ARE YOU USING THE BEST E-COMMERCE FULFILMENT STRATEGY TO SUPPORT YOUR BUSINESS?
The incredible pace of adoption of internet retail and omnichannel is not only changing consumer purchasing behaviour, but it is also triggering fundamental operational changes for companies. Sales order volumes and product catalogues are growing, order sizes are shrinking, and there’s increased pressure to deliver them faster AND cheaper. How do you succeed in this new economy where retailer and wholesalers need to reinvent themselves to compete (or comply) with giants like Walmart and Amazon? You need the right business processes and solutions that will support and scale with your company’s growth.
What is Order Fulfilment?
Order fulfilment encompasses the entire end-to-end cycle of your product within your warehouse and involves the processes of storing, picking, packing and shipping ordered inventory to customers. Ecommerce order fulfilment can apply to both business-to-business (B2B) orders as well as business-to-consumer (B2C) orders. With B2B, larger quantities of products are shipped to brick and mortar shops and/or distributors. In turn, B2C orders are shipped directly to a person’s physical address. In this case, the end consumer may have placed the order through the company’s website or via third-party online marketplaces such as TradeMe or E-Bay. A robust eCommerce fulfilment process equals happy returning customers and positive reviews.
How Does it Work?
Receiving and Storing
Before the order fulfilment process can start, a company must have inventory received and stored in a facility. Efficiency and accuracy at this stage are paramount for a successful order fulfilment process. It’s a simple enough process: pallets of products are shipped to a warehouse, then those pallets get recorded into the Warehouse Management System (WMS) and placed on shelves, ready to fill your orders. However, many warehouses fail to receipt and store incoming goods promptly and accurately. This results in sales losses (when a pallet is not loaded into the WMS, the stock contained within is not available for sale) and inventory shrinkage (items get lost, stolen, broken or expire).
Picking, Packing and Shipping
Once an e-commerce order is received through the web, it gets exported into your integrated WMS. Depending on a company’s picking rules, the order will eventually be released for picking from its stored location, followed by packing into a pre-determined carton, labelling and shipping. Accuracy in picking, packing in shipping means fewer returns. Efficiency means faster order turnaround windows and prompt shipping. The combined result of both accuracy and efficiency is happier customers and increased revenue!
Ecommerce Fulfilment Models
Self-fulfilment occurs when a company completes all steps of the fulfilment process internally. It allows full control of inventory and the pick, pack, and ship process. However, it’s costly and time-consuming.
If your e-commerce company is small, self-fulfilling can be a manageable and affordable approach. But as your business grows and more orders come in, it will pay off considering other fulfilment models such as hiring a third-party logistics (3PL) provider.
Dropshipping means that the merchant acts as a middleman. They never hold the products they sell in their online store; instead, the products are produced, stored, and shipped by the manufacturer.
When a customer places an order, the order is forwarded either manually or automatically to the manufacturer or partner. It’s their responsibility to ship the order to the customer. With drop shipping, you don’t have to worry about any part of the fulfilment process. Your profit is made up of the margin you add to the product’s retail price. However, you also have little to no control of inventory management and shipping.
Third-Party Logistics (3PL)
3PLs are organisations that offer warehousing, fulfilment and distribution services to businesses in a variety of industries including retail, wholesale and manufacturing. These companies have extensive logistical expertise and capacity and can negotiate substantially discounted shipping rates from carriers due to the sheer volume of consignments they send each day.
When you outsource fulfilment top a 3PL partner, it may feel like you have lost control over your inventory. However, if your partner operates with an integrated WMS, you should have full visibility and thus retain the reigns of your operations.
Warehouse Management Systems (WMS)
Regardless of which fulfilment model you choose for your business, you’ll need the right technology to support your operations. Either implementing it in-house (for self-fulfilment) or ensuring your partners have a robust WMS that will allow you the inventory visibility and control you need to make sound business decisions (if you’re using a 3PL or drop shipping).
A Warehouse Management System (WMS) can help retailers with operational and streamlining order fulfilment, inventory and shipping management. It allows for more accurate reporting, allowing managers to make better-informed forecasting decisions. Moreover, a WMS will create automated shipping processes for customer delivery. Streamlining your shipping process avoids delivery inaccuracies and increases order turnaround speed. It can also dramatically minimise logistics costs.
Ecommerce is the new reality in which retailers need to operate to remain competitive. Consumers have grown to expect super-fast shipping options, and they don’t want to pay a premium for it! Without the right order fulfilment process in place, e-commerce businesses can’t deliver on their promise — and making your customers wait can be costly.
Therefore, to meet client expectations you must ascertain which fulfilment model makes the most sense for your business then ensure you have the correct technology to back you up! As your business grows, your fulfilment strategy might shift, thus your software solution must be adaptable.
iWMS is an independent software developer, innovator and team augmentation partner with years of global experience in consulting, building, and supporting WMS solutions. We offer proven industry-leading software from HighJump for warehouse and supply chain management.
iWMS is based in South Africa, the Americas, Australasia and India.This gives iWMS access to the best resources and IT talent globally enabling us to ensure that the right level of experience is available for all projects at any given time.
Please contact us if you are looking for a warehouse and supply chain management system service provider for enterprises.