Any ecommerce merchant will tell you, if more than a few of your customers receive broken, missing, late, or wrong merchandise from you, your days as a successful product company are numbered. Consumer expectations have risen in conjunction with the rising volume of products that are ordered online each year. Ecommerce merchants need to have their order fulfillment processes exactly on point to keep up with demand.<\/p>\n
Ecommerce fulfillment isn\u2019t one-sized-fits-all. Your company size, product type, and customer needs factor into the type of fulfillment you choose. Here are the most important factors when choosing your fulfillment model, and the top three most common fulfillment types in practice.<\/p>\n
Ecommerce fulfillment is the process of receiving orders, packaging, and distributing products or to the consumers who purchase them. This may mean products might be packed and shipped to stores for retail fulfillment (also called business-to-business or B2B fulfillment) directly to individual people (called business-to-consumer or B2C fulfillment).<\/p>\n
No matter where the products go, fulfillment requires putting strategic systems in place to ensures that all customers’ orders are accurately fulfilled.<\/p>\n
All ecommerce fulfillment processes include the following steps:<\/p>\n
Because there are many aspects of fulfillment, it\u2019s important to assess your business needs before choosing (or changing) your fulfilment model. Look at the following four areas, not only to choose the best model now, but one that can grow with your business.<\/p>\n
The kind of product you sell plays an integral role in your fulfillment. Is your product a raw material, or finished good? Is it something that can be ordered directly by the consumer, or a business that will eventually process it and sell it to individuals? The answers to these, and other questions will inform the type of warehouse, timing, packing materials, and specialty infrastructure you might need to process your orders.<\/p>\n
If you are a product manufacturer, you’ll likely deal with a large volume of orders which requires more warehouse space and automated processes to increase order throughput. On the other hand, if you are a new ecommerce merchant, with only a few products, and very low order volume, you may want to consider fulfilling in-house to start.<\/p>\n
Your order fulfillment location can go a long way in determining your ability to meet your customer’s expectations and fulfill orders in a timely fashion. It will also determine your shipping rate and its affordability for your customers. It\u2019s best to situate your fulfillment location close to your customers. Look to have your fulfillment done in an area where you can guarantee one- or two-day shipping to many urban areas, where carriers and transportation are abundant.<\/p>\n
The flow of your inventory is another crucial factor that you must consider. How long does it take to package and process your products? Do you need to update your products often, for example, re-flash software? Do you anticipate getting many returns (e.g. an apparel company), or need to institute a refurbishment program (e.g. an electronics company)? Understanding your products from an inventory flow standpoint is huge when it comes to fulfillment.<\/p>\n
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In-house fulfillment is basically a do-it-yourself model where the merchant will package and delivery products to customers themselves. It is a model that works best for small-scale businesses, with minimal volume. In-house fulfillment can be done out of a home, or rented storage facility.<\/p>\n
With this model, the merchant is solely responsible for all aspects of fulfillment.<\/p>\n
Benefits<\/strong>:<\/p>\n This model eliminates the cost of outsourcing fulfillment, which can include paying for storage fees, peak season charges, and other associated costs.<\/p>\n In-house fulfillment allows businesses that are highly specialized or have limited daily orders or cash flow to use their funds for personnel, product iteration, and quality packing materials.<\/p>\n Challenges<\/strong>:<\/p>\n As order volume grows, in-house fulfillment can take a lot of time and resources away from other aspects of the business. It may become overwhelming for an individual to handle. If your marketing efforts, fundraising, or product iteration start to go unattended, you may think about looking for outside help with your fulfillment.<\/p>\n In-house fulfillment may mean you don\u2019t have the oversight and experience of industry professionals when seeking the most optimized packing materials, or getting high-volume shipping discounts.<\/p>\n Third-party fulfillment is a model that allows you to outsource or hand over the management of your distribution infrastructure to a specialized logistics company that will handle your entire ecommerce fulfillment flow within its own fulfillment center.<\/p>\n Benefits<\/strong>:<\/p>\n With a 3PL you will have more free time to focus on other areas of your business. Your fulfillment provider will fully take over all your inventory management and distribution.<\/p>\n If you find an experienced 3PL they will help you get into new sales channels. A great fulfillment provider will be the catalyst for business growth.<\/p>\n <\/p>\n Challenges<\/strong>:<\/p>\n You\u2019ll be giving up a lot of the control that comes with packing and distributing products yourself. Finding a reputable 3PL is imperative as you\u2019ll be trusting a very important aspect of your business with them entirely.<\/p>\n Outsourcing incurs a cost, but once you start growing it becomes worth the money to scale your business efficiently.<\/p>\n A newer fulfillment model rising in popularity, dropshipping means the flow of products is very different from manufacturer to customer. The seller does not keep products in storage like in traditional fulfillment, instead the manufacturer keeps them until orders are placed. Products may come into the fulfillment center or distribution center but be processed immediately and get shipping out quickly. In short, when the consumer makes an order from your store, he or she is in essence ordering directly from the manufacturer.<\/p>\n Benefits<\/strong>:<\/p>\n This model is very quick to set up and may lower your overhead costs (no storage fees).<\/p>\n <\/p>\n Merchants often report an uptick in order volume when they switch to dropshipping due to more products being available; the quick turnaround time gives them the ability to sell more products in a shorter window of time.<\/p>\n <\/p>\n Challenges<\/strong>:<\/p>\n Dropshipping requires the ability to process orders quickly. You must have a very close relationship with a reliable manufacturer in order make dropshipping a success.<\/p>\n Customization of the product and quality control could be lacking, which might have an adverse effect on the order fulfillment in most cases. And since the customer interacts with you (through your store\/website), you’ll be blamed for any problems with the delivery or product itself, instead of the manufacturer.<\/p>\n There are many aspects of ecommerce fulfillment, finding a model that fits your business and will allow you to scale take major planning and strategy. Your customers are the ultimate test of your fulfillment. If you choose a fulfillment model, but are getting complaints of damaged items, late or missing packages, you\u2019ll need to reconsider. For any online business to thrive successfully, the customer satisfaction should come first. This can only be achieved if you adopt the right ecommerce fulfillment model.<\/p>\n","protected":false},"excerpt":{"rendered":" 3 Ecommerce Fulfillment Models to Consider for Your Business Any ecommerce merchant will tell you, if more than a few of your customers receive broken, missing, late, or wrong merchandise from you, your days as a successful product company are numbered. Consumer expectations have risen in conjunction with the rising volume of products that are […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","footnotes":""},"categories":[20],"tags":[2055],"class_list":["post-13589","post","type-post","status-publish","format-standard","hentry","category-fulfillment","tag-expert-advice-tips"],"acf":[],"yoast_head":"\n1.\u00a0\u00a0\u00a0 Third-Party Logistics (3PL)<\/h3>\n
2.\u00a0\u00a0\u00a0 Dropshipping<\/h3>\n
Bottom Line<\/h2>\n