Dermalogica traditionally maintained a lean supply chain, operating two company-owned distribution centers - one in Southern California and another in Kentucky. This setup served their omni-channel model, supporting both retail and ecommerce from a shared inventory pool.

However, as Dermalogica's ecommerce volume grew, cracks appeared. DTC orders differed significantly: smaller, more varied, frequently bundled with sample items, and heavily regionalized. 

Consequently, orders were often split between warehouses, resulting in fragmented shipments.

During peak periods, 25-30% of ecommerce orders shipped in multiple parcels, driving up:

The real issue wasn't just split shipments - it was the lack of real-time inventory visibility and intelligent order routing. Without these, Dermalogica could only monitor lost revenue, rather than proactively prevent it.

To tackle this, Dermalogica strategically separated ecommerce as its own business unit, requiring a dedicated fulfillment strategy. This called for intelligent inventory management, sophisticated routing, and a competitive customer experience.

Enter Fenix Commerce - a routing and delivery optimization platform specifically designed for these complex scenarios. Fenix offered:

That made Fenix the ideal partner to power the next phase of Dermalogica’s DTC strategy.

Dermalogica began by ringfencing inventory for DTC. This meant separating ecommerce stock from retail and export - giving the team control over where product was placed, how it was replenished, and which orders it supported. 

This was critical. 

Without dedicated inventory, no amount of routing logic could fix the problem.

Dermalogica transitioned from two distribution centers to a seven-node fulfillment network:

This distribution approach placed inventory closer to customers, reducing transit times and parcel costs. Inventory was strategically allocated across nodes based on regional demand, avoiding unnecessary SKU duplication.

The key to making this network work was consistency. Dermalogica standardized execution by using Flex - a lightweight WMS that ran Dermalogica’s operations inside each 3PL. 

Even if the warehouse used a different system for other clients, they used Flex to run Dermalogica’s workflows.

This gave the internal team visibility into every facility. It also made it easier to onboard and scale 3PLs without reengineering operations each time.

Fenix became the central routing and decision-making engine. It pulled real-time inventory data from all nodes and combined it with:

Fenix made the fulfillment decision before the order was placed. Customers saw a clear, accurate delivery promise on the product page, in the cart, and during checkout. 

Behind the scenes, Fenix chose the node and carrier most likely to fulfill the order on time, without splitting it.

The rollout happened in phases:

This phased rollout kept the complexity low. Orders were routed intelligently from day one. New nodes went live without disrupting existing flows.

One part of the project that made everything else possible was getting data alignment right from the start.

Dermalogica ensured accurate and timely:

Dermalogica made this work by investing early in data cleanup and system integrations. That upfront effort meant the routing logic could run in real time - at millisecond speeds - and make decisions that were both fast and accurate.

Dermalogica’s split shipment rate wasn’t the problem - it was the result of multiple systems not talking to each other in real time. Shared inventory between retail and ecommerce meant DTC couldn’t reliably get complete orders out of a single node. Without a centralized decision layer, the system defaulted to the lowest-common-denominator logic: fulfill what you can, from wherever it’s available.

The fix wasn’t just more warehouses. It was a coordinated redesign across network structure, inventory segmentation, fulfillment tech, and customer promise.

The takeaway: if your split rate is high, it’s probably not about fulfillment speed. It’s about control. And control starts with better alignment between inventory, systems, and the promise you want to make.

Most legacy OMS platforms make fulfillment decisions after the order comes in. They prioritize warehouse costs or carrier rates, but they miss the upstream lever: helping the customer make a decision with confidence.

Fenix brought routing upstream. It calculated the optimal fulfillment node and carrier before checkout. That enabled:

Dermalogica didn’t just ship smarter - they sold smarter.

If you want to fix fulfillment, start with the customer experience, not the shipping label.

Dermalogica could have let each 3PL run their own playbook. Instead, they imposed Flex - a unified, lightweight WMS - inside every location. That made operations more repeatable and less dependent on the 3PL’s default systems.

It also gave Dermalogica a clean layer of visibility. They could track inventory and performance in real time, without stitching together data from six systems.

The signal here: If you’re serious about scaling a distributed network, standardize early. Fragmentation doesn’t scale - it multiplies chaos. Uniform tools = consistent execution.

When Dermalogica turned on estimated delivery dates, conversion jumped by 19%. Nothing else changed - not price, not product, not UX. Just a better delivery promise.

For customers, seeing an actual date (“Get it by Friday”) builds trust. It signals professionalism and reduces friction.

That trust translates into dollars. And it compounds over time - especially when the delivery experience matches the promise.

Many brands treat delivery communication as an afterthought. Dermalogica proved it belongs at the center of the funnel.

Jason didn’t just run the warehouses. He managed a portfolio of 3PLs, shipping nodes, sourcing partners, and inventory strategies - all with an eye toward flexibility and responsiveness.

He made medium-term bets, reassessed locations every few years, and avoided locking into rigid long-term leases. When tariff pressures shifted, the team moved sourcing. When Canada or Europe showed signs of instability, they pre-positioned inventory.

In other words, he treated logistics like capital allocation.

