Last time we talked about the importance of setting up a website dedicated entirely to eCommerce, as well as tailoring marketing efforts specifically towards online audiences. But we didn’t mention anything one of the most critical differences between offline and online retail: actually getting the product to the customer.
It’s also called order fulfillment. Instant gratification is an advantage that brick and mortar stores have over online retail. While impulse buys can still happen online, the longer the product takes to get to the customer, the less likely they’ll want to keep that product, which increases the rate of returns. Online retailers also have to worry about shipping the right product, as well as keeping the right number of products in an order, which is harder than it sounds when you’re shipping thousands of orders. While you may be used to shipping bulk shipments to your stores, shipping directly to consumers properly is an entirely different prospect, and requires a different type of operation.
So what’s the best way to get started? It depends on what you’re shipping, how much, and what existing resources you can use to operate a fulfillment system. If you’re starting out small, it might make sense to pick, pack, and ship orders yourself. Generally, operations of under 250 orders a month don’t need the complicated systems and trained staff that larger ones do. However, anything more than that and you’ll want to outsource your fulfillment to an experienced service provider: there are many advantages to doing so.
Cost Savings: A larger fulfillment service will typically ship millions of orders per year. The results of shipping such huge numbers means bulk discounts on shipping, equipment, packaging materials, warehouse space, and labor. These cost savings are then passed down to you.
Accuracy: Top outsourced services will have advanced technology and multiple quality checks designed to minimize errors to the lowest possible degree. In fact, you shouldn’t accept any accuracy rate lower than 99.95%.
Speed of Processing: Meaning how quickly the order gets picked, packed, and shipped from the time the customer clicks the “checkout” button. Top providers can give you processing within 1 business day. While this is not difficult to manage on your own when your order volume is low, the more orders you get, the harder it is.
Speed of Delivery: The easiest way to speed up delivery is to utilize more than one fulfillment center; the country is simply too large for one centralized facility to cover within a reasonable time period. Today’s consumers expect Amazon-level speeds, where you get your order within 1-2 business days. If you’re not running a dedicated fulfillment operation, it doesn’t make sense to invest the capital necessary to get that kind of speed. Luckily, some outsourced services do give you the ability to reach anyone in the country within 1-2 business days.
Technology: Designing the fulfillment technology to integrate with your shopping cart and also give you all the tools you need to manage your operation properly is an expensive and time-consuming process. Some services give you cloud-based order management software with detailed analysis tools included.
Generally, outsourcing your order fulfillment is cost effective and helps you deliver a higher level of fulfillment quality to your customers. You also save a lot of time you would otherwise spend managing the process. Of course, you must choose the right service for your product, one that fits your pricing and quality expectations.
There are times however, when outsourcing is not the best solution. Companies that ship out a certain volume per month (in the tens of thousands) can potentially run fulfillment operations rivaling fulfillment services. Order fulfillment is arguably the most important difference between an offline store and an online one. It’s your way of presenting your product to the customer, and that’s always critical in sales. Hopefully some of the above information will help you if you decide to venture into eCommerce. It’s a rapidly growing industry that can yield great returns if you have the right formula.
How does your eCommerce operation differ from your physical business?