B2C Order fulfillment
Understanding the Difference Between
B2C Order Fulfillment and B2B Order Fulfillment
Main Differentiators
There are some key evaluations when evaluating outsourcing order fulfillment to a 3PL, or third-party logistics company for an e-commerce store. Besides just finding the “right” partner, there are major differences between a B2C (Business to Consumer) focused fulfillment operation and a B2B (Business to Business) focussed fulfillment operation. The core differences are in Buyer expectations and behavior, store capacity and efficiency. Understanding these key differences can be very useful when choosing the appropriate outsourced provider.
What are buyer expectations and behaviours for B2C order fulfillment?
If your store primarily supports ‘consumers’, it provides B2C order fulfillment services. The B2C customer typically purchases products for personal use. The decision to purchase is autonomous and often driven by emotion-based advertising and marketing programs. Typically it’s a “low stakes” financial purchase and a return is the ‘worst-case scenario’. However, the emotional expectation can be “high stakes” and anticipation often completely outweighs the financial commitment.
For B2B businesses, purchase decisions are typically made by a team after some analytical process which attempts to be a ‘fact-based’ process, with the product being for commercial use. The financial commitment can often be high stakes and rather than a ‘one-off’ purchase, an ongoing vendor/supply is often expected to be long term. Short of a complete breakdown, there is little emotional investment or anticipation on the part of a buyer.
Why is this distinction important? If your online store is focussed on selling to consumers, you should first align your operation with a B2C fulfillment provider that clearly understands consumer expectations and behavior. This will typically be demonstrated by their understanding of how to plan and execute a ‘sale’…from the fulfillment perspective. How to anticipate and manage higher consumer demands (faster delivery options) for peak selling periods like Christmas. Timely and effective communication systems to the consumer such as providing timely tracking numbers or order confirmations to lower consumer anxiety and pre-empt needless customer service phone calls/emails. Ensuring your store operations staff clearly understands the differences that various carriers offer and the potential impact on the consumer. For example, does Carrier A have an adequate pickup depot network in a certain area? Finally, international returns need to be managed economically. In the event of returns, are returns processed efficiently and promptly to ensure the consumer requirement is met?
B2B oriented business will typically not be as tuned into consumer expectations/requirements and instead will be invested in volume and capacity, compliance and documentation requirements. The difference between a 5-star rating and a 3-star rating on your online store will be of little interest to their operation.
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How to leverage B2C eCommerce fulfillment providers for increased capacity and efficiency
A B2C Order fulfillment provider will have invested in systems and processes designed to facilitate efficient picking and packing of products to get to the shipping dock in as few steps as possible. Rather than rows and rows of standard height pallet racks, the work area and staging area will dominate the warehouse operation. The information system will handle a high frequency of orders and be tightly integrated into the warehouse operations. Wave picking, zone picking, cross-docking will be utilized to improve labor efficiency and economics. Given the required speed of execution, organization of work areas around customer product dynamics and the use of bar code scanning will be critical to accurate and efficient execution. In the end, as an online store, you will want to leverage additional labor to manage and execute your pick and pack operations and to have your store integrated with the B2C fulfillment operations information system. This integration, if industry-standard applications are in use, should be relatively painless. Put simply, the points of leverage are primarily labor organized around mature and effective processes and information systems.
B2B service providers will focus their operation on leveraging warehouse efficiency and transportation purchasing power (LTL and Full Load economics). The primary objective is to maintain a high level of warehouse density, (pallet storage) and to be able to pick products at the pallet level and ship efficiently and economically, (Pallet in – pallet out). Thus the warehouse and equipment will be organized to maximize pallet locations. Work areas will be kept to a minimum. A key benefit to be gained from a B2B service provider is their experience shipping to ‘Big Box’ retail chains that have very specific and rigorous receiving requirements. In the end, B2B oriented service providers will be characterized by fewer order transactions, lower frequency shipments and higher volume of product shipped per order. The points of leverage will be warehouse size and density and transportation efficiencies.
