‘Shop ‘til you drop’ goes the common refrain, which positions shopping as a hybrid of pastime, athletic endurance contest, and cure for the blues. While retail therapy remains a popular activity, it’s one that’s increasingly being done from home. Brick and mortar locations may be the cornerstone of retail but, as Covid-19 hastens the ascendance of e-commerce, various direct-to-consumer (DTC) and delivery models are gaining prominence. If robust marketing programs are the face of this revolution, then logistics are the backbone.
The Importance of Shipping in E-commerce
For online retailers, victory is not achieved when an item is placed into the virtual shopping cart, but only when the cart is bought and paid for. One of the final hurdles to closing the deal is presenting favourable shipping terms and keeping pace is not getting any easier. According to a recent study, 63% of digital shoppers cited expensive shipping as a reason for abandoning an online purchase.”1
“Thanks to Amazon Prime, and other retail giants who have followed suit to offer free 2-day shipping, customer expectations around the speed and cost of shipping are constantly shifting,” says Big Commerce. “As consumers, when we want something, we want it now. As sellers, fulfilling those demands is easier said than done.”2
Order Fulfillment Considerations for E-Commerce and Direct to Consumer
As manufacturers and retailers race to keep pace with consumer expectations, there are many considerations to take into account when choosing an order fulfillment model. Should it be done in house or outsourced? Is inventory to be pre-produced or made to order? How should the customer relationship and data be managed? What is the policy for complaints, returns, and recalls? Should inventory be held at one central location or distributed through a network of smaller micro-fulfillment centers? Is the model sustainable? Is it scalable for peak seasons or sudden surges in demand? What about perishables? Custom packaging? With so much on the line it’s important to give careful analysis to the best course of action for your particular business.
Do It Yourself Shipping
For small and/or new manufacturers and retailers, the best option may be in house shipping. If time permits, handling the task yourself allows for maximum control over the process and eliminates the need to pay a third party handler. Nobody stands between you and your customer, allowing for maximum flexibility and making things like personalized thank-you notes possible. As businesses grow, they will find that order fulfillment obligations become a strain on time and space. While some businesses will choose to invest in additional staff and warehouse space, many will decide they are better served by trusting these duties to a third party.
Third Party Order Fulfillment
A good third party logistics (3PL) partner will handle your order fulfilment process from top to bottom, taking care of receiving, inventory, storage, order processing, shipping, and returns processing. With these tasks off your plate, you’ll be free to focus on the production and marketing of your products. A 3PL company will often handle many lines and can use that volume to obtain favourable shipping rates. On the downside, you will lose some level of control. When trusting such an important part of your operation to an outside entity, it’s important to research their ability to meet your specific needs and vet them to ensure they’re reputable and reliable.
Selling Through Amazon
It’s time to address the Amazon in the room. Manufacturers who sell through Amazon gain access to a massive online marketplace as well as a behemoth logistical operation. Amazon will, of course, take a slice of your pie, but are capable of growing your pie to the point that it may be worth it. Fulfillment by Amazon (FBA) means that Amazon will market your product and fulfill the order, allowing you to focus on manufacturing. Multi-Channel Fulfillment means that you market your products through other means, relying on Amazon for order fulfillment. While trusting your marketing and shipping to Amazon has its perks, Medium explains what is given up.
“With FBA, you not only give up a lot of data about your products but the entire customer relationship and customer experience. This not only means that your brand’s entire reputation and image is in Amazon’s hands, since quality control is left to them and they get to define your relationship with your customers. It also means, again, that Amazon is collecting a lot of important data about your audience instead of you — data that might be useful to help your business to improve certain services and grow.”1
From at-home jewellers and fashion designers to corporate giants like Nike and L’Oréal, manufacturers and retailers are reorganizing their operations to make it as easy as possible for consumers to purchase their products without ever leaving their home. As these companies compete on the basis of marketing channels and branding communications, they must never forget that an efficient, reliable, and user-friendly logistics process is a major component of success.
1 Codept. “Fulfillment for Direct-to-Consumer (D2C) Brands: An Orientation Paper and Guide.” Medium. Codept, February 18, 2020. https://medium.com/codept/fulfillment-for-direct-to-consumer-d2c-brands-an-orientation-paper-and-guide-17ef75633f55
2 19th, charu sharma on February. “Ecommerce Fulfillment: 3 Strategies To Fulfill Online Orders (2018).” The BigCommerce Blog, January 28, 2020. https://www.bigcommerce.com/blog/ecommerce-fulfillment/