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12/28/2021

CSA Exclusive: MIT partners with brand incubator to improve DTC logistics

Dan Berthiaume
Senior Editor, Technology
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Heyday and MIT are addressing issues in the DTC supply chain.

The MIT Center for Transportation & Logistics is teaming up with marketplace accelerator Heyday to create a direct-to-consumer inventory management platform.

Chain Store Age recently interviewed Kara Gandhi, head of operations at Heyday, about the San Francisco-based incubator’s efforts to create a platform that will help digitally native direct-to-consumer (DTC) brands avoid out-of-stocks and improve sustainability. Aimed at Amazon sellers but applicable for brands selling across third-party digital marketplaces, Heyday has been working with MIT on this project.

“Today, the major problem is the supply chain,” said Gandhi. “It’s the word of the hour. All hands are on deck to solve supply chain issues.”

According to Gandhi, for Amazon-native DTC brands, going out of stock affects revenue and rank on the platform.

“Often, it can be more than brands are able to overcome when competing against hundreds of thousands of other brands offering the same goods and targeting the same consumers,” stated Gandhi. “Heyday and MIT are working to solve this through investing in the supply chain, supporting brands with efforts like SKU segmentation and inventory optimization.”

Heyday and MIT conducted research on the supply chain and sustainability. Students at the MIT Center for Transportation & Logistics took five to six months to digest data and test hypotheses.

“Digitally native DTC brands have growth potential, but need some of the brightest minds to apply cutting edge research into sustainability and what they can do in an incremental way,” said Gandhi.  

To improve global supply chain sustainability for DTC brands, Heyday and MIT examined optimization methods that would reduce carbon emissions and waste.

“We looked at different packaging,” said Gandhi. “There might be plastic packaging that doesn’t have to be plastic. Across Heyday’s brand portfolio, we want to create a material impact on sustainability.”

Ultimately, Gandhi said Heyday wants to build a next-generation platform that can create and digitally accelerate DTC brands.

“We’d like to become a modern-day Procter & Gamble,” said Gandhi. “High-penetration marketplaces are largely ignored within the e-commerce industry, but 62% of e-commerce sales come through third-party marketplaces. The next large CPG brands will come from digitally-native marketplace platforms.”

Sebastian Rymarz, co-founder and CEO of Heyday, agrees with Gandhi’s assessment of the importance of third-party marketplaces to the e-commerce industry and direct-to-consumer brands.

“Marketplaces like Amazon have democratized e-commerce creation, making it easier than ever before for consumers to discover innovative new products and brands,” said Rymarz. “We’re excited to partner with these amazing entrepreneurs and leverage our platform capabilities to help them make the great leap from marketplace-native brand to household brand.”

Amazon reaches out to third-party sellers
As described in a recent Chain Store Age interviewwith David Nadel, director of selling partner trust at Amazon, the e-tail giant is opening its platform to small businesses looking for access to direct-to-consumer sales infrastructure and services. According to Nadel, Amazon can help small businesses rapidly grow their sales on its platform by providing tools, services and scale.

These include customizable, multipurpose storefronts; a brand follow feature that allows customers to sign up to receive updates on new products and promotions from selected sellers; and the Fulfillment by Amazon infrastructure which can provide full distribution for sales made on the platform.