How To Choose The Right Fulfillment Process
“The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.” Bill Gates
As we’ve discussed in the previous article, which you can read here, choosing the right fulfillment partner is a critical step in the pipeline of creating happy customers. But before you can choose the right fulfillment partner for your needs, you need to figure out what fulfillment process is the best fit for you. There are a few different factors and questions you need to ask yourself to determine which strategy would be most sound for your business aspirations. Let’s take a look at them below.
One of the most important things to consider in any eCommerce business is…
Location, location, location.
Whether your business is 100% virtual or you have a brick-and-mortar shop, location matters. Why? Because you’re sending goods to other locations, and that “sending” includes delivery costs and customer expectations on shipment times. Location will ultimately impact your bottom line and ability to scale your business most successfully.
Customers want a positive delivery experience. What does that mean? It means they not only want but expect their orders to be delivered quickly, and thanks to the illusion of free 2-day shipping with Amazon (which is usually paid for through Prime), customers also want their shipping to be free or very affordable.
This falls on the business to determine how best to approach affordable and fast shipping.
So how can you work around this affordable shipping expectation?
By utilizing software that seamlessly integrates into your current workflow to help automate the fulfillment process.
Automating the fulfillment process reduces the opportunity for human error and frees up time - and money - for you to focus on other aspects of your business. As Bill Gates said, automation not only magnifies efficiencies within your operation, it also magnifies inefficiencies. Let’s take a look at some of the benefits of automating your fulfillment process wherever possible.
- Inventory is automatically updated on your website when a purchase is made. This allows consumers to make decisions based on real-time availability and avoid disappointment if something says it’s in stock when it isn’t. This also allows the company to know when a product is running low and can replenish as needed, maintaining a more efficient operation.
- Tracking can automatically be sent to customers as orders are fulfilled and shipped out.
- When integrated with your Shopify store or other marketplaces, automation streamlines the entire process from purchase to fulfillment to shipping.
All in all, automation should be a high priority because time is money. When you can save time by automatically integrating efficiency into your business model, you save and earn more money over the long run as consumers grow to trust your brand due to its efficient and dependable processes.
Another consideration when choosing the right fulfillment process is your goals overall. In general, there are three different types of fulfillment processes that are most common. Below, we will discuss each one to determine which might be the ideal setup for your business needs.
In-house Order Fulfillment
In-house order fulfillment is just as it sounds. The entire process of fulfillment occurs in-house or is considered self-fulfillment. This is the ideal operation for those who have a small business that is simple to manage solo without the help of third-party logistics providers or dropshippers. While this may be ideal for saving money initially, it’s almost always worth outsourcing some aspect of running a business to save money and maximize time.
How do you save money when you are spending it on outsourcing?
It frees you up to focus on what’s going to be most lucrative with your skills. Outsourcing or automation might come in the form of hiring a marketing team to set up automated email campaigns for you, or it might mean building your own fulfillment infrastructure by securing a facility, hiring staff, and so on. When you hand off some of the work to other people or integrated automation software, even if you have to pay for it, you allow yourself the opportunity to earn more money because you can fulfill orders much more efficiently.
Dropshipping is another fulfillment option that works wonderfully for some businesses and not at all for others. This is an excellent option for those looking to get started selling quickly at high quantities without carrying the burden of storing all of the products. There are some pretty significant drawbacks to dropshipping that need to be considered.
Dropshipping is a more hands-off approach. Goods are typically shipped directly from the manufacturer, and oftentimes that manufacturer is overseas. That means slower shipping times, lower quality control, no customization, and a plethora of other issues like the possibility of products running out and that information not being reflected on your site.
Although dropshipping doesn’t sound like a great option for some brands, it works wonderfully for those that have the goals of starting up quickly and with relative ease, as well as shipping more products out faster. It also has low overhead costs and offers the opportunity to test out a new market’s viability without too much commitment.
A 3PL partner is a popular option for businesses looking to scale and thrive without having to DIY a fulfillment process infrastructure. They outsource all fulfillment-related tasks that a company or person no longer has the bandwidth for and do the work in a much more cost-efficient way.
Some of the benefits of using third-party fulfillment are the capacity to order bulk items to improve profit margins, more affordable shipping rates due to the fulfillment company likely handing larger orders per month due to representing many different companies, and no investment in the warehouse spaces, infrastructure, and packing/shipping requirements necessary to fulfill orders.
Just as with dropshipping, anytime you aren’t doing everything yourself, there is a chance that quality control can become an issue. It’s essential to do your due diligence when researching different fulfillment companies to ensure they can meet your needs.
Some questions you need to ask yourself when developing your fulfillment process include:
- What is your expected order volume and business size, currently and at the rate you want it to grow?
- Where and how are you selling your products (what sales and technology streams are you utilizing)?
- Where is your customer base located?
- Is customization part of your offerings?
Choosing the right fulfillment process might take a little time initially, but it will pay dividends in the end if you find a strategy that meets the majority of your needs.