What is e-Commerce fulfilment and why should I outsource it?
In three to five years, 18% of retailers expect to entirely outsource fulfilment, up from 12% who said they do so currently. In this article, we will cover what order fulfilment is, what it involves and how to deduce whether now is the right time for your business to outsource with a storage and distribution service.
For any online retailer who is serious about growth, getting orders out on time and having enough space for stock, are key. Delivering your orders quickly and cost-effectively is paramount to being profitable and driving repeat business.
In addition to the dispatching of your products, the returns element is key. Processing returns fulfilment correctly ensures that your customer gets a refund quickly and this does not impact on your reputation.
For smaller businesses, it is more cost-effective to manage this in-house, but as online retailers grow, they will reach a point that they need to either invest heavily in larger premises, warehousing staff, negotiate shipping discounts and integrate all of these processes with their sales channels and order management system.
How does e-Commerce Fulfilment work?
With minimal set-up costs, outsourcing e-commerce fulfilment is less capital intensive because investment in fixed assets is not required.
Overview of Whistl's e-Fulfilment Services
e-Commerce fulfilment is the process of outsourcing the following operational processes:
- Integration with your system(s) - The first step when choosing a fulfilment provider is to check if their current technology integrates with yours. Whether you are purely selling from marketplaces, through a third-party, your own website or synchronising all sales channels. All these sales need to be managed through an order management system and your technology needs to be able to connect directly to your outsourced fulfilment provider.
- Dealing with your suppliers - Many fulfilment houses offer more than simply storage, picking, packing and dispatch; more ‘hands-on’ providers can liaise with your suppliers on an ongoing basis and ensure you are getting the best air and sea freight rates for your raw materials and bulk product imports via pallet and container.
- Storage - Fulfilment warehouses range in size, from 10,000 sq ft all the way into the millions. Typically they will specialise in either B2B such as print fulfilment, FMCG goods (e-Commerce fulfilment, pick and pack services) or a category within FMCG, such as ‘health and wellness goods’.
- Stock management or inventory management - Striking a balance between not over-ordering and having enough stock is fundamental to ensuring your online business has sufficient cash flow to grow. Furthermore, minimising the amount of stock required at and time ensures you will be paying the minimum amount for warehouse storage. And it isn’t just a case of minimising storage capacity; time is also a factor because a successful e-commerce fulfilment house will always store the optimal amount of product for the minimal amount of time required while ensuring your customers never see that ‘out of stock’ status.
- Order Picking - Order picking is the process of locating and gathering products from a warehouse shelf to fulfil customer orders. An effective e-commerce fulfilment house will utilise the latest technology and apply algorithms to calculate the most efficient way to extract your products.
- Order Packing - If, for example, multiple orders can go into 1 box, or elements of a single order need collating after your item(s) is/are picked they are packaged and assembled together, ready for the application of the shipping label and dispatch.
- Goods Reworking - Many fulfilment houses, when dealing with your imported goods from your suppliers, will offer a service in which they will take your raw materials such as boxes and inserts, and package them together on either a bulk, campaign or bespoke ‘made to order’ basis.
- Order processing - When a customer places an order on your website, your fulfilment house can print the customer’s shipping dispatch label and picking sheet. Each picker will typically have a laptop/tablet and scanner that gives them a route and location to pick from the final shelf.
- Dealing with carriers - Your customer’s order is then taken, along with others to the final packing bench where the shipping label is applied and your order is processed into the carrier networks. Typically a fulfilment house will have ‘pooled volume’ discounted shipping rates with the major UK and international carriers, so you will be piggybacking off other merchants using that fulfilment house and leveraging economies of scale. These cost savings will empower you to offer your customers a more premium delivery service in which you can give them, for example, timed delivery windows.
- Customs clearance support - Some fulfilment providers such as Whistl offer flexible international customs clearance services, helping you with the paperwork for your goods arrival, customs records, goods manifests, customs duty, taxes payments and item validation.
- Customer support - Fulfilment providers such as Whistl, offer an extra layer of service to online retailers, through specialist contact centre support. With our nationally based centres we can answer your customers’ inbound product and shipping queries, helping your business keep customer loyalty and support omnichannel shopping.
What different types of fulfilment providers are there?
Fulfilment companies differ in terms of their chosen target market, (e.g. verticals: health and wellness, clothing, food and drink), type of storage (e.g. frozen foods, long term non-perishable) or reworking, repacking and restocking capabilities (e.g. custom-made-to-order homewares, luxury items or clothing). Some fulfilment providers pride themselves on their speed of dispatch, order processing technology or simply their client experiences, and others are particularly good at the shipping element, offering multi-carrier delivery options.
What do mid-market retailers want from a fulfilment provider?
If you’re reading this article you’re likely already an established retailer. If, like 88% of retailers you aren’t currently outsourcing fulfilment, it isn’t to be taken lightly. One thing is outsourcing the delivery, like most retailers do (other than those with their own delivery vehicles), but another entirely is outsourcing the storage, order processing, stock management, picking and packing.
Your brand reputation is at stake, and it’s important that you work with a provider that has experience dealing with merchants who share your product sector and business model.
At Whistl we work with thousands of e-commerce retailers and our multi-centre, 1.5 million square feet of fulfilment warehouse network caters for businesses in a variety of sectors, from print to sporting goods, medical devices to fashion retailers. We have found that it is important to demand the following from an order fulfilment provider:
- Robust technical infrastructure that integrates seamlessly with your sales channels and order management system
- Getting orders out on time, every time
- Having enough space for stock
- Orders being delivered correctly
- Returns processed efficiently and cost-effectively
- Fast refund processing to customers
- Flexible approach with a laser focus on clients’ continuously evolving needs
The benefits of outsourcing order fulfilment
Outsourcing fulfilment means you can better focus on your own core competencies such as product development, product sourcing and marketing. It can also give you access to cost savings and mean your products are stored more securely. You can piggyback on their buying power and club together with other retailers to access ‘pooled volume’ discounted shipping rates.
Do consumers care if you outsource fulfilment, and can they even tell? With seamless and efficient fulfilment processes such as fast dispatch, and nearly perfect order picking accuracy in place, your customers will not be able to tell.
Potential drawbacks of outsourcing fulfilment
If you have already invested in your own fulfilment premises and you’re looking to expand, outsourcing is a less risky option. Many retailers have chosen to cease investing, because of fears surrounding Covid-19 and Brexit.
However if you have already invested in your own in-house fulfilment centre and have spare capacity, it might make sense for you to utilise what you already have and instead work with a delivery management provider to access the same discounted shipping rates normally the preserve of those who outsource through major fulfilment houses.
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