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Ecommerce Fulfillment: 3 Fulfillment Options for Your Business

Jake Rheude
Updated 09/08/20 1:50 PM

In today's highly digital landscape, almost anyone can start an online store.

But not just anyone can effectively run an ecommerce store. It takes more than just great products; you also need the abilities to accept credit card payments, market your store to bring in leads and customers, and ship out those orders in a fast and efficient manner.

Fulfillment is all about getting products from the warehouse into the hands of your customers. This includes packing, shipping, and delivering your products.

There are the 3 primary fulfillment options to consider for your business:

  1. Inhouse Fulfillment
  2. Third-Party Fulfillment
  3. Dropshipping

Inhouse Fulfillment

Also known as self-fulfillment, this is one of the most popular methods used by new or small businesses.

In this type of fulfillment method, it's the ecommerce company themselves who covers every aspect of the fulfillment process.

Usually, there's no third-party involved in picking, packing, and delivering the item. This fulfillment method is best suited for businesses that can handle a sizable number of orders.

Third-Party Fulfillment

Third-party or outsourced fulfillment occurs when you delegate the entire fulfillment process to another company.

According to Red Stag Fulfillment, a top 3PL fulfillment company, “A third-party fulfillment provider will store your products in their warehouse on your behalf, and they handle the packing and shipment the products for you. The only thing that you need to do is provide the details.”

Dropshipping

Dropshipping is a fulfillment option in which products are shipped directly from the manufacturer or wholesaler to your customer's doorstep. When a customer orders from your ecommerce store, you take a cut of the profits.

With this model, you don't have to worry about the excess stock because you only buy stock when a customer places an order.

How to Choose a Fulfillment Provider

No two ecommerce businesses are the same - each has its own needs, preferences, and nuances.

Choosing the right ecommerce fulfillment provider will enable you to save on operational costs, which can facilitate long-term brand growth.

But, choosing the wrong one can negatively impact your bottom line, your customer experience, and your day-to-day operations.

There are several facets that ecommerce businesses typically consider when evaluating fulfillment options.

Flexibility

One of the first things that you need to consider is whether or not you'll need custom packaging and instructions when shipping to various customers.

Some fulfillment providers specialize in efficiency, but at the cost of customization. There might also be other who are flexible in changing and updating requests but may not be as quick in shipping products.

You need to study every fulfillment center's approach when it comes to orders, as well as how they process returns.

You also need to know the impact of their processing system on your customers and business. Searching for the right balance is important to your business' supply chain operations.

Location of Fulfillment Centers

Next day deliveries are pretty common these days. Therefore, one of the most vital elements of this process is the fulfillment center's proximity. The closer you are with customers, the shorter the distance for your products to travel.

So, if you sell internationally, it's a good bonus in your part that you find a fulfillment company that has a warehouse outside your country, particularly where you're selling your goods.

Although it's possible to ship a product from one corner of the world to another in a day, this often comes with a price.

But shipping from a location closer to your customers could mean more benefits for you in terms of the speed of delivery, as well as price.

Clear Storage Fees and Rules

The best order fulfillment centers have clear and set storage fees and rules, to avoid any potential surprises down the road.

It helps to ask the fulfillment center for a detailed quote first or estimate on how much you need to spend based on the projection of sales, and order history.

Apart from that, it is vital to have a good idea of their insurance policy so that it will be clear from the start who will be responsible for any damage, mistakes, or theft that might occur.

Customer Service

Returns management has become central to the ecommerce customer experience.

A fulfillment center can handle returns, and other customer service issues, taking a huge burden off your team. This makes it easier for your business to scale and thrive.

Before working with a provider, you can ask them for their metrics on their service, and check for online reviews as well.

Scalability

Scaling your business from five orders to a thousand orders per day seems like a dream to most entrepreneurs, but it can feel like a nightmare if you have the wrong fulfillment provider.

Therefore, you need to think about scaling in the long-term when searching for a provider.

Switching to another provider can create a lot of friction later on, especially once your business has begun to grow. It's best to have the right systems and tools in place from the start.

Technological Compatibilities

The right technology can make all the difference in ecommerce. There are a couple of key aspects to keep in mind when considering the delivery of your product.

Mobile Location Devices

Ideally, you know what kind of technology is in place to efficiently locate, scan, and track your products. This also provides easy communication with customers, as it keeps them on the loop where these products may be, or when the item was shipped.

This is a great customer service tactic and dramatically cuts down service calls.

Custom Inventory Tracking

You might also want to consider checking the order fulfillment company's dashboard to check whether or not it provides the integration that you need and the right predictors to maintain your stock levels.

Acquisition, Packing, and Shipment of Products

If you're interested in a particular order fulfillment provider, ask them to explain the different methods that they use when packing, dunning, labeling, securing, and shipping your products.

Using incorrect materials or neglectful strategies can eventually lead to damaged items or high return rates. On the other hand, overpacking a product means that you're assuming unnecessary costs.

Pricing

It's easy to look for fulfillment providers who provide you with affordable services, but oftentimes, the cheapest option isn't right for everyone.

So, the question isn't just what you will be billed. It's how you will be billed. Are there any annual or monthly fees? Are there any additional transaction fees on top of that? Are there any minimum charges or storage fees?

Make sure that you thoroughly understand the pricing, as there are deals that often come off as too good to be true. There just might be hidden costs that you didn't notice.

Final Thoughts

No one fulfillment provider is right for everyone. Your products or business might require more than what the usual fulfillment companies offer.

That's why it's important to match the current and future needs of your business with a fulfillment provider that can best partner with you, and communicate well, to gain the best possible results.

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