That mindset is becoming essential in today’s environment - where costs, demand, and regulations change quickly. You can’t plan your way to perfection. You need to be able to rebalance in real time.

Before implementing a solution, clearly establish whether split shipments are hurting your operations. Look for these specific indicators:

If you're consistently seeing these signs, split shipments are impacting your bottom line and customer experience. The good news: Dermalogica successfully navigated this exact issue. 

Here's the structured playbook you can use to replicate their success.

Objective: Clearly quantify the operational and financial impact of split shipments.

Actions:

Outcome: Leadership fully understands the issue’s magnitude, allocating resources and commitment to a dedicated solution.

Objective: Ensure ecommerce inventory isn’t diluted or shared across multiple sales channels.

Actions:

Outcome: Complete control over ecommerce inventory placement, essential for precise routing decisions.

Objective: Optimize inventory placement to achieve faster, cost-effective deliveries.

Actions:

Outcome: A carefully balanced, financially justified multi-node fulfillment network is established.

Objective: Implement proactive, intelligent order routing capabilities.

Actions:

Outcome: Chosen routing solution fully integrated into your fulfillment ecosystem.

Objective: Create consistency in fulfillment execution across multiple 3PL-operated warehouses.

Actions:

Outcome: All nodes follow an identical, measurable operational framework, ensuring high quality and scalability.

Objective: Provide customers accurate and trustworthy delivery timelines at every shopping step.

Actions:

Outcome: Improved customer conversion rates, trust, and satisfaction due to reliable delivery communication.

Objective: Ensure successful, risk-managed expansion of your new fulfillment network.

Actions:

Outcome: Fully operational fulfillment network, achieving targeted KPIs without major disruptions.

Objective: Maintain operational excellence through continuous management and oversight.

Actions:

Outcome: High-functioning, agile fulfillment network continuously managed to meet performance standards.

Objective: Reduce parcel shipping costs by leveraging your improved fulfillment efficiency.

Actions:

Outcome: Significant parcel spend reduction (5-8%) as carriers recognize and reward your operational improvements.

Objective: Maintain and enhance efficiency as demand patterns and operational conditions evolve.

Actions:

Outcome: Consistently optimized network delivering sustained high performance and customer satisfaction.

Once your network is live, tracking the right KPIs is what keeps it healthy. 

These 12 metrics show if split shipments are going down, delivery promises are holding, and costs are trending in the right direction.

Here are key metrics you can track, driven by my learnings from Dermalogica’s project.

If you want to go deeper on this project, here’s the full conversation I had with Jason (Director of US Logistics at Dermalogica) and Akhilesh (CEO of Fenix Commerce).

We cover the entire journey - from the operational pain points that triggered the change to how they rolled out a 7-node fulfillment network, reduced split shipments to under 1%, and tied delivery experience directly to revenue. It’s a detailed look at what it takes to build a customer-first supply chain that actually performs.

This conversation has been edited for length and clarity.

Can you walk me through how Dermalogica’s fulfillment network was set up before this project began? What problems were you running into?

Jason: We were running two omni-channel distribution centers — one in Southern California and another in Louisville, Kentucky. These were both owned and operated by us, and all of our U.S. inventory was housed between those two locations.

The biggest issue was balancing inventory between the two sites. We had trouble getting the right SKUs to the right place at the right time — especially when it came to ecommerce, where order profiles are smaller but more varied. A lot of our DTC orders contain multiple SKUs and promotional items, so unless both DCs were perfectly stocked at all times, we’d end up fulfilling orders from both locations. That meant split shipments, which created waste in packaging, labor, and shipping — and ultimately hurt the customer experience.

We didn’t have a proactive system to solve for this. We were measuring the problem after it happened, looking back at shipment data to understand how bad the situation was. That’s when we realized about 25–30% of all DTC orders were being split across two parcels. That was a huge red flag — it gave us the push to rethink how we handled fulfillment and order routing altogether.

Did you try solving this internally before looking at external partners like Fenix

Jason: Initially, we didn’t have any specialized tools to fix it. Our solution was just measurement — we’d quantify how many shipments were being split and try to figure out why after the fact.

There wasn’t much we could do in real time to prevent it. Our systems weren’t built for that kind of dynamic routing. We weren’t able to predict or prevent split shipments — just react to them. So after a while, it became clear that if we wanted to scale our DTC business and treat it seriously, we’d need to bring in a more intelligent layer of order management.

What triggered the shift? Why bring in Fenix specifically?

Jason: It was really a broader strategic decision. We wanted to treat ecommerce as its own standalone business — not just an extension of our retail or export channels. That meant standing up a dedicated fulfillment infrastructure for DTC, which included expanding beyond our two owned warehouses and building a national network with 3PLs.

But even with more nodes, the split shipment problem wouldn’t go away unless we had the right tech in place. That’s when we looked at Fenix. What stood out to us was that they could intelligently route orders across a multi-node network and offer delivery date visibility at the same time. We weren’t just solving for cost — we wanted to improve the customer promise. Fenix gave us the tools to do both.

From your perspective, what did you see in Dermalogica’s setup that made this a good fit for Fenix?

