Dive Brief:
- Levi Strauss opened an e-commerce fulfillment center in Erlanger, Kentucky as the company looks to drive growth in its direct-to-consumer and e-commerce business, CEO Chip Bergh said during a Q2 earnings call.
- The 575,700-square-foot facility will serve e-commerce orders for the East Coast, according to an announcement from the Kentucky Cabinet for Economic Development, with shipping operations already begun in July, the CEO said.
- “This completes bringing our U.S. e-commerce business in-house, which will drive more agility and inventory positioning, reducing lead times, improving customer satisfaction and accelerating digital margin expansion over time,” Bergh told analysts.
Dive Insight:
Levi’s struggled to fulfill orders throughout the pandemic due to capacity constraints at some U.S. distribution centers and trapped inventory in closed stores. Since then, the retailer has worked to optimize its fulfillment operations.
While the Kentucky facility will serve East Coast customers, Levi’s Nevada distribution center fulfills West Coast e-commerce orders.
The retailer’s Nevada omnichannel fulfillment facility consolidates wholesale, retail and e-commerce fulfillment under one warehouse, despite being separate operations. One main warehouse handles wholesale and retail merchandise, and about 100,000 square feet of open space on the second floor is used to handle e-commerce orders, according to a June 23 Levi’s blog post.
As the retailer looks to expand its fulfillment capabilities and move away from third party facilities, the omnichannel fulfillment center improves Levi’s “in-stock availability of items by easily transferring them within one warehouse and reduce the lead-time needed to get items ready to ship to consumers,” according to the blog post. Handling e-commerce fulfillment is different as it tends to be two or less items at a time, versus wholesale and retail which can be hundreds of items at a time.
"Overall, our digital and e-commerce businesses remain under penetrated versus peers and the channel represents a tremendous sales and profit opportunity for the company," the CEO said.
