A Guide to Ecommerce Fulfilment
The process of receiving an order and delivering it to your customer in a timely and efficient manner is one of the greatest concerns for ecommerce businesses. Good delivery management is essential for strong customer retention levels, which relies on an effective supply chain.
For medium size and growing ecommerce businesses, the fulfilment process needs to be in excellent shape, as it is regularly used as a measurement of its success. There are three common models used in ecommerce fulfilment that each have their own benefits and drawbacks, to help you decide which best suits your company.
Also known as in-house or direct fulfilment, this method is probably the first port of call for most ecommerce businesses. It involves your company taking control of the entire fulfilment process yourself, from receiving an order to picking, packing and arranging the delivery to customers.
This enables your business to flex full control over its fulfilment process and maintain accountability. Usually you will need to rent a warehouse for storing products and where pickers and packers will deal with orders.
- Control: Total control means you can compare and change the third parties you work with and get the best process in place.
- Cost saving: There’s no need to pay third parties for picking and packing, which can appeal to new and small ecommerce firms.
- Customisation: Full control enables the opportunity to brand all products sent out.
- High capital: Paying for a warehouse, maintenance and extra overheads can become costly. This is in addition to paying more staff to cover the extra jobs self-fulfilment entails.
- Time consuming: When taking on more jobs yourself it could prove more time consuming for your ecommerce business and could restrict growth opportunities.
For a hands-off strategy and one that can be run with minimal facilities, dropshipping can be highly beneficial. This is a fulfilment method where the selling merchant doesn’t keep any of the products it sells through its ecommerce site in stock. Instead, it accepts orders and then purchases them from a third party (often a wholesaler or manufacturer) to fulfil them. This means that the selling merchant never sees the goods it sells.
- Low capital required: You don’t have to invest thousands up front for inventory or pay for overheads to store stock.
- Easy to start: You don’t need to worry about paying for products, storage, packing and shipping, tracking inventory and more.
- Flexibility: With dropshipping you can be located anywhere in the world and offer a wide selection of products easily.
- Risk: The product supply is in the hands of your third-party partners. This could lead to challenges if an item is out of stock but you’ve already accepted an order.
- Cost Structures: Working with multiple suppliers and dropshippers could become complex if you’re not well organised and have strong supplier relationships.
- Branding: its unlikely suppliers will be willing to add your branding to their products when delivered.
Third Party Fulfilment
A combination of dropshipping and self-fulfilment, third party fulfilment provides a more balanced option. You’ll need to buy some stock and store it but also will be working with third-party providers who take care of certain elements of the process.
For a growing ecommerce business, it can be highly efficient for reaching a wider customer base a lot faster, without having to take on all the work yourself. Many of the benefits and disadvantages of third party fulfilment fall between both of the above methods.
- Low costs: No investment is needed for warehouse space or the workforce to pick and pack orders if outsourced.
- Shipping discounts: Regularly needing high frequency deliveries allows you to negotiate shipping discounts easier.
- Convenience: Outsourcing much of the process to trusted professionals can make it a lot more efficient for your ecommerce company.
- Branding: Dependent on your supplier and the services available using third parties could mean you have less opportunity to send out branded products.
- Cost Structures: Understanding the cost structures of the all of the services available from your chosen supplier/suppliers could impact the cost efficiencies. As some may charge separate costs shipping, warehousing and staffing to pack and pick orders.
If you’re thinking about fulfilment options, then our fulfilment services at Whistl can help. From storage to picking and packing and returns, we offer a reliable and thorough service which can support any ecommerce company. Get started with Whistl by filling in a contact form online to learn more about our fulfilment options.
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