Akhilesh: We had actually been in touch with the Dermalogica team even before they reached out. From the outside looking in, you could tell they were a high-quality brand with a strong customer base — but the delivery experience wasn’t where it could be. You couldn’t see real-time delivery promises, and we suspected there were operational inefficiencies behind the scenes.

When they made the decision to expand their fulfillment network and treat DTC as a separate business line, the timing aligned. Jason’s team wasn’t just looking for a warehouse management solution — they needed an intelligent routing layer that could sit on top of multiple warehouses, pull in real-time inventory data, and make smart decisions about where to fulfill each order from.

Our platform is designed exactly for that scenario. We sit between the front end and back end and enable real-time brokering of orders — based not just on cost, but on customer experience, speed, and availability. That’s what made it a great fit.

How does the routing engine actually work? What makes it different from a typical OMS or WMS?

Akhilesh: Most OMS and WMS platforms were built 15–20 years ago, and ecommerce was an afterthought. Their logic is very linear — usually a single-dimension cost optimization that happens after the order is placed.

Fenix flips that model. We optimize before the customer checks out. While they’re still on the product page or in the cart, our engine calculates the best node to fulfill the order from, based on inventory availability, carrier performance, zone optimization, and other business rules.

That requires real-time data feeds from every warehouse, plus machine learning models that evaluate:

And all of that has to happen in milliseconds — not seconds — or you lose the customer.

This is the key difference: we don’t just route orders after they’re placed. We broker the order during the shopping experience, so the customer gets an accurate delivery date and the business gets a more profitable fulfillment decision.

How did you approach inventory placement across the new network?

Jason: We ringfenced inventory for DTC — which means it was completely separate from our inventory for retail, export, or manufacturing. That gave us the flexibility to place product specifically for ecommerce.

We didn’t try to replicate all 200 SKUs across all seven nodes. Instead, we set min-max levels at each location based on historical regional sales. That allowed us to optimize our inventory investment and specialize certain warehouses.

That strategy wouldn’t have worked without Fenix. Their routing logic could account for those differences and still get the order fulfilled fast — without splitting it across nodes.

What did implementation look like?

Jason: We rolled it out in phases. The first thing we did was connect Fenix to our two owned warehouses. That allowed us to immediately offer delivery promises and track split shipments — even before the rest of the network came online.

Then, every couple of weeks, we brought on a new 3PL node. We’d have a call, flip the switch, and within minutes orders would start flowing to that facility.

The whole process was smooth. Each 3PL site went live on schedule without major issues.

Did this change how your teams operated internally?

Jason: We didn’t add headcount — but we did shift roles. One of our team members who used to work inside a warehouse now manages our entire 3PL network.

He handles:

We also standardized 3PL operations using a platform called Flex. It’s a WMS-lite system that runs just our business inside each 3PL — even if they use a different WMS for other clients. That way, we can enforce consistency across the board.

What kind of results did you see?

Jason: We went from 25–30% of DTC orders being split to under 1%. In a recent month, we shipped 25,000 ecommerce orders — and only 50 were split. That’s unheard of.

We also saw a 19% lift in conversion after we added estimated delivery dates to the site. Giving customers a clear, accurate promise — especially on the product page and in the cart — made them far more likely to complete the purchase.

We’re also now shipping 95–99% of orders within zones 2–3, which has helped us negotiate better rates with UPS. Our reps even bring it up during quarterly reviews — they highlight how efficient our shipping network has become.

How did adding delivery dates improve customer experience?

Jason: Before Fenix, we were vague — “3–4 business days” was the standard message. We didn’t tell customers if their order was being split, or when each item was arriving.

Now we give them a precise delivery date before they place the order. That gives a sense of confidence — and elevates the overall experience.

It made our site feel on par with Amazon or Sephora. That alone gave us a serious bump in perceived professionalism and trust.

What data was critical to making this work?

Akhilesh: To do this right, we need:

We combine all of that to dynamically determine the best fulfillment and delivery strategy per order — at the time the customer is still browsing.

How are you thinking about sourcing and trade policy shifts like 321 or tariffs?

Jason: We manufacture in the U.S., but we’re a net exporter — about two-thirds of our output is shipped abroad. We do source components globally though, including from China and Korea.

When the first wave of tariffs hit, we shifted about 50% of that sourcing back to the U.S. We’ve also moved inventory into Canada and Europe preemptively to manage trade risk.

We’re exploring more regionalized manufacturing too — including a partner in Spain. That gives us faster delivery into Europe and helps reduce tariff exposure.

Rather than locking into long-term infrastructure, we reassess every 2–3 years. That keeps us flexible while still being proactive.

What advice would you give to other brands considering a project like this

Jason: Don’t think of your role as just running operations. You’re running a business — and the customer is your end user. If you’re not solving for their experience, you’re missing the bigger picture.

Akhilesh: When DTC becomes a real growth driver, it’s not enough to optimize shipping costs. You need to start with the customer experience — and work backwards from there.

That’s what unlocks both the cost savings and the revenue lift. That’s where modern order routing — or brokering — really creates value.