Mastering Resilient Ecommerce Fulfillment as You Scale

January 26, 2022
by
Rachel Go

Mastering Resilient Ecommerce Fulfillment as You Scale

January 26, 2022
by
Rachel Go
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As an ecommerce business owner, you oversee multiple areas. Your team balances inventory, delivers marketing campaigns, optimizes the site for conversions, perfects shipping, and so much more.

As your business grows, it’s critical internal processes grow in parallel. Every aspect of your ecommerce brand needs to be resilient; otherwise, you risk losing time, money, customer loyalty, and more when faced with change or turbulence.

Learning to strategically master your ecommerce fulfillment process is one of the best ways to achieve resilience as your business grows. With worldwide supply chain issues, efficient fulfillment processes have now become one of the biggest competitive advantages your brand can achieve.

In this walkthrough, we’ll share how you can be successful in this foundational area, covering: 

But first up…

What is ecommerce fulfillment?

Simply put, ecommerce fulfillment refers to the process of picking, packing, and shipping orders to your customers.

When someone places an online order via your ecommerce store, it’s everything involved in sending their chosen products within a set timeframe and price (while still making a profit).

Whether you send orders to a fulfillment warehouse for management by a third-party logistics (3PL) provider, use Fulfillment by Amazon (FBA), or pack orders in your own dedicated warehouse, your timely and effective ecommerce fulfillment process is crucial. 

When we refer to resilient ecommerce fulfillment, what I mean is building out operations that can withstand sudden changes in the industry, market, or even the world. When the pandemic happened, ecommerce sellers who were prepared with multiple suppliers and built redundancy into their fulfillment were able to weather the initial hit better than the rest. This is thanks to resilient, well-planned logistics. 

Alright, let’s get into all the interconnected pieces you’ll need to master.

The components of ecommerce fulfillment and logistics

As we’ll get into, effective management of each aspect of your ecommerce fulfillment operations ensures smooth logistics and customer satisfaction as your brand grows.

Ecommerce fulfillment logistics

Typically this is made up of these seven key components. Let’s dive into an in-depth explanation of each aspect of fulfillment and some tips for mastering them:

1. Inventory and order management

This is the process of ordering, storing, and using your business’ raw materials, as well as individual item components and finished products.

As part of your inventory management, it’s essential to monitor your sales volume and current stock levels closely. Doing so will help you with forecasting and sales projections. 

You can get this process right in a few ways. Namely by:

  • Setting minimum stock levels, 
  • Minimizing shrinkage, and 
  • Removing slow-moving or obsolete inventory. 

2. Item receiving and inbound deliveries

Item receiving and inbound deliveries refer to obtaining raw materials and inventory into your warehouses.

You can optimize your warehouse receiving procedure by automating the process with an inventory management system. This will give you real-time insight into your inventory counts, as well as increased accuracy. This is especially useful if you store inventory in multiple warehouses or ecommerce fulfillment centers.

It’s also helpful to run frequent inspections to make sure your stock is balanced across all sales channels (based on historic demand and projections), and double-check paperwork to minimize errors.

#cta-paragraph-fe#Pro tip: Most sellers only look at the shortest distance traveled from a warehouse to buyer. But to optimize for costs and efficiency, you should also work with warehouses that are close to your supply. For example, if your office is in Chicago and your manufacturer is in California, look for a warehouse in California to shorten inbound delivery times and costs.

3. Storage and warehousing

This one’s fairly self-explanatory. This refers to storing physical goods in a fulfillment warehouse until they’re needed. You might choose in-house fulfillment, whereby you store stock in an accessible location like  a warehouse space you rent. 

Alternatively, you can partner with a 3PL for warehousing, use dropshipping, or leverage fulfillment services such as FBA. The method of storage and warehousing you use depends on your brand’s scalability requirements. With a large 3PL, for example, your brand can scale faster than using dropshipping or relying on in-house fulfillment.

4. Item prep, pick, and pack

This is the process of preparing inventory for each individual order, and then manually packaging an order for shipment.

Optimizing this process can be tricky, especially if you have multiple SKUs and bundles available. Whether your business uses batch picking, zone picking, or wave picking, keeping your warehouse organized can do wonders to streamline this process and avoid losses and mistakes.

  • As a best practice here, it’s helpful to place top-selling items nearest to your packing stations, and to store items typically packaged together right next to each other. While these seem like small changes, they can make a big difference in the durability of your ecommerce fulfillment strategy.

5. Dunnage and packing materials

Dunnage and packing materials refers to everything surrounding the protection for your items when they’re in transit. 

