A recent survey highlights the challenges faced by retail brands as they scale operations, revealing the increasing complexity of fulfillment strategies and the shift toward third-party logistics.

A recent survey conducted by Radial, Inc., a bpostgroup company, has revealed significant challenges faced by retail decision-makers as brands begin to scale their operations. The survey, which included responses from 200 retail executives, highlights how fulfillment strategies become increasingly complex when brands approach the $50 million revenue mark.

According to the findings, many emerging and tech-driven retail brands continue to handle fulfillment in-house, with 70% of those surveyed relying on that model despite increasing challenges posed by consumer expectations for faster and seamless delivery. Notably, 59% of these brands manage their operations from a single distribution facility. “As modern retailers scale operations and navigate customer demands, many are finding that in-house fulfillment alone is not sustainable and stretches their internal resources,” commented Tom Schmitt, CEO of Radial, in a statement. He noted that when brands approach the $50 million revenue milestone, there often comes a need to outsource fulfillment to third-party logistics (3PL) providers, with the intent to unlock efficiencies and adapt to the ever-evolving retail landscape.

Furthermore, nearly half of the respondents, or 47%, indicated that managing growth and scaling operations presents a significant challenge within their current fulfillment strategies. Limited capabilities to add new sales channels were noted by 44% of respondents, and 40% attributed their struggles to inflexible technology. Despite these challenges, a notable 60% of brands generating under $50 million in revenue maintain their in-house fulfillment approach using a single distribution center.

As brands work towards the $50-$200 million revenue range, the survey findings suggest a marked increase in the tendency to use 3PLs, with reliance growing to 57% for brands within the $50-$100 million range, 72% for those in the $100-$150 million range, and 76% for brands in the $150-$200 million range. The data emphasizes the necessity for retailers to zero in on their core competencies and develop partnerships to bridge existing knowledge gaps.

The survey results also shed light on the dominance of brand websites as the leading retail channel, utilized by 72% of the respondents. This trend is particularly strong among home furnishing brands, with 89% citing it as their primary sales avenue. Other sectors such as apparel and sporting goods also reported significant utilization of their websites for sales. Walmart and Amazon emerged as dominant platforms for retail expansion, with 56% of companies indicating plans to sell on these channels, while acknowledging a retraction by 49% from Walmart and 47% from Amazon due to stringent requirements and fees.

While emerging sales channels such as TikTok Shop, Temu, and Shein garnered interest, they remain secondary to established marketplaces. Brands that take an omnichannel approach to fulfillment are more likely to position themselves for sustainable growth.

Transportation costs and fulfillment logistics also emerged as pressing concerns for retailers. Unexpected additional charges were a significant issue for 45% of respondents, escalating to 53% among larger brands exceeding the $100 million revenue mark. High base costs were similarly problematic, especially for smaller brands under $50 million, with 58% experiencing challenges as a result of more limited negotiating power with carriers. These findings underscore the importance of partnering with a qualified fulfillment provider to navigate the complexities of transportation and secure favorable rates.

The methodology for the survey was conducted by Radial through Dynata in March 2025, targeting key decision-makers across various sectors, including Apparel, Accessories, Home Improvement, Sporting Goods, Home Furnishings, Health & Wellness, Electronics, and Toys.

This comprehensive research indicates that the fulfillment landscape for retail brands is fraught with challenges as they grow. The evolving nature of consumer expectations, coupled with the need for efficient logistics, prompts brands to reconsider their in-house fulfillment strategies in favor of more collaborative arrangements with 3PLs and other logistical partners.

Source: Noah Wire Services