Ecommerce Fulfillment as a Competitive Advantage
When you run a Direct to Consumer brand, you have to juggle a lot of responsibilities. There’s product manufacturing, marketing, sales, web development, accounting, and much more. It’s easy to put order fulfillment on the backburner that is of course until it becomes a liability. However, with a little forethought and some ingenuity, fulfillment can go from being a liability to becoming a strategic advantage.
Many business owners treat fulfillment as a necessary evil, but we’re here to say that it can actually grow your business. There are tons of 3PL Companies out there, and each of them has specific areas where they excel. You’re not locked into a choice between Fulfillment by Amazon or in-house fulfillment.
An efficient order fulfillment process can cut shipping times, reduce costs, lead to better reviews, and help you to manage your inventory. With all this in mind, let’s talk about how exactly you can use fulfillment to your strategic advantage.
You can reduce costs
One of the main issues with fulfillment is that a lot of companies simply…start doing it. They don’t have inventory stored in a specific way nor do they have special printers for shipping labels. Many people even take their items to the post office instead of arranging a pick-up. Fulfillment becomes, essentially, an afterthought. This can lead to a lot of lost time, which can mean lost revenues and increased labor expenses.
As counter-intuitive as it sounds, outsourcing fulfillment can save money. Yes, there are storage fees, order processing fees, and account maintenance fees. However, there are three major differences that offset prices. Postage rates are often negotiated by the third-party logistics company to a much lower rate. Secondly, packing supplies are ordered in bulk, dropping the cost of supplies used per shipped unit, and lastly, you’re dealing with experts who are much more efficient at pick and pack than you can possibly be.
Storage fees can be unwelcome at first, but often, the alternative is to find a storage unit or use extra space around your office. Either way, real estate is expensive. Fulfillment companies tend to buy land in low-cost areas or use much bigger buildings, meaning their cost per square foot is much lower and they can pass the savings along to you.
You can customize the experience
As much as I love ordering products on my phone without getting off the couch, I have to admit that something is missing. Brick and mortar stores surround you with items laid out in a certain way, with subtle factors like lighting and shelving affecting your mood. Customer service reps come up to you and are engaging. They get to know you as an individual.
Online shopping is convenient but largely forgettable. You miss out on some of the personal and tactile experiences that make people remember your brand. In eCommerce, your customers don’t have to fight traffic, but they’ll also never say “their store smelled like strawberry perfume and the cashier was so nice to me.”
How can you work around this? If you streamline your fulfillment processes and find that you have extra time, you can use that time to improve the overall fulfillment experience. For example, you can include custom thank you notes, gift-wrapping or scented tissue paper to help to personalize the experience. Similarly, you can work on creating upscale custom packaging for a premium unboxing experience. Lastly, you can add marketing inserts based on what you think each customer will buy. Limited-time coupons for similar items, in particular, are a good way to get repeat customers.
You can retain more customers
In 2017, 63% of customers expected online orders to be delivered in three days or less. As a general trend, customers are expecting better service when they order online. Fast shipping times are a key element of that. On top of that, difficult returns scare off as many as 34% of your customers.
Three-day shipping with easy returns are, admittedly, a high bar to hurdle for eCommerce companies. You either need to ship orders out the same day you receive them or outsource fulfillment. In any case, the major opportunity here is that fast, reliable shipping with easy returns sets you apart from other retailers that cannot clear that hurdle.
You can gather highly valuable data
When you fulfill orders on your own, it’s hard to track data. After all, you have to manually update your own inventory records or design/purchase an inventory-tracking system. Either way is suboptimal.
Inventory data is a goldmine when you know what to do with it. Having that level of visibility into what you sell and when allows you to:
- Forecast sales
- Restock before you run out of inventory
- Gather data on which types of items are popular
Much ink has been spilled extolling the virtues of using inventory data to improve your business. Oftentimes, you don’t need exotic metrics or detailed reporting. You simply need to watch the numbers that matter and get a feel for trends as they happen. Inventory levels are among the numbers that matter.
You will have more time for other parts of your business
Done well, smart eCommerce fulfillment processes can have a lot of positive downstream impacts on your business. Even without outsourcing fulfillment, streamlining fulfillment will allow you to reallocate labor and funds to other areas in the business. That could mean customer service, research and development, or another value-added area. The possibilities are endless!
As we’ve stated above, a smooth set of eCommerce fulfillment processes can have direct benefits. You can improve customer experience, retain customers, get better reviews, and sell products.
But deep down, fulfillment is a support function. Seldom is fulfillment a strategic advantage in isolation. However, as a time-consuming, necessary process ripe for process improvement, small changes can free up a lot of time and money.
This makes process improvement for fulfillment a great way to get what you need to focus on what you do best. Less time spent packing boxes means more time spent on what really makes your business special to your customers.
Fulfillment isn’t merely a task that must be completed to stay afloat. It is a key function of your business that can be tweaked and improved to save you time and money. Whether you perform fulfillment in-house or outsource it entirely to a Top 3PL, fulfillment can become your strategic advantage.
Merely saving time and money alone allows you to reallocate time toward more value-added activities. Yet improving your fulfillment processes can provide benefits beyond just that. You can customize your customers’ experiences, retain customers and upsell products, and gather crucial market research data for future projects.