What 2020 Has Taught Us About the Future of Ecommerce Fulfillment
Editor’s Note: This article is a guest contribution from Shannon Callarman, content marketing manager at ShipBob, a tech-enabled 3PL that fulfills ecommerce orders for direct-to-consumer brands.
Ecommerce fulfillment has always been a necessity, but it’s now taking center stage.
Though ecommerce was already on the rise before COVID-19, the pandemic accelerated ecommerce growth at such a rapid pace that even Amazon had to close its doors to many sellers more than once.
So how do brands elevate their fulfillment strategy and prepare for the unexpected?
From partnering with thousands of brands and supporting them through challenging times, the biggest takeaway from 2020 for us at ShipBob is how important it is to provide transparent communication with your customers and keep them informed about unanticipated scenarios — even when those situations are outside of your control.
Being proactive is crucial, especially as brands try to navigate arguably the most chaotic holiday shopping season (and year) ever. During this time, brands should include carrier delays on their website, the order confirmation page, the confirmation email, and other customer touchpoints.
Since shipping delays with major carriers are all over the news, as long as you’re doing what you can to communicate with your customers, they’ll likely be understanding.
To prepare for 2021 and beyond, here are some more tips on how to bulletproof your fulfillment strategy and how a third-party logistics (3PL) partner can support small, medium, and large businesses.
Early-stage companies: Get started with a 3PL sooner than later
You don’t have to start off shipping a thousand orders monthly to reap the benefits of a 3PL partner. In fact, many brands learn early on that there are hidden costs to self-fulfilling orders and that partnering with a 3PL can not only save time but money in the long run.
Pro tip: When you’re sourcing a 3PL, make sure they provide transparent pricing on receiving, warehousing, picking and packing, and shipping to avoid unexpected fees and budget for these costs.
Relying on a 3PL is an affordable and flexible fulfillment option for smaller businesses that are looking to spend less time on logistics while saving money in the long run.
The important thing here is to look for a partner that supports early-stage growth, such as offering no minimum order requirements. Not all 3PLs are ideal for startups and small businesses, so make sure you do thorough research before choosing a logistics partner.
"I’ve talked to people who think they save money by fulfilling themselves. Their first question is always ‘is a 3PL worth the extra expense?’ We see outsourcing fulfillment as a cost-savings and believe it will save you money in the long run. 3PLs negotiate rates and give you back all the time to scale your business."
Gerard Ecker, founder and CEO, Ocean & Co.
Fast-growing brands: Look for ways to optimize your fulfillment
Sixty-eight percent of U.S. online shoppers surveyed stated they didn’t make a purchase more than half of the time if the brand didn’t offer a shipping incentive such as free shipping.
The best approach here is to offer a minimum order requirement in exchange for free shipping. But this can be a challenge if logistics costs outweigh your average order value (AOV).
If your brand is going through a growth period, think about offering bundles, managing subscriptions, and merging duplicate SKUs across channels. If you haven’t already, this would be an ideal time to get started with a 3PL to make these processes effortless.
Additionally, many 3PLs partner with major shipping carriers to negotiate bulk shipping rates for their merchants and have the capabilities to manage shipping challenges that are out of your control, such as what we’re currently experiencing — a “shipaggedon” — which is challenging to tackle on your own as a quickly growing business.
If you partner with 3PL with a growing fulfillment network, you can start out small by storing inventory in one fulfillment center, then expand into more as you grow your customer base.
By distributing inventory, you’re able to reduce your average shipping zone, which significantly reduces shipping costs and transit times. Throughout the COVID-19 pandemic, we’ve seen another need for this: spreading inventory out to reduce risk in case an outbreak happens and a single fulfillment center gets shut down.
You can strategically choose which locations to store inventory data in using historical order data to determine where your customers are located.
Your 3PL should be able to offer insights into inventory allocation, as well as carrier performance and shipping insights, logistics costs, and fulfillment performance, so you can make better decisions on how to expand your fulfillment distribution while keeping costs low.
Pro tip: Analyze what your shipping costs would be if you went from one fulfillment center to two (or two to three, and so on) by experimenting with different locations (e.g., one central and two coasts), and how those would be offset by the additional transportations and warehousing costs you’d incur.
Mature companies: As you grow, so should your 3PL
The right 3PL will continue to make investments in building and expanding their core offering to meet the needs of today’s merchant. A customized solution matters in logistics because every business has a unique set of needs. With ShipBob, we’ve learned from the beginning that there is no one size fits all.
The benefit of partnering with a tech-enabled 3PL is there’s no limitation in optimizing your logistics strategy. Many 3PLs partner with leading ecommece solutions to offer third-party apps and integrations, which can help streamline your entire ecommerce tech stack. Or you can take advantage of a 3PL’s open API to create a custom fulfillment solution that meets your unique business needs.
This makes it easy to integrate your fulfillment solution with multiple sales channels, inventory and order management platforms, returns management software, and other tools that touch different points of the customer lifecycle.
This way, you can easily launch into new markets, expand your customer reach, and add new sales channels, while still managing all-things logistics from one dashboard.
Pro tip: Partnering with a tech-enabled 3PL that offers global fulfillment powered by proprietary technology allows you to scale efficiently without needing to switch 3PLs or use more than one 3PL with different locations, software, and capabilities.
What we’ve learned from 2020, and how COVID-19 has impacted industry growth and peak season, is how challenging it would be if brands had to tackle these challenges alone with inadequate fulfillment support. It’s about being prepared for the unexpected and having the support you need to provide an exceptional customer experience.
The right 3PL should have the technology, infrastructure, support, and expertise to help you grow your business, no matter what stage of growth you’re in and what challenges come your way.
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