Comparing the Best Fulfillment Strategies for Your eCommerce Business
This is a guest post written by Jillian Hufford. Jillian is a Marketing Analyst for nChannel, provider of the simplest integration software to automate multichannel processes. Using both her writing and analytic skills, she assists the Marketing and Sales teams. Jillian performs competitor market research, provides analysis of key sales metrics, and writes informative posts on multichannel commerce trends. She holds a BA in Marketing from Otterbein University.
If you want to be a successful online seller then you must be able to guarantee fast, flexible, and affordable shipping services. Positive delivery experience is what brings customers back to your store again and again.
96% of shoppers said a positive delivery experience would encourage them to shop with a retailer again.
The problem is that order fulfillment is difficult, especially for high-volume merchants. All online retailers are struggling to maintain consistency and cost-effective processes. To help you, we’ll compare different fulfillment strategies so you can pick one that’s best for your business.
Turn Order Delivery into Your Competitive Advantage
Whether you’re new to eCommerce or not, your fulfillment strategy must be a top priority for your business. Customers are demanding more from merchants than ever before. They expect faster, accurate, transparent and affordable shipping times and options.
But, not all merchants are meeting those expectations. Recent surveys report the following.
- 80% of consumers want same-day shipping and 55% are willing to pay a premium for it, but 47% of retailers don’t offer it.
- 46% of online shoppers abandoned a shopping cart due to a shipping time that was too long or not provided.
- 1 and 3 shoppers say speed of delivery is a reason they choose to buy from a marketplace.
As a merchant, you have a real opportunity to improve your delivery strategy and win over (and keep) more customers. You can provide a better experience that customers aren’t finding anywhere else.
Now, some may feel that customers have unrealistic expectations that can’t be met. We believe though it’s all about choosing the right fulfillment strategy and technology to make it happen. If you do, you’ll be able to delight your customers.
Comparing the Best eCommerce Fulfillment Strategies
It’s a long process between the click to submit an online order and the delivery of product into that customer’s hands. There are tons of places that your process can fail causing frustration for both your customer and your team.
It’s time to evaluate your current strategy and see if it’s right for you. We’ll compare four options for you so you can see the benefits of them. You’ll learn the differences between each one and receive resources to get started with any one of them.
The four options we’ll compare are:
- DIY Fulfillment + Order Management Software (OMS)
- Drop Ship
- Fulfillment by Amazon (FBA)
DIY Fulfillment + Order Management Software (OMS)
If you’re new to eCommerce or have relatively low order volumes, you can get by fulfilling orders by hand. You can take care of order processing, picking and packing items, printing and attaching labels, and scheduling pick-up of items by a mail carrier. It seems like a lot of responsibility, but you can still manage quality control and timeliness of delivery. Your business doesn’t yet warrant paying for more advances services.
As you grow though, you can look into shipping or order management software to help you manage different parts of the fulfillment process.
(Another reason to handle fulfillment by yourself is because you have either handmade or very unique items that take considerable thought when handling, storing, and shipping.)
On the rise in eCommerce is the use of drop shippers. If you’re not familiar with it, drop shipping works like this:
- You list and sell an item on your webstore
- You send the order confirmation to your drop ship supplier who owns the inventory
- Your drop ship supplier receives the order and sends the product to your customer
- Your drop ship supplier sends you shipping confirmation and invoice for order
There’s two major advantages of the drop shipping process. First, you don’t have to procure or store inventory. Your drop shipper manages all inventory. Second, the drop shipper remains completely invisible to the consumer. The product shipped appears to have come straight from the merchant.
Drop shipping as a fulfillment strategy is used in a variety of ways. It can be an affordable way to start a business so you don’t have to procure inventory upfront and worry about fulfillment. Established sellers also use drop shipping to diversify their product catalog.
Just keep in mind - drop shipping requires you to find and work with suppliers who provide products that you want to sell. Learn more about this fulfillment process in our introductory guide to drop shipping.
Third-Party Logistics (3PLs)
Another fulfillment strategy is to use third-party logistics (3PL) services – not to be confused with drop shipping. 3PL services allow you to outsource all or part of your fulfillment process so you can ensure top notch services for your customers.
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If you’re fulfilling more than 10-20 orders a day, you can consider using a 3PL. At the end of the day, you’re probably not going to be a supply chain or logistic expert. You don’t have the time, resources, technology or money to make it happen. Therefore, eCommerce sellers turn to 3PLs to handle fulfillment.
When working with a 3PL, you send your inventory to their warehouse to be stored. At this point, your 3PL provider can pick, pack and ship items for you. The best part of 3PLs is that you maintain some control over how to package and ship your product for branding purposes. You pay your 3PL provider fees to store and ship your products. But, you’re getting their proven practice in logistics in return.
Learn more about choosing different pick and pack services that are best for your business.
Fulfillment by Amazon (FBA)
It’s hard to talk about online fulfillment without mentioning Amazon, who’s built its business around superior shipping practices. Fulfillment by Amazon (FBA) is the marketplace giant’s own shipping practice that is the foundation of Amazon Prime. Just like a 3PL, you can send your items to Amazon’s warehouses to store and ship your products for you.
And, you don’t have to be an Amazon seller to use it.
If you’re considering using FBA, find out if FBA is worth the cost for your business.
Next Step: Integrating Your Fulfillment Software
As you consider what fulfillment software to use, you should also think about how it will integrate to the rest of your retail systems. While these strategies will help improve your fulfillment processes, they do add complexity to your operations.
When using a 3PL, drop shipper, or supplier directly, you must communicate order status, amount, and invoices back and forth with them. You need this information in both your eCommerce platform to show an order is complete and financial system like an ERP to recognize revenue from a shipped order.
Do you plan on hand-keying the same order data between all your systems? Will you rely on emails with your suppliers for when they receive and ship an order?
For high volume sellers, you don’t want to rely on manual data entry. It can take hours to process orders and is prone to human mistake. Instead, integration can automate order fulfillment for you. It can also help you set up intelligent workflows so you can split orders by fulfillment location.
By doing so, you’re well on your way to meeting tough customer expectations for delivery! How can you start improving your operations today?