According to Finaria, global ecommerce retail sales will reach more than 2,7 trillion dollars in 2021 and should reach 3,4 trillion dollars in 2025. In other words, this sector is constantly growing, and there will be still more focus on omnichannel and online sales expansion. This means also an increase in orders amount, operations and processes, parcels to be sent. To handle all this properly ecommerce needs an excellent fulfillment service that will support all the business from the order to delivery.
What is order fulfillment?
Generally speaking, order fulfillment is everything that happens from the moment in which a customer orders some goods, to the final delivery, or even beyond, if the order includes a return. However, it requires some preparation before the order is placed, and those are also activities directly included in the ecommerce fulfillment service. This process can be very simple, composed of just a few steps, or very complicated, with the engagement of many entities, geographic locations, and various rules. Typical order fulfillment process will contain those phases:
- Shipping products to the warehouse, updating stock levels,
- Placing an online order, the product is sold,
- Completing the order in the warehouse,
- Appropriate packaging to ensure safe shipment,
- Shipping the product to the customer, updating stock levels,
- Completing delivery with the last mile service company,
- In some cases, receiving the product back, as per returns and complaints.
What is the best fulfillment strategy?
Depending on the level of complexity, the order fulfillment process can be handled in-house, fully, or partially outsourced. Let’s have a look at possible scenarios, to understand better the specific needs of various businesses.
- In-house order fulfillment. This solution is often used at the very beginning of the ecommerce journey. The owner or the team is handling every step by themselves, storing the goods at their houses, or small, local magazines. They sort, pack, and send the orders by themselves, having total control of the process. As the business grows, it begins to be much more difficult to meet all the requirements inappropriate time, it generates many mistakes and high costs. It’s time to think about finding a fulfillment partner that will help to scale the business and continue an expansion.
- Outsourcing order fulfillment. When ecommerce business is growing and company needs more space to store their products, or they start to sell products that need special warehouse or transportation, or process is becoming more complicated and there are more and more orders, a third-party logistics service is becoming a must. Beyond storage and shipment, such a company can offer many additional services, as packing, order managing, returns handling.
- Dropshipping. This way of doing ecommerce business does not require keeping goods sold in-stock – orders are being accepted and sent to shop customers directly from manufacturer or producer. In other words, the producer is the one to store and send the goods that ecommerce is selling on their website.
- A mix of systems. It may happen that some products will be fulfilled with help of external services, while other ones will be handled in the company, like for example personalised products. This may also occur, if the company uses an omnichannel strategy, and is selling goods both online and in-store
What is an ecommerce fulfillment center?
Order fulfillment centers are entities that offer complex services for your order management. It’s a network of magazines, offices, means of transportation that provides all required resources to fulfill step-by-step the process mentioned in the paragraph above. They own dedicated space for storage, qualified workers in the magazines, advanced software to manage the stocks, and the fleet to transport the goods. Different fulfillment centers offer different ranges of services – there are huge, global companies serving the biggest players in the market, but also smaller companies specialised in selected industries or types of products. We believe in the synergy effect of collaboration, therefore we’ve built a network of 50+ logistic partners in Europe.
Factors to consider when choosing fulfillment services
Here we arrive at the point: to outsource or not to outsource? If yes, how to pick the right service? Of course, it all depends on your business, your plans, your situation, but let us show you some advantages of outsourcing fulfillment to a company that has dedicated resources and experience.
- Costs savings. Synergy effect and scale bring significant benefits when it comes to fulfillment prices. If you are a rather small ecommerce, that can’t meet required order levels to negotiate with big warehouses and courier companies, you definitely benefit from fulfillment services.
- Growth and change are inevitable factors when speaking about business success. Your ecommerce needs to be prepared for dynamic changes, market expectations, different demands. Outsourced fulfillment lets you adapt quicker to those.
- When success in the local market is not enough, you will start thinking about expanding to other markets. Signing new agreements, meeting law and tax requirements, ensuring the right time of delivery may be a challenge. Ecommerce fulfillment services offer local warehouses around the world, one agreement for all services, and easy expansion to new countries.
- The clue of outsourcing is to let other, specialised parties do the job they know the best. It means, if you outsource your orders management, you may expect the company to do it better and quicker than you would to that with your resources. Time is crucial nowadays, therefore it’s a huge advantage to be smart and fast.
- Customer satisfaction. When you start struggling with a big amount of orders, sooner or later it will impact the correctness of your service. Mistakes are inevitable, and that means your customers will receive their orders with a delay, or not in a way they asked for. Well-designed processes by order fulfillment centers, smart technology, and modern systems eliminate as many errors as possible.
- Focus on the business. When you don’t have to deal with order fulfillment challenges, you can focus on how to make your business blossom.
- Knowledge and expertise. Market conditions may be hard, and for sure you won’t be prepared for all of them. Someone’s experience, knowledge, and resources will help you go through more demanding situations.
- Local services. Be closer to your customers thanks to services on local markets. It ensures you deliver the order as soon as possible with help of companies your clients know very well.
- When you integrate your shop (meaning your system: Shopify, Magento, or marketplaces) you can see all your orders in one place, all statuses and stock levels. Moreover, you can prepare reports, analyses, and insights to improve your sales and marketing strategy.
- Finally, modern technology is a must these days, and investments in the IT department can cost a million. When outsourcing your fulfillment, you gain access to continuously up-to-date systems and qualified IT specialists.
Choosing the right service at the beginning can be hard, but it’s good to pick features that are the most important for your business and analyse fulfillment centers’ offers to meet the requirements.
Best fulfillment services for ecommerce
When making the final decision regarding the third party to whom you will entrust your goods, you should take a closer look at such factors as:
- Number and location of warehouses,
- Range of offered services,
- The flexibility of the agreement,
- Pricing model (be aware of hidden operational costs),
- Certificates, if required,
- Insurances and proceeding in case of damage.
There are recognisable players in the ecommerce order fulfillment market, and they offer similar but different features. You can meet traditional 3PLs, that work mainly with mid-and big size companies. Linker Cloud is a smart fulfillment network that makes cross-border sales available for every ecommerce, providing scalability, knowledge, and modern tools to make your business grow internationally. By joining the network, you can expand your sales with just one click, at a price that is affordable for almost everyone.
If you feel overwhelmed by ecommerce fulfillment services and all the market offers, we are more than happy to assist you – analyse your business and find the right solution. Our team of experts is ready to discuss and design a plan for how to leverage your sales to a different level.