Dermalogica Reduces Split-Shipments by 92%

Dermalogica is a professional grade skin care brand recognized worldwide for custom skin care products that work for a lifetime. Founded in 1986 by a skin care therapist, Dermalogica is the number one choice for skin care education, products, and services of more than 100,000 skin care professionals in 100+ countries. Now a part of Unilever’s Prestige Beauty Brands portfolio since 2015, Dermalogica has expanded into Retail beauty and health stores, further expanding its mission of ensuring healthy skin for all.

With Direct-to-Consumer (DTC) as the next growth driver for many CPG brands, Dermalogica needed to increase sales from their own website. To compete against more established eCommerce players, Dermalogica needed to improve the customer experience to increase conversion and customer loyalty. Fulfillment capability also needed to grow to meet online customer demands for fast, cheap shipping while holding down costs within an existing in-house warehouse network.

Dermalogica originally shipped from three warehouses across the U.S., but soon found a majority of online orders contained multiple products, combined with free trial sizes of promotional items. Too often, these orders were fulfilled via split shipments from multiple locations rather than from one warehouse that may have the entire order in inventory, driving up fulfillment, packaging and carrier costs. Items shipped separately would also arrive at different days, detracting from the customer’s experience. Dermalogica could not intelligently route orders to a single warehouse where all items were in inventory, nor could they access data history to improve ongoing inventory allocation.

To reduce shipping costs and improve delivery times, Dermalogica planned to add a 3PL partner, placing more inventory at more locations closer to the customer. But even with this strategy, Dermalogica knew split shipments would not decrease without an effective order routing solution, especially on a combined platform of internal warehouses and the 3PL’s own network, fulfilling both one-time and subscription orders.

When Dermalogica inititally approached FenixCommerce, it was clear that their order processing needs were complex. Splitting orders across multiple warehouses was creating a pile-on effect. Fenix onboarded Dermalogica to the Order Operations Platform, which can intelligently route orders to specific fulfillment locations based on configurable criteria.

Fenix processes inventory data of Dermalogica's existing warehouses and their new 3PL warehouses together. Fenix compares this real-time SKU quantity per location data against proprietary AI-models for Carrier performance to identify the optimal inventory location to fulfill orders. With this optimization in place, Dermalogica saw a 92% reduction in split-shipments during the initial stage of the implementation, solving one of the biggest problems facing their growth.

Seeing such a reduction in split-shipment, Dermalogica decided to continue pushing their eCommerce growth and implement a feature that they had tested before to lift conversions. Dermalogica understood the value of providing estimated delivery dates for conversion lift and a branded shopping experience. However, in prior testing, Dermalogica utilized a combination of tools to provide EDDs and other shopping experience, slowing down their website and increasing the cost of website operations.

Using AI-based models and data integrated within FenixCommerce, accurate EDDs are displayed at every stage of the buyer's journey in less than 2 ms and orders routed from the optimal inventory location. Having seen success with their split shipments, Dermalogica utilized Fenix once again to solve their problems.

Dermalogica found FenixCommerce to be a single solution for multiple problems. Fenix’s AI-powered EDDs met Dermalogica’s expectation for faster website operation coupled with competitive pricing and a branded shopping experience. In launching with Fenix EDDs Dermalogica saw a 19% increase in end-to-end conversions.

Sandy Johnson said “We knew from prior testing last year that showing customers actual delivery dates would lift conversion and Fenix’s solution does a great job.”

Dermalogica is thrilled to see such growth in just a short period of time. Ultimately, a refined order experience for customers and improved process for routing orders efficiently, displayed a significant impact on the e-commerce business.