E-commerce fulfillment is commonly the aspect where don’t see many online shop owners with positive feedback. A general perception about logistics is that it is only a cost factor, but in actuality, it can become a conversion driver if used efficiently. That is why all successful e-commerce companies have one thing in common- exceptional order fulfillment with or without a third-party logistics provider.
So far we see that fulfillment is highly underrated when it comes to corporate success. Many experts also argue that there is no point in offering the best available product if the fulfillment process is not up to the mark. In a recent study, it was observed that 50% of the people abandon the shopping cart just by looking at the shipping cost, and 30% of people abandon the cart due to longer delivery time.
That is why we want to give you an insight into this important aspect so that you can get answers to the following questions:
- What is e-commerce fulfillment?
- What are the costs associated with fulfillment?
- When should we start to think about outsourcing e-commerce fulfillment?
What is E-Commerce Fulfillment?
The term order fulfillment or e-commerce fulfillment is commonly described as the process involving the physical processing of a customer`s order. From booking to the last mile delivery it involves all the associated processes like shipping, storage, and last-mile delivery. A typical e-commerce fulfillment starts from order acceptance and ends with the last-mile delivery. The process also includes return management.
What are the Costs Associated with Fulfillment?
E-commerce fulfillment comes with a cost and it entirely depends on online shop owners, whether they do it themselves or outsource the process to a third party. Online shop owners try to keep the shipping costs as low as possible to keep the customers less bothered by the shipping costs. Shipping orders locally can be handled and the costs are very reasonable if the qualities are less. International shipping brings in more shipping costs. So the online shop owners should come up with a good balance to keep the business rolling and customers attracted.
Outsourcing or In-house Processing?
To give you a better understanding of what is a better option, we should first see what is in-house processing or self-fulfillment? What costs are associated with managing the in-house fulfillment process?
• Warehousing
• Digital infrastructure
• Insurance
• Shipping Service
• Packing
• Workforce
Warehousing and Storage
According to AGOL worldwide experts both for national and international business owners, storage costs take a bigger chunk of expanses. The warehouse should be affordable and it should be located within accessible reach. If it is too expensive it will cost you more, and if it is situated in a remote location you will ultimately end up paying more transportation costs. Shipping cost and delivery to the final customer are to be taken into consideration when selecting the warehouse.
Digital Infrastructure
A good warehouse with all the good characteristics is not just enough to bring you success. You need software along with the corresponding hardware to keep a record of all your transactions. The more you are digitally updated the more your warehouse is efficient. Usually, the expenses are directly related to the efficiency of the warehouse. A good mix of choices should be made, considering the business volume and needs. From using general software like MS Excel to tailor-made software and hardware you can choose what fits your business needs.
Insurance
To avoid unnecessary troubles just in case you end up in an accident or damage to your warehouse. Here the cost also depends on the type of package you are buying and the coverage you need.
Packing
You can save a good amount of money when it comes to packing. Buying the packing material in bulk quantities can save you good money. You should always buy a moderate quantity of packing material to avoid engaging too much storage space. Good planning and finding an absolute balance are crucial in every aspect.
Workforce
The workforce is very important and without it, you cannot effectively manage your warehouse operations. As advised earlier you should think of an ideal solution depending on your business volume and requirement. For instance, if you get fewer orders in summers and orders increase dramatically during winters, you need to come up with a flexible solution.
Keeping in view all these aspects we can only come up with a good solution if we think and take a wise decision on every aspect of our business. There is no universal rule that fits all, e-commerce businesses vary in volume and there are many factors influencing them, like product type, customer base, and geographical location. That is why you need to dig deep and come up with your sweet spot where everything is managed efficiently and affordably.
