How to Choose the Right E-commerce Fulfillment Partner
Your e-commerce business can be made or broken by order fulfillment. Although it sounds cliché, a trusted e-commerce fulfillment partner can help you delight your customers and grow your company. A poor ecommerce fulfillment partner will result in you losing customers and ruining your brand reputation.
How do you select the best e-commerce fulfillment partner? What are the most important criteria?
Before we get into the details to help make the right decision, let’s take a moment to explain a little more about e-commerce order fulfillment services for small to medium sized business.
What is e-commerce fulfillment?
An e-commerce fulfillment center is a place where you can manage the delivery of online orders after the checkout process.
Fulfillment of e-commerce orders is more than just placing a package on a customer’s doorstep. Fulfillment involves receiving and storing inventory as well as picking and packing items. The items are then shipped to the destination customer along with all the necessary communication to both the internal and external parties.
Who would use e-commerce fulfillment companies?
Direct-to-consumer businesses are those that do not have a high-street store or storage facility.
Businesses that are unable to dispatch orders at scale due to in-house fulfillment capabilities simply cannot compete with other companies.
Businesses that have omnichannel channels and are interested in adding e-commerce.
Most fulfillment services are located in large warehouses near the city’s outskirts. However, modern fulfillment solutions use multiple smaller warehouses, called micro-fulfillment centres. These micro-fulfillment centres are located in metropolitan areas. They rely on automation to meet customers’ requirements and provide faster, more sustainable delivery to different geographical locations.
There is a difference between traditional 3PLs and e-commerce fulfillment services
Traditional 3PLs have some similarities with ecommerce fulfillment services. However, most 3PL companies only provide basic logistics functions, such as pick and pack, warehouse, distribution, etc. Full-service fulfillment centers provide more complete services, such as customer support and returns.
Delivery speed – traditional 3PLs do not have the ability to deliver brands immediately due to their model. They can reduce the wait time to one or two days (next day delivery), at most. They are however limited in their ability to reduce delivery times.
Instant commerce solutions often forward-position inventory at micro-fulfillment centres around the country. This significantly reduces the transportation and delivery costs per order, even though the number of dedicated deliveries increases.
Sustainability – Another key difference is the proximity to end customers. This allows modern ecommerce fulfillment services to use eco friendly transportation (walkers and bicycle messengers) and reduce wasteful cardboard packaging. This is not possible for traditional 3PLs.
How do you choose the best e-commerce fulfillment company?
According to an e Marketer Report:
“The greatest challenges retailers face today are transportation, scalability and inventory management, order processing speed, accuracy and profitability.”
A fulfillment partner must be able to provide reliable services that meet or exceed the KPIs in each of these five areas. This guide will help you to identify key aspects that you should keep in mind when you are searching for the best e-commerce fulfillment company.
1. Delivery time
Your customers, like most shoppers, expect quick delivery and will continue to expect it to speed up.
According to PWC’s global consumer insights survey (41% of respondents) fast delivery is the top priority for shoppers when shopping online.
Two-day delivery options that are same-day or within two hours or less have made two-day delivery less attractive. Modern shoppers aren’t considering these options fast enough. E-commerce retailers with a growth mindset are shifting to instant delivery because it is a proven strategy to increase customer satisfaction and customer retention.
Longer delivery times are becoming a common expectation. This could cause customers to shop elsewhere, which can negatively impact your business.
2. Warehouse locations
Consumers are no longer satisfied with 2-day delivery. It’s almost impossible to meet today’s delivery needs with obsolete fulfillment models that rely solely on huge warehouses located in the middle of nowhere and where land is scarce. This may sound appealing on the surface. But think about what this fulfillment model means for your last-mile delivery experience and speed.
If speed is what you’re after, you need to look for a micro-fulfillment-based solution that utilizes small warehouses (or micro-fulfillment centers) in densely populated urban areas, to shorten the time/distance to the end customer. Because your inventory is local to customers, last-mile delivery can be faster since a courier can deliver just one order (point-to point) rather than hundreds by truckload.
Your company’s growth is what a good partner should be as important to you as it is to you. They should also be open to adapting and growing with your company as you grow. They should be able to show evidence of their ability (or actively increasing the capacity) in order to handle your growing orders. This will ensure that your business is able to maintain a high level of operational excellence as well as your customer experience.
In short, it is important to partner with an ecommerce fulfillment provider that is adaptable, flexible, scalable, and capable in handling unprecedented situations and spikes in volume.
4. Data tracking
To scale your business, you must have full visibility into your metrics. This will allow you to focus your efforts on growth areas and find solutions to bottlenecks. E-commerce businesses need to be able provide exceptional customer service as part of their brand differentiation. This is dependent upon having access to accurate and timely data.
These critical data tracking capabilities should be available in real-time by a fulfillment provider.
Stock levels and forecasted order schedules for your products
Track your customers orders in real-time for all of your deliveries
You can track your inventory online in real-time so you always know when your products are on hand
Analytics to gain better insight into product purchase trends
5. Order fulfillment technology & integrations
When it comes to choosing the best ecommerce fulfillment provider, technology is crucial. These two aspects are crucial: how your online store communicates to fulfillment services and how they assist you with data leveraging.
The right technology allows you to send product orders directly from your ecommerce platform to your fulfillment provider. This is done without the need for additional information from you or your staff. The software updates your website and warehouse inventory levels, as well as order statuses. These automated processes should be easy to use and will ensure your online store runs smoothly.
These features should be offered by fulfillment services.
Software that is state-of-the art
Accurate reporting and automated fulfillment
Integrations with top e-commerce platforms such as Shopify and Magento
6. Returns management
A survey found that 92% of respondents would purchase again if the return process was simple. 79% expect free shipping. (source)
E-commerce fulfillment goes beyond delivering packages to customers. Reverse logistics is a service that allows merchants to receive returns and process refunds. A third-party logistics provider with experience in managing returned products will be able to assist you. A third-party logistics provider can help retailers develop a return policy that maximizes profit margins.
You can expect to pay some initial costs for offloading your order fulfillment requirements to an ecommerce fulfillment service provider. You will save significant amounts on overhead, labor, packing supplies, as well as other variable costs later. Inventory is already in place and last mile delivery is much easier.
When looking at ecommerce fulfillment providers, it is important to realize that the cost of delivery can often be overlooked. Retailers often get a huge ROI by enabling quick delivery. This can lead to increased conversion rates and customer loyalty metrics such as repeat purchases and customer lifetime values. These metrics are more than justifies the initial costs of these fulfillment services.
‘Modern problems require modern solutions.’
While traditional ecommerce fulfillment solutions may still be the dominant e-commerce solution, they will no longer meet modern customer demands for instant delivery. You should consider using multiple fulfillment partners to meet your customers’ needs.