Sales and Fulfillment
Factors to consider when choosing your ecommerce fulfilment model
Online shopping - it is so incredibly convenient! Place an order from your couch and receive it at your doorstep.
Have you ever wondered what takes place behind the scenes during lead time (the gap between order placement and order delivery)? Let us explain: The nearest fulfilment centre receives your product(s). It sorts and stores inventory briefly until it runs a check. The centre then picks and packs the order, and ships the order. Great, if you are satisfied with what you have received, if not, return processing begins.
Consumers have high expectations: fast delivery, reasonable delivery charges (we prefer free, of course!), and a hassle-free returns process.
Sellers must work hard to keep customers happy. Effective order fulfilment is an essential component of successfully managing an online store and involves verifying that requests are processed, packed, and delivered to clients promptly and with precision. Inadequate order fulfillment may result in customer dissatisfaction, adverse feedback, and a decline in revenue. Therefore, online businesses need to pay close attention to their order fulfilment processes and continuously seek ways to improve them.
Order fulfilment strategy must be guided by a thorough financial analysis.
Four paths, one destination
Businesses employ four primary methods of order fulfilment to deliver products to their customers. They include in-house fulfilment, third-party fulfilment, drop shipping, and hybrid fulfilment.
With the in-house model, the business handles all order processing activities internally.
The outsourced order fulfilment model engages a third party to meet order fulfilment demands.
A dropshipping model is helpful when a retailer doesn't stock up on items and instead purchases them from a third-party supplier or manufacturer as orders are received. The manufacturer or supplier is responsible for shipping the order to customers.
A hybrid model combines two or more of the three models mentioned above. For example, a business might outsource fulfilment during peak seasons like holidays. It might prefer dropshipping to directly deliver large and heavy products from the manufacturer, and use internal order fulfilment at all other times.
Make the right choice
Having the option to make choices is often very useful, but it also strains your decision-making faculties. If you're unsure which model to choose, use the following criteria as your guide:
Is order fulfilment your strength?
Most e-commerce businesses do not consider order fulfilment as their core competence, and more importantly, they do not think it is the most efficient use of their time.
Only a handful of businesses are interested in establishing their own supply chain or building their own distribution network. This is over and above the many responsibilities they need to shoulder.
Many e-commerce businesses discover that the intricacies involved in warehouse operations and shipping are too daunting to even comprehend.
Many do not even know how to initiate the process. If you realise you belong in this category, it is best to outsource order fulfilment.
Are you prepared to ramp up operations?
Are you prepared to handle the surge in operations during the holiday season? With an increase in orders, more personnel are required to facilitate shipment.
There is also the undeniable reality of staff attrition during peak seasons, which is difficult to anticipate. Equally hard is to lay off personnel during the low season.
Then, there is the challenge of planning and financing infrastructure, particularly expenses associated with managing logistics in-house.
Coping with fluctuations in volume, scaling the workforce, and managing more returns can be challenging.
Do you have the right technology?
The key to modern corporate success is technology. Ideally, order fulfilment technology should include an efficient Freight Management System (FMS), a streamlined Warehouse Management System (WMS), an adaptable Order Management System (OMS), and any additional systems required to meet business requirements for accurate order processing.
Do you have flexible shipping options?
In e-commerce, customers reign supreme. As their expectations grow, it's imperative to provide them with shipping options that cater to their every whim and fancy.
From domestic to international delivery options, the contemporary consumer demands it all. With an eye on the bottom line, you must offer them the least expensive shipping option. In addition, you must fulfil their every request for a specific delivery window.
In the ever-changing landscape of e-commerce, minimising shipping costs has become an art form that only the most skilled merchants can master.
Happy customers, healthy bottom line
Did you know that convenience was the most influential factor for online shopping for 45% of online US shoppers? For a whopping 83%, free shipping was their top priority while purchasing online. Let's face it, no one likes paying high delivery costs. Outrageous shipping fee has led to nearly 54% cart abandonments!
So, if you want to keep your customers happy, make sure your order fulfilment game is on point.
By taking the time to carefully consider your options and assess the unique needs of your operation, you can find a sales fulfilment strategy that streamlines your processes, optimises your costs and enhances your customer experience.
Remember to evaluate factors such as order volume, product type, shipping distance and overall budget when making your decision. Whether you opt for drop shipping, in-house fulfilment, or a hybrid approach, selecting the ideal e-commerce fulfilment model is an essential step toward long-term growth and profitability.
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