Order fulfilment refers to the entire process of receiving, packing, and shipping online orders to the respective customers. The process begins when a client requests a product and ends when they receive it. If the buyer decides to return a product, order fulfilment handles the transaction as well. An effective order fulfilment strategy is crucial for crowdfunding campaigns and e-commerce websites to win loyalty and remain competitive.
Third-party order fulfilment services will retrieve, and package items as the orders arrive, store products, and transport a merchant’s goods to the customer on the merchant's behalf. Although the cost of these services may seem prohibitive, order fulfilment services can actually help your business grow.
Partnering with a fulfilment service may reduce shipping costs and improve operating efficiency and delivery times, saving your business valuable time and resources. All these improvements, in turn, will make your enterprise more profitable.
Reduced shipping costs
It is less expensive to ship orders to customers closer to your business' distribution point than it is for those farther away. Also, it will take less time for the shipments to reach your clients. These advantages may seem obvious, but they are overlooked by most e-commerce retailers - even though they have an incredibly significant impact on business profitability.
Imagine, for example, that your current warehouse is in Billings, Montana, but many of your clients are in Boston. You'd likely want to offer free shipping to beat your rivals. But it costs you about $15 to ship a typical package to Boston, the city where most of your clients or beneficiaries reside.
Your only solution may be partnering with a fulfilment company that operates a warehouse in that region. When an order comes from that area, your fulfilment service partner will probably ship it for about half the price. Furthermore, the orders will reach the clients sooner. It may take about a week for a ground shipment to travel all the way from Montana to Boston, but from a fulfilment centre near-by, the parcel could be delivered within 24 hours.
Reduced operating costs
There are many ways third-party fulfilment could help an e-commerce business, including replacing the retailer's warehouse. While each business' situation may be different, in general terms, hiring an order fulfilment service will;
- Reduce or remove the cost of leasing warehouse or storage facilities
- Reduce labour and taxation fees associated with order fulfilment
- Reduce packing material costs (your fulfilment partner may have better pricing)
- Pack and ship items faster.
Enhanced efficiency
Besides the financial gains mentioned above, a third-party fulfilment service will save you (the merchant) valuable time. This is particularly true for medium scale online retail enterprises. Consider this example; if you must run both the store's content marketing program and pack orders from 11 a.m. to 5 p.m., using a fulfilment service means you will have a lot more time to create blog posts, respond to customer queries, and so on. Marketing is essential for the growth and continued profitability of your business. Order fulfilment services will allow you to handle it effectively.
Which order fulfilment strategy is right for you?
Third-party fulfilment services will undoubtedly help your enterprise reach new heights. That said, it’s worth noting they aren’t suited to every business, and that they don’t apply for every product in every scenario.
To help you decide whether it's is the right time to hire order fulfilment services for your business, consider the following.
It is possible to fulfil your own orders. There are times it may be better to fulfil e-commerce orders yourself. If you're just starting your business or have a low order volume, it may be better to handle order fulfilment in person. A low sales volume may mean it’s more reasonable for you to keep order fulfilment in-house, instead of outsourcing. If you sell a narrow range of products and are shipping a few each week. You may not need third party fulfilment services.
Conversely, if you're spending all your time on order fulfilment, and have been forced to hire others to pack boxes, you definitely need to consider third party order fulfilment.
Just about anyone in the retailing business, large or small, can process their own orders. Self-fulfilling adds the benefit of process control and customization to packaging and shipping. Furthermore, it is the least inexpensive for low volume retailers.
Outsourcing may require compromise. Should you choose to work with a third-party service, you'll be outsourcing. You gain all the benefits described above, but you'll also have to surrender control of the shipping process, and some branding opportunities.
Mixed order fulfilment. Your business could outsource some orders then process the others by itself. This model is especially suited to regional enterprises that are planning to expand to other areas, or for seasonal retailers who need assistance with product distribution during peak periods.
Dropshipping. Your business may not even need to purchase inventory. Dropshipping allows you to buy a product from the manufacturer and ship it directly to the customer the moment they make an order. This model is highly popular among startup and e-commerce retailers because it’s convenient; the supplier handles all the orders and ships them to the customers.
Your preferred order fulfilment strategy should complement and support your sales channels, particularly from a technological perspective. Order fulfilment solutions that integrate with your e-commerce platform and digital market places will help you control the entire fulfilment process efficiently without the need for a team of developers.
If your business is growing and your average order value is rising, likely, you'll quickly outgrow your current fulfilment strategy. With that in mind, choose an e-commerce fulfilment strategy that can be scaled to suit the needs of your business.
Today’s consumers have grown accustomed to 48 and 24-hour delivery options, so there is a high demand for shipments that are reliable and fast. In fact, the businesses that don’t meet these expectations risk clients even before customers try their product. An effective order fulfilment strategy will help you avoid this challenge and maintain a competitive edge over your rivals.
