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Ecommerce Stores + Fulfillment: Strategies for 2020
Inxeption Editorial Team
With the prevalence of ecommerce stores increasing, both for "Business to Consumer" (B2C) and "Business to Business" (B2B) industries, the speed at which customers expect to receive their products has also increased.
Order fulfillment is a strategy that you can add to your B2B ecommerce supply chain to improve your bottom line and grow your business without expanding in-house resources exponentially. In fact, 91 percent of consumers will leave your site if you don’t offer fast and free shipping. If you are just starting an ecommerce business, this post will help you understand order fulfillment and its relationship to customer experience.
Table of Contents
What is order fulfillment?
Order fulfillment refers to the process of storing inventory, packing products and shipping ecommerce orders to customers. Order fulfillment can help businesses to easily and quickly get products to customers. For both B2B and B2C companies, the fulfillment process begins after a customer has completed their ecommerce order.
Order fulfillment: Myths busted
Myth: Fulfillment should be close to your business.
Reality: Fulfillment (whether a fulfillment company or not) should be close to your customers, not necessarily to your business.
Myth: Having fulfillment locations in rural areas will save money.
Reality: This is not necessarily the case if it is not close to your customer.
What’s the difference between fulfillment for B2C and B2B?
Ecommerce order fulfillment is just as important for B2B businesses as for B2C. For B2B, bulk quantities of products are shipped to retailers (whether they be big-box like Walmart or smaller stores). Fulfillment is not only a component of inventory management strategy, but also of customer experience strategy with the ultimate goal of customer loyalty.
How does order fulfillment work?
- The baseline of any fulfillment strategy is having inventory to ship out. This is called receiving. When you fulfill your orders in-house, you need to have the inventory in-house. When you outsource your fulfillment you send your inventory to the provider you are using who fulfills ecommerce orders on your behalf.
- The warehousing and inventory stage is for organizing and storing your products. For B2B organizations who are shipping in bulk, a unique product SKU will be on a shelf/pallet in a warehouse.
- There is also a discovery stage in which users discover your product or service. If you rank higher on search engines and use target keywords as well as long tail keywords, there is the chance that you will generate high demand for your product. Your website designers or marketing team can also employ internal linking, meta descriptions, anchor text, and more. Web designers should also consider contextual keyword and cluster research in their keyword research process. In addition, they should have links point to the site to increase authority.
- When someone places an order through your ecommerce site, it is the order processing stage. You can use your supply chain management software to manage this and have visibility into your orders. Once processed, if you are using order fulfillment services, the products will be retrieved, packed and prepared to ship (custom packaging or packing instructions will be given to the fulfillment), and a shipping label is added to the package to ship out.
- Once the order is fulfilled, the merchant must ship the order. Based on the label and instructions you provide, the fulfiller might ship through the appropriate provider. Alternatively, the merchant can themselves pick the orders up from the fulfillment center or request a shipment through their provider to pick up the products and get them to the customer.
- The next possible stage in order fulfillment is a returns process. It will always be governed by your specific policy. If you accept returns for your product, it might be shipped directly back to the fulfillment center where it is evaluated for a list of reasons you provide. And, depending on the reason for return and the reason accepted for return, the products might be disposed of, returned to the merchant for repair (in a B2B equipment scenario), or returned to the shelves for resale if not damaged.
How to plan for order fulfillment
First, have your ecommerce and supply chain strategy in place. Use software like Inxeption, that helps you to get organized, sell, ship, and manage orders easily. Once these things are in place, determine based on your understanding of your customers and their locations, and determine where you want your fulfillment to be.
You want to use software or services that integrate with ecommerce platforms or online marketplaces that you currently use, so you can manage your full supply chain in one place. This makes it easier to track information and where products are en route to customer. It also helps the merchant to understand supply levels and properly plan.
Utilize an ecommerce software that enables you to transact in the way that you need. For example, if you are shipping products in bulk that require signatures for purchase orders or other contracts, it would make sense to use a platform that allows for CPQ, quoting and signing functionality in cart.
Location matters when it comes to fulfillment. You want your product to be as close to your customers as possible. Even if you don’t have a brick and mortar location and only sell via online channels, you know where the majority of your customers are coming from based on your marketing strategy and analytics (if you don’t, think about an ecommerce software with integrated marketing data). You want to put your fulfillment in a place that will serve the majority of where your customers are coming from and provide the following benefits:
- Quicker shipping - Reducing the distance that packages need to travel to get to the end customer (or shipping zones) will reduce the cost of shipping and the time it takes to get to the customer
- Scalable - As your business scales, and depending on your product and customer location, having multiple fulfillment/inventory locations might work well for you
- More affordable
Use software that allows for the best possible shipping and logistics services for your customers. Customers expect fast shipping that is also affordable, and you can do this partially by utilizing fulfillment, but also with a software that accommodates for affordable and integrated logistics when it comes to your ecommerce. Offering fast or free shipping to customers decreases cart abandonment rates substantially.
What type of B2B order fulfillment is there?
Also known as self fulfillment, this is where the merchant fulfills orders internally without the help of a 3PL or dropshipper. It is common for smaller or newer businesses to fulfill in house, or bigger B2B businesses that have their own warehouses or operations that enable them to do the fulfillment themselves.
- This option offers more control over fulfillment and packing process
- If there are returns you have a direct understanding and evaluation as to why the return was made. If you are still a small business, doing fulfillment in-house can save money
- Anyone can do the fulfillment process, you don’t need additional contacts or help so long as you have room to do the fulfillment in-house
- It takes a lot of valuable time and requires additional resources to manage
- Once the business grows to an extent that you cannot fulfill without help, you will be faced with the need to outsource or build out fulfillment infrastructure in house (warehousing, etc.)
Ask yourself, “What do I need as a large or growing business to fulfill orders internally?” You’ll quickly identify warehouse space, staff to manage the warehouse facility, necessary equipment to handle boxing, packaging, moving products, warehouse management software/services and more. You will need liability insurance and workers compensation for warehouse staffers, amongst other considerations.
Third party (3PL) fulfillment
Why would you use a 3PL? You’ve run out of space, time and resources to pick, pack and ship your products to customers efficiently.
What does a 3PL do? A 3PL handles fulfillment on your behalf. They get inventory from the manufacturer, pack and ship products to customers when an order is processed, managing returns (in some regard, depending on your policy).
- Profit margins can be improved with the purchasing of material or products in bulk to have enough inventory for fulfillment
- There is no internal investment for warehouse space or other necessary resources. In addition, working with a professional removes stress
- It potentially compromises quality due to less direct involvement with the picking, packing and shipping of products
Do I need fulfillment services for my B2B ecommerce business?
When certain challenges are arising in your business, you might want to consider fulfillment for your products. These might include the following:
- You don’t have the resources to fulfill in house or an expert to do the job properly. Fulfillment requires full time people resources to manage a large fulfillment operation properly
- You have a busy season coming up that you can’t keep up with internally. If you know you have a busy season coming up that will make it challenging for you to keep up with order volume by fulfilling in house
- You are using the valuable time of members of your business that would be better served on growing your business and improving processes and strategy
- You need to ship more quickly at a cheaper price
Fulfillment + Logistics
It’s no surprise that logistics and fulfillment are intrinsically linked. You fulfill orders so you can ship them. It’s important to make sure you are using a logistics provider that works for your specific needs, especially if you are a B2B ecommerce business.
Having a system that integrates each component of your supply chain can make business processes more seamless and can help you focus on the parts of your business that manage most. Want to see how having a one stop shop for commerce and logistics can help you? You can do it all with Inxeption.
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