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Ecommerce fulfillment is such an important aspect of any e-commerce cycle. It influences the decisions your customers make, and has a huge impact on returning customers. This means that making profits from your e-commerce business goes beyond having sterling products, using the best B2B platforms, and having amazing website copy to trigger customers to buy your products and get to the checkout.
Fulfillment, and the whole processes involved in it ensure that your business runs smoothly, you stay relevant in the present e-commerce economy, and that you’re raking in profits.
What E-commerce Fulfillment is
Fulfillment includes all the processes from when a customer places an order to when they get their product. It includes: inventory storage, order processing, picking and packaging items, and delivery to where the products will be shipped off to the customer’s location.
Studies have shown that: 38% of online customers will abandon their orders if the delivery takes more than a week; 54% of shippers abandoned their orders in the carts due to high shipping costs; more than 75% of shoppers proceeded with a purchase because of free shipping. These numbers go on to show how much fulfillment impacts a business, especially in e-commerce.
At the start of a business, fulfillment may not be thoroughly considered, as the excitement is usually focused on marketing and sales. However, to build a strong business and ensure customer loyalty, fulfillment needs to be thoroughly planned for, whether you choose to self-fulfill or use a fulfillment provider.
Processes involved in Fulfillment
Fulfillment is divided into stages or processes that run sequentially: e-commerce fulfillment, order fulfillment and shipping.
E-commerce fulfillment is packing or transporting your products to a warehouse or fulfillment centre. Some people use the terms fulfillment centre and e-commerce warehouses interchangeably, but there are slight differences. While warehousing companies store products that won’t sell quickly over long periods of time, fulfillment companies are more mobile in their actions; holding products that are selling off quickly, packing boxes, packaging goods, negotiating with courier or logistics companies and making sure the products get to your customer directly.
The aim of this stage in the e-commerce fulfillment workflow is to ensure that your products are stored at a location where it will be easily processed for packaging when your customers place their orders.
Order Fulfillment: This stage occurs when an order comes in from a customer in your ecommerce store. The order is immediately picked and packaged into the right boxes or packaging materials, ensuring care and accuracy before shipping.
Shipping/Delivery: Most fulfillment service providers ship the products themselves, as they have integrated logistics services. The delivery methods used for each customer would depend on some factors such as; location of your customers, the type of product you’re shipping, the size of the product, the delivery speed you want to offer, and the resources or tools you have at your disposal.
Whatever your method of shipping is, it is important that customer satisfaction is kept at the centre.
Should I use a Fulfillment solutions provider?
If your business is still in early stages, self-fulfillment may work out fine for you. You may drive your customer’s order to a post office or a logistics company to deliver for you. But when your business starts to grow, self-fulfillment may be counterproductive, as there will always be hidden costs that might cost you later, while you waste time that would have been relevant in other aspects of your business.
Letting an e-commerce fulfillment service company handled by a service provider can be very helpful and a huge revenue driver, particularly to businesses that have no physical locations, do online dropshipping, and cross-border e-commerce.
Fulfillment centres with wide global reach will also be useful if you are operating in the global B2B e-commerce market. Your products can be shipped all over the world because these companies have wide networks and branches.
Fulfillment centres improve your customer service as they provide round the clock support and ease product returns and exchanges. Research shows that companies lose millions of dollars annually due to poor customer service. Previously discussed statistics also show how many customers cancel their orders due to delay in shipping, high shipping costs, and poor logistics plans. These problems can be avoided by choosing credible fulfillment service.
Using fulfillment services will also save you cost in the long run. There are discounts on bulk orders, and these discounts can even be passed on to your customers, reducing the shipping costs for them and even offering free shipping which will attract more sales.
E-commerce fulfillment service providers reduce operating costs, because if you do decide to handle fulfillment yourself, you will be saddled with the responsibility of paying for a space, paying employees full-time, providing electricity and quality control etc.
What to look out for when choosing a Fulfillment Service Provider
Choosing a good e-commerce fulfillment centre might be tricky, as there are a lot of factors to consider that, if not taken into consideration, may cost you.
Here are some things to look out for when choosing an ecommerce fulfillment centre:
1.Integration with your Ecommerce store: Your fulfillment centre should integrate with your online store and any other platform you sell on. Your orders should go directly to the fulfillment centre, so the fulfilment process starts immediately. B2B platforms like Droplo provide amazing online store integration features, and connect you to some fulfillment service providers with their collaboration with third party ecommerce software like Shopify.
2. Choose a fulfillment centre close to your customers, not close to you: Rather than use a centre close to you for ease, use a centre that is centrally located or close to your customers. How do you know a centre close to your customers? By using data analytics reports. Zip codes and other information can help you know the locations where most of your customers are, and help you choose a properly situated fulfillment centre.
3. Processing/Shipping Time: The main reason why you are outsourcing fulfillment is to save you time and deliver your goods to your customers as fast as possible. So there would be no wisdom in choosing a company that would be a drag for you and frustrate your efforts. Companies like Amazon have set standards, which means more customers desire to get their products within two to three days after placing their orders. Look for companies that offer fast shipping and even shipping of products on the same day if possible.
4. Good returns management system: In business, you cannot avoid returns totally, and the attitude to product returns impacts your business. A good ecommerce fulfillment centre should be able to handle returns quickly, so you can provide a refund to the customer and resell the product. They should also be able to provide good customer service.
5. Inventory Management and Data Synchronization: A good ecommerce fulfillment centre prioritizes inventory management, because it wants to save costs and drive revenue for its clients. Softwares that support data synchronization, allow you to monitor your inventory and synchronize or update your inventory data should be employed. B2B platforms like Droplo have softwares that provide real time insight into how much stock you have, and prevent small inventory which may harm your sales; or too much inventory which may be very costly.
Cons of using Fulfillment Service Providers
- Lack of customisation: Personalisation in branding your packages is a very good way to make impressions on your customers. However, this may be lost when you use a third party ecommerce fulfillment service provider. Some fulfillment companies nowadays offer a wide range of packaging options, but these might be costly.
- Limited Control: When you outsource your fulfillment, you give up control over some part of your business. You may not be able to make any last minute changes or control the speed of delivery of your products to customers.
- High Costs: Using an e-commerce fulfillment company can be a bang, but let’s face it, it may be expensive, especially if you’re just starting out with them. There are lots of fees to be paid; fees for reception of goods, storage, packaging and shipping. While these companies reduce the workload, they might be expensive depending on the volume of goods and requirements. And while this is a downside, expert advice and the potential benefits of improving customer experience, reducing errors and investing time into scaling your business are going to be profitable in the long run.
Can I use a fulfillment service provider if I want to do dropshipping?
Online dropshipping can be enhanced with e-commerce fulfillment companies. The supply chain is often between the dropshipping wholesalers and the customers without the seller handling the products.
E-commerce fulfillment in dropshipping is mostly dependent on the supplier. All you need is an online store integration with your supplier so you know the products being offered. Once your customer places an order for a product, you can now notify the supplier who will handle the fulfillment process and send the goods to the customer.
E-commerce platforms like Droplo make online dropshipping very easy with features such as store integration and shop automation.