It’s one of the most critical aspects of e-commerce: A well-executed fulfillment will delight your customers, while poorly executed fulfillment can turn them against you. It’s an extreme understatement to say you have to be very selective in terms of your fulfillment processes. With this in mind, here are some smart fulfillment strategies your ecommerce business should explore.
If you think it’s important to exercise as much control over the process as possible, you should conduct fulfillment yourself. This means you’ll stock products on your own, warehouse and process orders, as well as pack and label shipments when it’s time for them to go. You’ll then hand them off to a transportation company like UPS, FedEx or the USPS to get them to your customers’ doors.
There’s much to be said for this level of control. With well-trained employees following a clearly defined set of efficient procedures, you can pretty much guarantee your customers will get exactly what they ordered in the most expeditious manner possible.
Of course, this control comes at a rather steep price. You’ll have to maintain a warehouse, purchase your inventory, pay to keep it on hand and support a team of employees dedicated to operating this aspect of the business. Further, you’ll be limited to selling only what you can physically stock in your warehouse.
However, there are options eliminating the drawbacks of conducting fulfillment on your own. With drop shipping you’ll transfer orders directly to the manufacturer who will then ship the product to the consumer. Warehousing and packing are eradicated. You’ll pay only for the merchandise you sell. By leveraging a solid e-commerce website builder, you can transmit orders directly to drop shippers, automating that aspect of the process.
You’ll surrender a large measure of control, but you’ll also pay more for the products and incur drop ship fees, which will cut into your profit margin. To avoid selling out of stock items (which can cause shipping delays) you must have some method of monitoring the drop shipper’s inventory levels. If you deal with multiple drop shippers, you’ll have to keep tabs on each of them to ensure your orders are flowing to your customers expeditiously. Additionally, this strategy limits you to dealing with manufacturers who offer drop shipping.
One more key issue; returns will go back to the supplier to resolve. If customer relationships are important to you (and they should be) drop shipping inserts a layer of insulation to overcome between you and your customer.
Essentially a hybridization of the two strategies outlined above, outsourced fulfillment eliminates the need for a warehouse, as well as all the heavy lifting involved with order fulfillment.
You’ll purchase products in quantities sufficient to qualify you for wholesale discounts and have them forwarded to the fulfillment center for storage until an order is placed. You’ll then process the orders as they come in and transmit shipping information to your outsourced shipping department. This will free you from paying shipping staff and maintaining a warehouse, though you will need someone in your customer service department to communicate with the fulfillment center.
However, what you’ll save in warehousing and shipping employee costs, you’ll spend to compensate the fulfillment center. You’ll also be limited to selling only what you have on hand in the fulfillment center. Additionally, people over whom you have very little control will package, label and ship your products, introducing the potential for errors as well as slipshod practices.
In other words, each of these smart fulfillment strategies your ecommerce business should consider comes with pros and cons. Basically, it comes down to how much control you’re willing to surrender vs. how much cost you’re willing to carry. Each of these strategies is workable, as is any combination of the three. The question is what’s most effective for you?