2018, with Boxzooka taking over a portion of Buffy's fulfillment distribution and running it through its New Jersey warehouse. Boxzooka also deployed its enterprise cloud-based WMS for Buffy's San Francisco operations.
Rolling It Out
The WMS rollout at the San Francisco facility happened over a weekend and was "very easy," Bloom says. The system was easy to use and provided instant access to inventory and order information.
By January 2019, Boxzooka moved Buffy's business to its Los Angeles hub, allowing Buffy and Boxzooka to more efficiently coordinate inventory, orders, shipping, and returns without any downtime.
"We have a strong connection with the e-commerce sales platform Shopify, as more than half of our customers, including Buffy, are on it," says Brendan Heegan, founder of Boxzooka. "Orders are placed on Buffy's website, and then drop into our WMS in real time. We begin fulfilling the orders as they come in and then quickly send them out."
The decision to use Boxzooka's 3PL and WMS solutions has shortened Buffy's shipping times, allowing the company to more consistently hit its promised two-, maximum three-day delivery window for U.S. customers.
"We started with Boxzooka on the East Coast for a few months to see how things would go. Now, moving into Boxzooka's center on the West Coast has streamlined our whole process," Bloom says. "Having inventory with one company instead of spread across two companies has been great.
"Also, because Boxzooka has two fulfillment centers, we can manage the shipping based on what makes the most sense from a fulfillment standpoint," she adds. "We don't need to draw a line down the middle of the country and say the East Coast fulfills these orders and the West Coast fulfills the others. Fulfillment is thoughtfully split up so we can optimize shipments by location."
Boxzooka also helps Buffy on the returns side by receiving and storing the returned comforters, checking the quality of the returned items, and redistributing them in bulk to the appropriate local organizations.
This level of service has helped the relationship evolve.
"When we were developing the WMS, we focused on making it user-intuitive and user-friendly," say Heegan. "We wanted our clients to be able to run their business on it. They can see orders in real time. They can see inbound freight coming into the facility and being put away. Basically, they can look over our shoulders, and feel empowered about what's happening with their business while being able to streamline their communications flow."
A Solid Base
Creating a good user experience and shipping one main product in limited size formats has given Buffy a solid base to build on.
One short-term goal is to expand its top-of-bed product lines and offer items such as sheets and duvet covers, Bloom says, adding that she expects Boxzooka's WMS and fulfillment solutions will help Buffy reach its next growth level.
Specifically for logistics, Buffy wants a two-day order-to-delivery turnaround to be the company's competitive norm. Achieving that goal will likely require setting up a third facility somewhere in the middle of the country to ensure that every customer is within a two-day reach of Buffy's inventory.
Serving international customers is also on the radar, says Bloom. The company currently can send items to Canada, but is looking to grow beyond North America over the next few years.
Will Boxzooka be part of those plans?
"We have had a good experience with Boxzooka so far," Bloom says. "The easiest path is to have one company that we have a very good relationship with own everything."
It's that kind of confidence that ensures a good night's sleep.