Using the right kind packaging keeps items protected from damage and theft in some cases. For example, if you are shipping an expensive package, you don’t want the outer box to broadcast what’s inside.

Examples of dunnage and packing materials include bubble wrap, wooden blocks, corrugated paper, and plastic bracing. 

When looking into your dunnage options, it’s important to assess the types of products you have, how they’re shipped, and how much they weigh.

6. Shipping and delivery

This is the literal shipment of items, and the process of delivering orders to your customers.

To refine your shipping and delivery processes:

  • Focus on communication with your customers—share tracking numbers via email or text, and alert proactively for any delays. 
  • Offer to send delivery updates via text— this can double as an excellent way to get shoppers to opt-in to your SMS and email marketing.

#cta-paragraph-fe#You also need to be aware of the cost of shipping products to your customers. A robust ecommerce fulfillment strategy should minimize shipping costs for your business. You can achieve this by partnering with a 3PL that can offer you better shipping rates or by maintaining several warehousing partners throughout locations where most of your customers are based.

7. Returns management

Returns in ecommerce fulfillment refers to receiving, assessing, and processing returned products from your customers back to the warehouse for reshipment, parts, or anything else. Facilitating this process can become more expensive as your business grows. 

To streamline your returns management process, keep an eye on the cost of your returns, and why these items were sent back to you. 

If you repeatedly encounter broken or damaged products, it may be due to your dunnage and packaging, or a less-than-reliable fulfillment center. This information will help you gauge what changes need to be made to improve your fulfillment process.

#cta-visual-fe#<cta-title>Exceed the limits of modern commerce<cta-title>Scaling your operations? Learn how Shogun Frontend can help you achieve the exact ecommerce experience you envision. Learn more

Why resilient ecommerce fulfillment is vital

To choose the best ecommerce fulfillment strategy for your brand (managing all the seven components well), it first helps to understand why ecommerce fulfillment services are critical.

An especially resilient ecommerce fulfillment strategy plays an integral part in your operations for several reasons—but it all culminates in efficient and satisfactory service to your customers. If you nail your fulfillment process, you’re more likely to gain repeat customers and satisfy even those who need to inevitably return orders or process exchanges. 

Here are some of the benefits at-a-glance:

Ensures scalability

It’s only by developing your fulfillment services that you can develop your business.

Ensuring scalability in your ecommerce fulfillment strategy

They’re one in the same. For example: 

If you fulfill orders in-house—depending on how much space you have—you may find you’re not able to hold large volumes of stock or process an influx of orders. In turn, if your brand experiences a period of rapid growth, you might struggle to keep up with demand. In this case, the in-house route doesn’t support scaling. As we’ll get into later, self-fulfillment often, unfortunately, only gets you so far unless you’re willing to manage a robust logistics operation as a secondary business.

In contrast, partnering with a 3PL that can adjust logistics requirements to scale up or down with your ecommerce growth can often provide your store with a future-proof fulfillment plan. If, for example, your store experiences an influx in orders, a resilient 3PL fulfillment provider should be able to help you find additional warehousing space for stock, and increase manpower to prep, pick, pack, and ship orders.

Protects your buyer experience

Fostering a positive buyer experience is essential for creating a successful ecommerce brand, which includes no broken, lost, or late deliveries. 

In fact, 72.5% of online shoppers are likely or very likely to stop recommending a retailer after a poor delivery experience. 

So, to satisfy your buyer, you need to have a thorough process for picking and packing orders for timely, well-managed delivery. You’ll also need to monitor inventory levels to ensure buyers aren’t stung by stock shortages. 

Enables fast shipping

Fast shipping is now a table-stakes consumer expectation.

In the U.S., 40% of shoppers are only willing to wait two days for order delivery. Meanwhile, 18% of online shoppers now consider next-day delivery to be fast/satisfying shipping.

A resilient ecommerce fulfillment strategy ultimately helps you keep customers happy and keep up with competitors by helping you manage orders in a timely fashion.

Powers up your marketing

The promise of fast, reliable delivery or even free shipping can boost conversions. As such, robust ecommerce fulfillment increases the orders you can service in a shorter time frame to meet fast delivery expectations. 

Similarly, partnering with a 3PL for fulfillment can give you access to preferential shipping rates, making it easier to pass shipping savings on to your customers in the form of free shipping opportunities.

Opens additional sales channels

A strong fulfillment setup can cover multiple sales channels, unlocking new revenue streams.

With multichannel ecommerce fulfillment, you can easily begin selling on your own DTC store, or add listings to Amazon or Walmart without worrying about how you’ll deliver orders. This expands your brand’s reach and fosters more growth.

