Rugs Direct & SPS Commerce:  Automate Drop-Ship Fulfillment

Executive Summary

Rugs Direct is the leading eCommerce retailer selling more than 200,000 SKUs exclusively through a direct-to-consumer model. The company recently acquired Lightopia in the modern lightning space. Given the structure and SKU expansion, vendor communications are essential. The company needs up-to-date inventory information to keep its online store current and meet customer expectations. To achieve this, the company automated its drop-ship fulfillment with SPS Commerce.

Since going live with drop-ship EDI, the company has doubled in size and supports its inventory management by securing near real-time information from its key suppliers. These insights set customer expectations for product availability and delivery. This process has reduced customer service complaints while sales increase.

Automate drop-ship fulfillment

Despite their current success, drop shipping got off to a rocky start for the online retailer. At one point, Rugs Direct had more than 50 vendors fulfilling orders on its behalf—with 50-plus ways of confirming those orders and getting shipment details from its suppliers.

Not surprisingly, managing all the various communications became unwieldy. So, after deploying Oracle NetSuite as its ERP, Rugs Direct sought a unified process that would standardize and automate drop-ship fulfillment across its supplier base.

To address this challenge, the retailer selected SPS Commerce Fulfillment for Oracle NetSuite, a Built-for-NetSuite certified solution. With SPS for drop-ship EDI, Rugs Direct streamlined its vendor communications. The company now receives and sends all information using one EDI format, not 50. Order and inventory details are automatically updated in the NetSuite solution.

“By using SPS to connect with our vendors, we have streamlined the shopping experience from ordering through delivery, ensuring that our customers get a great experience. We have confidence in our drop-ship supply chain. It delivers on the dates we promise to our customers.”
– Greg Culler, Chief Information Officer, Rugs Direct

Managing a disrupted supply chain

During the pandemic, global supply chains were chaotic at best. With most of its rugs shipping from India, many of its suppliers’ factories were closed or the U.S. ports were overwhelmed. Rugs Direct needed visibility into its shipments and suppliers’ inventories.

“The inventory and shipping information we received from suppliers became highly critical when our supply chains were in flux,” said Culler. “The drop-ship EDI transactions from suppliers provided us with timely updates on back orders and delays. This information helped us to accurately set customer expectations and communicate accurate delivery windows on our eCommerce site. Without SPS during this time, we would have been blind to when orders would arrive, and our customers wouldn’t receive the level of service we promise.”

Operating with no physical inventory

Rugs Direct no longer has warehouses. The retailer is 100 percent direct-to-consumer. They never touch the inventory, including returns. This model requires a high degree of communication and trust with its suppliers. To stay connected, Rugs Directs relies on the experts at SPS to onboard new vendors and instruct them on the retailer’s requirements.

With drop-ship EDI from SPS, it is easy for vendors to send updated inventory and shipping information to Rugs Direct. The retailer uses this data to keep its customers current on order status.

“We need to provide accurate inventory and shipping details to our customers,” explains Culler. “If they need a rug by a certain date, say a holiday, we want to show them the items that we can confidently know will arrive in time. With added inventory and product details, we’ve seen increased customer satisfaction and decreased returns.”

The retailer requires an increasing number of product details, and accuracy is a must. Consumers rely on this product and inventory data on RugsDirect.com to make their online selections. Receiving this data in an automated fashion means that it can be on their site in a short period of time. With its automated processes, Rugs Direct wastes no time keying in updates from emails or phone calls. Instead, data populates the website quickly and error-free.

“Above all else, customer service is the No. 1 priority for Rugs Direct,” Culler said. “Our increased visibility into vendor inventory levels allows us to accept new orders with confidence!” – Greg Culler, Chief Information Officer, Rugs Direct