E-Commerce Order Fulfillment
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eCommerce Fulfillment
eCommerce fulfillment refers to a variety of processes and workflows that ensure an online order for a product is delivered, within expectations, to a customer. For an effective eCommerce fulfillment operation everything from inventory planning, supply chain management, incoming freight, warehousing, order management, shipping, post order customer care and returns needs to be addressed. eCommerce fulfillment can be performed ‘in house’ by the store owner (self-fulfill) or outsourced to an eCommerce fulfilment specialist.
When Should You Outsource eCommerce Fulfillment?
This decision, which is significant in the evolution of an online store, has no simple answer. The biggest key to remember is that eCommerce fulfillment leverages information systems and labour and to a lesser degree a warehouse/storage facility. At some point, online store owners, need to ensure that their core competency is not being eroded by the requirements to run an effective eCommerce fulfillment operation.
Your product will often lead you to an outsourcing solution as well. For example; larger, heavier items such as mountain bikes, or large format televisions will require more space and labour to manage than jewellery. In the end, choosing to outsource versus ‘self-fulfill’ is a significant strategic step.
Warehousing and 3PL, common terms when researching eCommerce fulfillment, are not the same as fulfillment operations. A 3PL warehouse “rents” space, typically by the pallet. While numerous warehousing companies claim to offer pick and pack fulfillment services, typically this is not a core competency, nor do their warehouse management systems do a good job of managing business to consumer (B2C) individual shipments. eCommerce fulfillment is simply a service extension to leverage their investments in warehousing.
Choose a Fulfillment Partner with a Strong Systems Infrastructure
Evaluating and assessing the best partner can be daunting task. The first step is to understand the potential partner’s information systems infrastructure. Basically, is their system designed at its core to provide eCommerce fulfillment services. Does it integrate with the various selling platforms such as Shopify, Big Commerce, Woo etc. etc. etc. Is the partner integrated well with various shipping platforms and can it manage international shipments. Is the returns management process integrated into the fulfillment system. How are back orders managed? Can the partner support multiple sales channels; wholesale vs retail? Does the partner have an ‘integration specialist’ on staff that can assist with the implementation of an ecommerce program and also assist when the business evolves. This capability is usually a bridge capability between your business requirement and programming. Programmers are rarely able to understand your day to day business requirement. The most critical question to ask and answer: Does this partner demonstrate a clear core competency around eCommerce Fulfillment or this just a service extension to warehousing, customs brokerage, freight forwarding, trucking.
Consider These Factors Before Choosing a Fulfillment Provider
Bigger is better: If your business does not have a shipping volume or realistic volume in the range 5% of your prospective partner’s fulfillment operation, you have the risk of being ‘lost’ in the overall operation and not receiving the attention you may expect. Some fulfillment providers, divide their operation between early stage customers and mature customers to ensure the smaller volume customers receive the appropriate attention.
The fulfillment center should be close to you
For early stage ecommerce stores, location close to your fulfillment partner will probably be the best choice as your business evolves and changes in ways you may have not imagined. Communication with your partner will be important.
While shipping costs and time to delivery are important factors, outside of pizza and other fast food items, the marketplace simply requires expectations, which the online store can set, to be met and simple, relevant updates after the order has been placed. eCommerce “customer care” is a very important and poorly understood part of B2C fulfillment operations….and is the subject of an upcoming white paper. The right partner with the right systems will always be better than the wrong partner in a better(?) location.
Multiple warehouse locations:
Managing inventory and orders over multiple warehouse locations can be a daunting task. While larger eCommerce fulfillment companies will argue that their location footprint will ‘save’ time and money in the delivery to the market, the management overhead of maintaining multiple inventories in different locations should not be understated. A study of the effectiveness of multiple locations showed that inventory investments had to increase 73% to support each additional location.
While more sophisticated inventory management systems can reduce this cost, there are many challenges to multiple locations. We have seen some customers try multiple locations only to go through the pain of consolidating back to one location for simplicity and efficiency.
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