Ultimately, harnessing a robust ecommerce fulfillment strategy benefits your business you don’t have to be a logistics expert to get started. All you need is to know which fulfillment option is best for your brand based on your stage of growth and how you anticipate you’ll scale in the near future.

Your ecommerce fulfillment options

The best ecommerce fulfillment models depend on a few factors, like the number of orders you ship each month, where your suppliers are in relation to your customers, and your forecasted growth.

This is why it’s so important to understand the pros and cons of each of the ecommerce fulfillment options available.

You can opt for in-house fulfillment, an outsourced fulfillment provider, or another route entirely. Whatever you choose, order fulfillment requires finesse and organization—but it’s not as challenging as it sounds.

Let’s go through the various options.

In-house fulfillment

As the name suggests, in-house fulfillment focuses on fulfillment processes that operate without the help of a third-party provider.

To determine if this is the right path for your business, think about your current inventory volume. If you move fewer than 100 items per month and aren’t predicting any rapid expansion, in-house fulfillment might be for you. 

The benefits of in-house fulfillment:

  • In-house fulfillment gives you full control over the entire process.
  • It has low start up costs.
  • It gives you the most insight into what packaging works best.
  • This is ideal if you’re bootstrapping your ecommerce business and planning for slow, steady growth.

Potential downsides of in-house fulfillment: 

  • This method can be time consuming.
  • If you’re working with a fixed space, limitations can crop up quickly. As your business grows, you may find you outgrow your at-home storage facilities, or you may need to bring on additional support to fulfill orders.

As fulfillment expert Taylor Smits puts it, when you are getting in trouble with your partner for having too much clutter around the house (or even rented ware-house!), it’s time to outsource.

#cta-paragraph-fe#For steady growing businesses, order fulfillment becomes almost impossible to scale when done in house. Not to mention, it’s another job you may not have signed up to do. If your in-house process can’t keep up with your business’ growth, you run the risk of losing sales and damaging your brand’s credibility. Either hire an expert to manage operations at this level to catch up, or move on to outsourcing this to 3PL or otherwise.

Marketplace fulfillment

Many popular ecommerce marketplaces have their own fulfillment options for sellers.

Marketplace fulfillment

These are slightly more complex, so let's go through a few of the most popular ones. These tend to work well for single-channel merchants and businesses that are ready to expand.

Fulfillment by Amazon

Fulfillment by Amazon allows Amazon merchants to send their products directly to Amazon fulfillment centers for storage and order fulfillment. This is different from Fulfilled by Merchant (FBM), which requires fulfillment by a 3PL or the merchant.

Amazon has one of the most advanced fulfillment networks in the world. This makes it a powerful marketplace for establishing and growing your ecommerce niche. 

The benefits of FBA:

  • Same-day shipping 
  • Subscribe and save 
  • Global selling 
  • Access to a sophisticated warehouse network
  • Customer service and returns support

FBA uses distributed inventory locations to help ensure rapid order processing and delivery. Distributing inventory in multiple locations or regions helps businesses expand reach while also reducing shipping times and costs.

Potential downsides of FBA: 

  • Amazon has competitive fees for light and fast-moving inventory, but those expenses go up for bulky, overweight, or slow-moving items.
  • FBA charges different rates for regular vs long-term storage.
  • You’ll also charged for inventory removal, returns, and disposals.

Think carefully about the potential costs and how you plan to mitigate any surprises if you plan to use FBA.

#cta-paragraph-fe#Pro tip: One of the most common mistakes I’ve seen are merchants sending in items that aren’t properly prepped for FBA. It’s very important you get your prep work right before sending items into FBA, because any non-compliant deliveries can get stuck in their warehouse and cost time and money to fix. Plus, every day your inventory is stuck is another day you miss out on sales.

#cta-visual-fe#<cta-title>Exceed the limits of modern commerce<cta-title>Seems your ecommerce operations are scaling. Learn how Shogun Frontend can help you achieve the exact ecommerce experience you envision. Learn more

Walmart Fulfillment Services

Additionally, you may want to explore Walmart Fulfillment Services (WFS) as one of your fulfillment models. Much like FBA empowers Amazon sellers, WFS offers end-to-end ecommerce fulfillment services.

To be eligible, you first need to be an existing Walmart Marketplace merchant. You’ll also need to make sure your products meet certain requirements, including:

  • Products must ship to Walmart Fulfillment centers from within the United States
  • No perishable or regulated products
  • Maximum product weight is 30 lbs
  • Maximum product dimensions are 25”x20”x14”

That’s not all—you also need to have a good history as a Walmart merchant. This means having great customer satisfaction, shipping orders on time, and providing quality service overall.

