Dive Brief:
- Duluth Trading Co. is using Amazon's fulfillment capabilities for orders made on the e-commerce giant's marketplace, as the workwear retailer seeks to draw in Amazon shoppers and leverage Prime shipping benefits, executives said during a June 8 investor and analyst event.
- "It's a traditional wholesale model, which means Amazon picks up the product from our fulfillment centers," SVP and CFO Heena Agrawal said. "They own the inventory, they own the Prime shipping, they own the returns and then they order as they sell through product."
- Duluth Trading has had prior wholesale partnership experience, including with Tractor Supply, Costco and on Amazon as well several years ago, President and CEO Stephanie Pugliese said. Duluth Trading opened the door to selling on Amazon again after seeing search interest for the retailer's products on Amazon, she added.
Dive Insight:
Duluth Trading has tried keeping its inventory in-house when selling on Amazon before, but this time around, the retailer's products will flow through Amazon's fulfillment network.
Amazon has a sprawling warehouse and transportation network powering its fast delivery capabilities across the U.S., including a growing assortment of same-day shipping options. Meanwhile, Duluth Trading offers standard shipping within five to seven business days, or a more expensive express shipping option within three business days, per its website.
"I think the reason some of our customers are going to Amazon is for some of the access Amazon provides and some of the conveniences of Prime shipping, free returns and all of those things that they have built the infrastructure over," Agrawal said.
Several products are already available for sale on Duluth Trading's Amazon store. Tapping Amazon for fulfillment on these products will provide Duluth Trading with "more free time to service our own online channel and our stores," Agrawal added.
Duluth Trading will offer a full assortment of core products available on Amazon, as the retailer wants to meet customers where they shop, Pugliese said. However, the ultimate goal is for that selection to be the entry point for Amazon users to explore additional items on Duluth Trading's own website, according to Agrawal.
Duluth Trading posted a net loss of $10 million for the quarter that ended May 3. While retail store net sales increased 3.3% year over year, direct-to-consumer net sales fell 8.7% YoY as reduced promotional activity stung web traffic and conversion.
