Industry Insights From Renewal Logistics:
3PL for the Fashion Industry
1. Because there are SO MANY SKUs!
Most fulfillment and distribution operations have a simplified WMS that works great for most product categories such as Consumer Packaged Goods, or pallet in pallet out inventory, where there are a handful of skus. With apparel, for every 1 design, there is usually a size range of 8-14 different variants, and often as well there are different colors and patterns.
So for every 1 style, there can be up to 30 or 40 different SKUs!
Most apparel companies have a few lines per year, and each collection may have as many as 25-45 new items. At 25 items, this means there may be an average of 750 skus. And that’s just for 1 season!
To make things more tricky, each item is stored folded, in a polybag. So, every item looks exactly the same as every other item. The only defining feature is color. Which means the workers we employ must have an extremely attentive eye for detail. While every item does have a rack location, and a sku code, that must be scanned to confirm the order is correct, with apparel there is still a much higher chance for error than other products.
If you’re going to pick a cosmetic product for example, the size and shape of the packaging from an eye cream to a lipstick is different enough to where its easy to quickly tell if there’s an issue. Not so with apparel. This is why so many brands who go with 3PLs that don’t specialize in apparel have so many mis-shipments. Inventory control is a lot more complex.
2. There are tons of Value Added Services programs and projects.
Today we’re creating Costco pallets for one of our baby clothes brands. Costco likes to have product arrive on Chep pallets, prepared in such a way that a minimum wage associate can roll a pallet of product off of the back of a truck, and place it on the warehouse floor, cut off the shrink wrap, and the product is ready to sell.
For this program, the product arrives to us in Single Sku Cases, and we then open the cases, sort the goods into Multisku packs, repack these Multisku prepacks into new cases with a certain presentation that is appealing to shoppers, label the cases, and repalletize the cases according to certain specifications. If we do this incorrectly, our customer will be fined or charged back a minimum of $3,000 per truckload for non compliance.
We do programs like these for clients that sell into Costco, Sams, BJ’s, and more. And we do hundreds of thousands of these pallets, maybe millions a year.
There are so many opportunities to sell apparel in creative ways if you have the resources to package goods dynamically at scale.
3. High Volume Returns & Recirculation
With apparel as opposed to other consumer products, the return rate can range from 20-50%.
The challenge with this is that many items that are returned were tried on. Which leads to deodorant removal needs, odor removal needs, refurbishment, refolding, and replacement of brand tags or price tags. The majority of items that come from a return will likely need to be refolded and placed in a new polybag, with a new UPC bag tag.
The try on process can be damaging to clothing, and can result in a high number of items that can’t be resold as new. Especially if a brand is using a 3PL for returns management or reverse logistics, that does not have cleaning or refurbishment resources.
We have an 85,000 sq. ft apparel cleaning facility, which includes equipment for wet cleaning, dry cleaning, steam cleaning, Steam tunnel, pressing, spot cleaning, and alterations.
We are able to remove the brand tags, trim, and price tags, clean the items, and replace those brand tags and price tags, after pressing the items and folding them so that they are factory fresh again.
Many brands think that any cleaning will deem the product second quality, however that is not the case. Almost every item that comes into the US from a factory was cleaned prior to arriving in the US.
Re-cleaning is not the limiting factor. The limiting factor is usually the damage that can occur to the tags and trim items in the removal/replacement process, and if you’re dealing with Renewal Logistics, we have specific ways to accomplish this without any damage.
Due to our vast apparel restoration and cleaning resources, Renewal Logistics is also specially prepared to help brands set up and manage re-commerce programs, which are also known as sustainability or circularity programs. We are able to help brands catalog gently used items, by item type, value, degree of damage, location of damage, and gender. And Renewal Logistics can also load these items into the e-commerce platform of our client’s choice to then sell these items to their loyal customers who appreciate the brand’s mindfulness and desire to treat the planet responsibly.
4. GOH (Garment on Hanger)
Renewal Logistics is also capable of managing product that arrives GOH, or Garment On Hanger as well. For most apparel brands, there is a need for an omni-channel approach. Goods need to arrive from the factories into the US in 2 ways, prepared to go directly into a brick and mortar store, so, on a hanger, as well as packaged for e-commerce. Goods that go into a brick and mortar store will need to be displayed on a hanger. Goods that are sold e-commerce will need to be taken off a hanger and folded in such a way to minimize its size to ship as inexpensively as possible.
For most companies, inventory planning is handled as best as possible, but it is often impossible to forecast which product will sell best in a store versus online. So, most brands will have over half of their goods arrive in the US already on hangers so that if they have to convert the goods to e-commerce, that process is easier than converting e-commerce (folded) goods to hanging, because that often requires an added step of steaming. The process of putting an item on a hanger also takes longer than taking an item off of a hanger and folding for e-commerce, so most companies will have the factory, which has much more affordable labor rates, do that process before it makes the trip to the US.
Once brands know what sells best through which channel, there is usually a conversion process that takes place. The goods that aren’t selling as fast in the stores are then converted to e-commerce packaging, and then those goods are shipped out, either in bulk to a retailer, or drop shipped B2C on a retailer’s behalf.
This conversion process requires a lot of labor, but only for a short time. Today there may be 20,000 orders that need to ship, tomorrow there may only be a few hundred. Product ships to retailers in waves. So, its helpful for wholesalers to have partners who can manage Value Added Services at scale in order to supplement their full time labor, in order to complete these projects that involve so much variance.
Looking For More?
If you ever want to chat with our existing clients, many of them we have NDAs with, so I can’t share their names on the website or in our newsletter, but I assure you, you’ve purchased product from them, and if you want to verify our consistency, accuracy, and ability to handle complexity with ease, they’ll be happy to talk to you.