Once you get accepted, you’re ready to start reaping the benefits and start using WFS as your ecommerce fulfillment provider.

The benefits of WFS:

  • Offering your customers fast shipping, easy returns and quality customer service
  • Full transparency over your inventory, orders, and shipments with easy-to-ready dashboards and reporting.
  • There’s a simple pricing structure and transparency around fees. WFS pricing starts at $3.45 for products weighing 1 lb or less. The program pricing gradually increases from there and is coupled with storage fees (per cubic foot).

#cta-paragraph-fe#Compared to FBA, one of the biggest benefits of using WFS is that you automatically get access to free two-day shipping without the need for a Walmart+ membership, whereas FBA merchants can only access shipping deals if they’re a Prime member. 

Being able to offer free two-day shipping lets Walmart merchants improve their marketplace rankings in search results, increase the chance of winning the Walmart buy box, and compete with other sellers on service, rather than price. Other benefits include the potential to reduce cart abandonment and, of course, increasing customer satisfaction by meeting their expectation for fast, free shipping.

Potential downsides to WFS

  • If you're looking to expand globally, WFS may not be for you. The service only ships within the United States, so Walmart merchants are only able to ship to domestic addresses, along with some military addresses, American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands. 
  • The limited product dimensions of WFS also mean sellers who plan to ship larger, bulkier orders can’t make use of WFS.

Shopify Fulfillment

Shopfiy isn’t technically a marketplace. Rather, it’s an ecommerce platform for setting up your own ecommerce store. However, brands who use it to host their store can gain access to the Shopify Fulfillment Network.

When you join the Shopify Fulfillment Network (SFN), you benefit in the following ways:

  • you can hand your order picking, packing, and shipping over to Shopify, freeing yourself up to spend more time managing the other areas of your business. 
  • you can track your sales data and inventory status in real-time over multiple platforms—Shopify’s fulfillment service connects with the admin area of your Shopify store and can be linked with third-party accounts such as eBay.
  • You can sell products via marketplaces like eBay and Amazon without worrying about monitoring other accounts
  • You won’t need to log into another system or platform to keep track of everything. 
  • SFN recommends which fulfillment centers would be best for you. And, using your chosen distribution centers, Shopify then automatically picks, packs, and ships orders.

Potential downsides of Shopify fulfillment include:

  • It’s more expensive to access the Shopify Fulfillment Network, with more charges. You pay more to access advanced features of Shopify’s fulfillment services. So, determine the features you’ll need and what the cost will be at outset.
  • Shopify does not have control over third-party providers. While they do integrate with them, Shopify is not responsible for the quality of these services. So, you’ll need to keep a close eye on the quality of service provided by the fulfillment centers. 
  • You’ll also need to set up these fulfillment center relationships yourself—which means communicating with the 3PL on how much warehouse space you need, expected order volumes, and more. For a new seller, this can be daunting.

Dropshipping

Dropshipping is an order fulfillment strategy that doesn’t require your direct involvement. One of the biggest being that you don’t need to take part in any stage of inventory handling. Sellers often like this option as it can be a good way to test a new product line without needing to hold stock. 

Orders from your ecommerce platform are forwarded from your website to your supplier who picks, packs, and ships the order directly to your customers.

Dropshipping ensures you only pay for what you sell, which is especially crucial if you’re a start-up. This makes dropshipping a low-risk option for new sellers or ecommerce owners who are bootstrapping.

The benefits of dropshipping:

  • Low overhead costs, as you won’t have to store or fulfill your own inventory.
  • Since you only pay for what you sell, it also has low startup inventory costs.
  • This option is hassle-free when it comes to fulfillment, thanks to your manufacturer or supplier managing the logistics.

Although dropshipping can be tempting, it often isn’t a scalable solution for most ecommerce businesses. Potential downsides of dropshipping include:

  • Lack of control over your packaging and fulfillment process, which may result in broken goods and/or a poor branding experience.
  • Many dropship items often take a long time to fulfill, with slow delivery times.
  • Since you don’t control your own supply, you might find yourself accepting orders that you can’t fulfill due to lack of inventory.
  • Although more convenient, dropshipping agreements often have lower profit margins since you cannot commit to bulk pricing.

Third-party logistics (3PL)

Another option is to hire or partner with a third-party logistics provider to manage various aspects of your supply chain, like sourcing transport, inventory storage and management, or picking and packing.

Outsourcing to a 3PL is useful for ecommerce retailers who don’t have the resources to store, pack, and ship inventory by themselves. When you outsource the entire fulfillment process, you allow your team (or yourself) to shift focus to business development and marketing.

