E-Commerce is an extremely competitive business. To succeed you need ambition, ingenuity, and the willingness to learn. That last bit is important, because without the willingness to learn, you have a diminished chance of understanding this industry well enough to survive it. Fortunately, this installment of the E-Commerce Fulfillment Learning Series by Flowspace has everything you need to learn about e-commerce order fulfillment and how to plan for your fulfillment strategy.
Recap: Understanding the E-Commerce Order Fulfillment Process
To recap our last lesson in e-commerce order fulfillment, we learned what the six basic components of order fulfillments were, the fulfillment options available to online business owners, and how to choose the best e-commerce fulfillment strategy for your business model.
In this installment, we are going to show you how to develop a fulfillment strategy; teach you best practices for order fulfillment, and provide the resources you need to push your business to the next level.
How to Plan Your Order Fulfillment Strategy
Literally and figuratively speaking, fulfillment is where everything comes together. From receiving to returns, order fulfillment is the amalgamation of every part of the e-commerce process. Like a juggler, you need a strategy to manage all those moving parts at once.
Network and Location
As an e-commerce business, your customers can be around the block or around the globe. To serve each effectively, you need to consider the size and strength of your distribution network and the location of your fulfillment centers.
Think of yourself and your managers as generals strategizing on the best way to move troops and supplies to the front lines, i.e., the geographic market where your customers reside (Chicago, LA, Topeka, etc.).
The best way to meet expected delivery times, reduce the cost of shipping, and keep your customers happy is to build your distribution network out of fulfillment centers that have been strategically chosen for their location.
To find the best location for a fulfillment center, determine where the majority of your customers are located. The closer your fulfillment center is to them, the faster and more cost efficient your shipping options will be.
Conversely, shipping costs and times are only one side of the equation. On the other side you have to consider volume and storage fees. Fulfillment centers located in urban centers are generally more expensive than fulfillment centers in the suburbs.
Therefore, e-commerce businesses who need to store large quantities of inventory may find it more cost-effective to choose a distribution center in an outlying suburb, rather than in the heart of the city. It all depends on your business model, your budget, and your customer base.
Technology and Automation
Whether e-commerce is merely a fraction of your business model or it is the entirety of your business model, you need to consider technology and automation when building your fulfillment strategy.
The implementation of technology and automation into your fulfillment service strategy not only improves the efficiency of your overall operation, it minimizes the risk of human error and the returns that inevitably follow.
There are a variety of warehouse management systems to choose from, many of which can be integrated into e-commerce stores or marketplaces so the order fulfillment process can begin the instant an order is placed online.
You can also adapt various capabilities to suit your specific needs and provide value to your customers, such as text message notifications when packages are delivered and/or automatic updates on available inventory.
Shipping and Transportation
Though it’s often sorted into its own category, shipping and transportation are a fundamental part of the e-commerce order fulfillment process and every fulfillment strategy. You considered shipping when choosing where to locate your fulfillment center, but now you need to consider the various shipping methods that are available to you.
Since the overwhelming majority of e-commerce deliveries are home deliveries, we’ll focus on one and two-day shipping and Just-In-Time (JIT) delivery.
One and Two-Day Shipping
A key part of any fulfillment strategy is shipping time, i.e. how long it takes for a fulfillment center to pick an item, package it up, and ship it out to the customer. The faster the shipping time, the happier your customers tend to be.
However, it’s important to remember that faster shipping options are typically more expensive. Though, one and two day shipping can increase the likelihood of customers progressing to a checkout page, the extra cost can increase cart abandonment. You have to strike the right balance between speed and cost.
It’s best to base your shipping options on customer preference and to look for cost-effective methods to incentivize higher purchases, such as free shipping, expedited delivery, and just-in-time delivery for holidays and special occasions.
How to Choose an E-Commerce Fulfillment Provider
Now that you know how to develop a fulfillment strategy it’s time to hire a fulfillment expert to help you implement it. Unlike traditional e-commerce fulfillment providers, Flowspace enables online retailers with the flexibility and support they need to gain a strategic advantage over their competition and ensure their customers get what they want when they want it.
We’re also the source for useful, reliable information on e-commerce fulfillment, on-demand warehousing, and third-party logistics. Stay tuned for the next installment of our E-Commerce Fulfillment Learning Series.