Why do Grocery Retailers Need Direct Store Delivery (DSD)?

Direct Store Delivery (DSD) providers are responsible for managing 25% of goods sold and — get this! — over half of a typical grocer’s profits. 

But in some ways, we shouldn’t be surprised by these figures. After all, DSD vendors supply a vast quantity of high-demand, fastest-moving items including bread, snacks (sweet and savory), and beverages like beer, wine, and soda. 

In fact, 9 in 10 shopping baskets now contain items sourced via DSD.

In this article, we’ll look recap on what Direct Store Delivery is and the value it can add for grocery retailers across the world.

What is Direct Store Delivery (DSD)?

Direct Store Delivery (DSD) is an efficient, cost-effective solution for grocery retailers — and represents a radical distribution approach for many retailers.

In DSD, products are delivered from the supplier or distributor directly to the store, without passing through the retailer’s own distribution center; the act of unloading and stocking usually falls to the distributor.

Not only is this workflow more efficient, involving fewer middlemen, but it’s also better for the environment (a huge ‘plus’ for eco-conscious and/or mission-driven brands). DSD results in a reduced number of trucks on the road, which means fewer emissions and easier traceability. 

And since less fuel needs to be used for transportation, DSD helps reduce costs too — which many retailers will be pleased to hear given the current volatility in global oil prices.

Is there anything that Direct Store Delivery can’t help improve?

Let’s find out…

Why do retailers need DSD in 2023? — 5 benefits of Direct Store Delivery

There are a number of reasons why DSD is a better option compared to centralized distribution if you’re a grocery retailer.

DSD gets your product to the shelves faster

DSD is the fastest way to get products onto your shelves. 

With traditional distribution methods, your products may sit in a warehouse for weeks before they are delivered. And when you’re dealing with perishable products, like food, or high-demand products, like BBQ items, you simply can’t afford wasted time between the warehouse and your store.

As well as offering speed, DSD happens to be more flexible than other distribution methods — retailers can place orders as needed rather than stocking up on inventory that might not sell quickly enough, or at all. This reduces costs by freeing unnecessary storage space and reduces waste from expired food items. 

When retailers are able to order based on real-time demand instead of having to order large inventories, they also benefit from reduced ordering cycle times. This allows them to respond quickly when customers request new items or change their shopping habits.

And as we’ve seen with TikTok food trends, like baked feta cheese pasta, when CPG products are hot, you want them on — and flying off — your shelves in lightning-quick time!

DSD improves warehouse efficiency

You may decide that not all products are suitable for DSD, and that’s okay. Because when you shift your fastest-moving items to Direct Store Delivery, this alleviates stress on the rest of your warehouse. When fresh products are delivered daily, weekly, biweekly, or whatever cadence you need, that creates tons more space for you to stock up on non-perishables when the time (and price) is right. 

If your grocery store has a Direct To Consumer or eCommerce arm, you can also use DSD to deliver products directly to customers’ homes or offices, which means you won’t need as much room in your warehouse, especially for non-food items, like toilet paper and toothpaste. 

DSD reduces labor costs

Bread, soda, milk — for many US households, these are everyday essentials. But they aren’t always super high value for retailers. In fact, when you put any of these goods on promotion, then your profit margin risks being tight indeed.

Here’s where DSD can offer another benefit: reducing labor costs for your store. Your Direct Store Delivery partner can stock, re-order, and even merchandise these goods for you — leaving your in-store staff to focus their energy elsewhere. 

It’s because of this that DSD has been found to save retailers 25% on labor. 

And if like many other businesses, you’ve been struggling with labor challenges over the last few years, then DSD can step in and augment your shortages.

DSD increases visibility on both sides of the supply chain

We can probably agree that the more visibility your suppliers have in the supply chain, the better the outcome for everybody. So why not have your distribution partner be front and center, in your store(s), seeing for themselves what sells well and what doesn’t?

With greater visibility, you can then work together to evaluate sales results and make adjustments faster than ever before — leading to smarter inventory management, improved forecasting accuracy, and, ultimately, even happier customers. 

And when we consider the potential of blockchain technology to revolutionize supply chain management, your DSD vendor can take on the responsibility of knowing exactly where one of their products is at any given moment, from production through delivery, so they can have the right amount of goods available when they’re needed.

For example, your DSD partner can track your inventory levels down to individual cases; if an item is out of stock at a particular store, they'll know exactly how many cases are on hand (or missing). They'll also know if an item needs restocking immediately or if there's time to wait until next week when deliveries are scheduled again.

DSD reduces costs for everyone

DSD saves money on out-of-stock items, reduces inventory storage costs, and increases customer satisfaction for retailers. It allows manufacturers to track their products from production through delivery and into the hands of consumers. This allows them to have confidence that their products will be exactly where they are needed and when they are needed, and save money on costly recalls.

If your grocery business has yet to explore the power of Direct Store Delivery, what are you waiting for exactly?

Buffalo Market is Direct Store Delivery 

Buffalo Market’s US-wide team puts Direct Store Delivery to use for a range of grocery stores, big and small. We know the benefits that DSD can deliver to the food and beverage industry, and we build on them with our vast experience and genuine drive to help your business grow. 

For some more specific resources on the power of DSD, you can visit:

• Direct Store Delivery: How Buffalo Market Employs DSD to Serve Brands
• How DSD is Changing Bread Distribution
• How Grocery Distribution Can Overcome Supply Chain Issues with DSD

Or get in touch today to organize your shift over to Direct Store Delivery.