Third-party logistics is helpful in other ways too. You can leverage industry expertise, reduce your operating costs, and optimize logistics while improving your data insights. These kinds of operations are easy to scale, and you have a wide range of providers to choose from.

The benefits of 3PLs:

  • Work with industry experts who have tried-and-tested processes.
  • Leverage the contacts and contracts a 3PL already has in place.
  • Thanks to economies of scale, 3PLs can often negotiate better prices for packaging and shipping.
  • By outsourcing your fulfillment process, you gain back more time and resources to invest in growth.

However, the large choice of providers can be a double-edged sword. Not every 3PL is going to be reliable, so choose your partner wisely. If you relinquish control and rely on third-party providers, you have to trust them to handle your shipping, returns, and sometimes even customer service. Any inefficiency from your selected 3PL can damage your business reputation.

Potential downsides of 3PLs:

  • Some 3PLs are unreliable, which will leave you worse off than you were before by not fulfilling products.
  • Many 3PLs have rigid services, which means they won’t be able to accommodate any special requests.
  • It can be harder to scale with smaller 3PLs who don’t have a nationwide network and multiple warehouses.
  • Many 3PLs have unclear pricing, and sellers only know what they owe when the bill arrives, making it hard to forecast profits.

Building resilient fulfillment operations

So, how do you create robust operational systems to weather any storm?

1) Build redundancy into your fulfillment

The best way to build resilience into your logistics is to make sure you never rely on just one fulfillment method. I recommend using multiple fulfillment options no matter what your main one is.

A stack of ecommerce fulfillment services will ensure your operations are always prepared. It also puts you in a strong position against competitors who likely lack a robust fulfillment process.

Look at which channels you currently sell through—then, work out which fulfillment services you can run concurrently. 

  • For example, if you sell products via Amazon, Walmart, and your own ecommerce website, you could use FBA to fulfill Amazon orders, WFS for Walmart orders, and partner with a 3PL to handle your direct-to-consumer ecommerce orders.

In this scenario, your 3PL fulfillment provider will act as a backup for Walmart and Amazon should you ever need additional fulfillment support. This then leaves you and your in-house team on standby for any DTC orders requiring manual fulfillment.

#cta-mini-fe#Build an ecommerce experience that scales with you. Learn more about Shogun Frontend

2) Ensure all of your systems and processes are connected

If the idea of managing multiple providers makes you weary, don’t worry—you don’t have to track everything manually.

Ensure accurate and real-time data flow across all of your sales channels, fulfillment providers, and suppliers to build a strong foundation for your operations.

This way, whenever someone buys a product from one of your online platforms, your inventory levels are updated across all others. This will make it easier for you to balance inventory across everywhere you sell and all the ways you fulfill orders.

3) Work with suppliers in multiple regions

Finally, diversify your supply chain. Scaling your ecommerce business and tapping into numerous sales channels and fulfillment providers will only work if you have the stock to fulfill orders. 

Make sure you have connections with multiple suppliers and manufacturers for the products you sell. They should be based across various countries and regions, including both local and overseas providers. This will make sure you maintain a consistent stream of inventory should one of your suppliers run into difficulties. Connecting with local suppliers might be expensive, but it can be beneficial if one of your international suppliers is unable to support you.

Forecasting is also your best friend. Make sure you forecast everything from sales to inventory. Moving away from “just-in-time” sourcing will help your ecommerce business stand the test of time, no matter what it faces.

Structuring your multichannel ecommerce fulfillment doesn’t need to be difficult

As we’ve covered in this guide, you have options for effective fulfillment as you scale! But you do need to be strategic in your choices. 

Ecommerce businesses go through ebbs and flows, so having an especially resilient ecommerce fulfillment strategy will make sure your brand stays strong in good times and bad. Use the considerations we presented here to help implement your multichannel fulfillment strategy to supercharge your brand’s growth.

Using the many fulfillment options available to you will also allow you to focus on other areas of your business, giving you the time and space to double-down on business development while ramping up marketing and sales.

#cta-visual-fe#<cta-title>Exceed the limits of modern commerce<cta-title>Seems your ecommerce operations are scaling. Learn how Shogun Frontend can help you achieve the exact ecommerce experience you envision. Learn more

Rachel Go

Rachel is a remote marketing manager with a background in building scalable content engines. She creates content that wins customers for B2B eCommerce companies like MyFBAPrep, Flxpoint, Shogun, and more. In the past, she has scaled organic acquisition efforts for companies like Deliverr, Skubana, and Pipe17.