Did you know that 53% of online shoppers decide who to buy from based on delivery speed? That makes your eCommerce fulfillment a make-or-break investment. And once a customer becomes accustomed to speed, it’s near impossible for them to go back.
If you’re still figuring out your online fulfillment strategy, here is a look at four options to choose from.
1. In-House Order Fulfillment
In-house fulfillment, also known as self-fulfillment, is where a retailer processes customer requests arising from online ordering internally.
With in-house fulfillment, your entire model operates under one roof. You and your team will be fully responsible for the whole chain, from receiving stock to shipping it out.
Once you prepare the order, you hire a courier and dispatch it. At this point, you must also send the tracking information to the shopping cart marketplace and update the buyer.
A large number of firms that rely on in-house fulfillment tend to be new outfits or small businesses. Once such firms grow past a particular scale, in-house fulfillment becomes a problem, and they have to consider outsourcing it.
The most significant benefit of in-house fulfillment is you get to exercise complete control over your product until dispatch. If you sell fragile products or need to oversee the process thoroughly, you can control the quality.
However, in-house fulfillment can be costly, depending on your operational dynamics. If you’re spending more time and effort fulfilling orders rather than investing in winning more online retail market share, negative opportunity costs kick in.
Moreover, if your order inflow ebbs, you still have to maintain your facility. Other related costs, such as salaries and ergonomic equipment for staff safety, will still be your responsibility.
In-house eCommerce fulfillment works best for businesses handling low volumes that won’t change rapidly. Additionally, brick-and-mortar operations who have pre-existing staff can use it as the extra cost isn’t significant.
2. Amazon FBA
Fulfillment by Amazon (FBA) is a program by the giant retailer to help other businesses sell online.
With FBA, you pass on the task of processing orders, payments, and delivery onto Amazon. In return for allowing you to use their facilities and equipment, Amazon charges you a fee.
Once you package your order according to Amazon guidelines, you send it off to their fulfillment center. There, the retailer processes and stores it until customers place an order. Only then does Amazon ship it to the buyer.
FBA works best for small businesses that can’t afford to invest in logistics. Amazon will handle all the SKUs for you and the shipping as well. If you happen to buy your stock on Amazon, the retailer will offer customer service and handle returns.
If you’re looking for scalability in fulfillment, FBA offers you a suitable platform with adequate room and human resources.
With that said, it’s not all roses with FBA. You have to pay a removal fee for starters if you sell your stock elsewhere and want out. That applies even if you’re suspended from FBA after becoming eligible.
Using FBA also means giving up a degree of control on your logistics as Amazon handles all packages that hit its faculties. If you plan on competing by offering a personal touch with your packaging, FBA may be a challenge.
Dropshipping is whereby a distributor or product manufacturer will ship the order straight to your buyer. Dropshiping is particularly prevalent in categories where the items are bulky or custom made.
After securing a sale, you contact the manufacturer or distributor and request them to ship the order to your buyer. The buyer pays you, after which you pay the manufacturer or distributor.
To reduce their risk exposure, some distributors and manufacturers tend to require a minimum order quantity. However, most of these suppliers will protect their interests by releasing the order after full payment and not a second before.
Dropshipping gives you the distinct advantage of not having to buy and hold inventory. You don’t need any capital investment in facilities or equipment. You just seal a sale, and the rest happens like magic.
As a result, you can sell a more comprehensive array of products as long as you can build more relationships with suppliers. That helps distribute your market concentration risks.
You give up control in handling the order from start to finish for the benefits you receive through dropshipping. The service quality is up to the supplier, and if they don’t perform, it’s your brand that catches the heat.
Since there’s little investment to set up dropshipping, there’s high competition. If you plan on using this strategy, you’ll need to work harder to differentiate your brand.
Engaging a third-party logistics party (3PL) is a popular strategy as you only need to focus on getting your products to the 3PL. The third-party will then handle the delivery to your customer.
The 3PL handles storing your products in line with their warehouse management policies. Whenever an order comes in, the 3PL will pick, pack, and deliver the product to your buyer.
For a 3PL relationship to thrive, you need to integrate their warehouse system with your ordering system. That way, an incoming order you confirm triggers their processing.
A 3PL enables you to offer relatively fast delivery timelines as they specialize in that line of business. Additionally, a 3PL makes all the investments necessary for the logistics to function. That saves you precious capital for your growing operations.
You can also scale operations using a 3PL, which makes for more efficient fulfillment operations.
Since you’re dealing with a third party, handing off your fulfillment to 3PLs means you lose control over that process. Yet, if they deliver poorly, the customer will blame your business.
3PL relationships work best with large sellers who can move more significant volumes. The more product you ship, the more you spread your fulfillment costs, making it cheaper.
You’ll Live or Die by the Quality of Your Ecommerce Fulfillment
As more people turn to the internet to make shopping easier, retailers need to invest more heavily in shipping the best experience. Ecommerce fulfillment is a vital part of that experience that can attract or chase customers away.
Thus, you need to invest significantly in identifying the right fulfillment strategy to deliver happiness to your buyers.
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