🥇Finding the Best eCommerce Fulfillment Model
3PL, FBA, shipping on your own...what do all of these things mean and how can you find the right combinations to make your business as efficient as possible? Let's find out!
As an eCommerce business, you are able to bring the ease of shopping online to customers around the globe who are eager to purchase your unique product. The thing is, problems can arise when you are attempting to fulfill these orders. From storing, packing, and shipping, this process can be stressful and finding the right option for you may seem difficult, but this article will lay out the importance of fulfillment and the ways in which you can deliver your product to excited customers.
Why is your fulfillment strategy important?
Fulfillment is not just a way to get your product to your customers, but it includes the storing and packing process that occurs before you send it off. Fulfillment can even give your business a competitive edge when you find a method that works best for you and your business model. Fulfillment services can help you to:
Manage customer orders
Improve shipping times
Stay up-to-date on your product availability
So, yes, fulfillment is important. As you continue to read, keep in mind your current fulfillment methods and how the processes outlined in the article can help you keep customers satisfied as you continue to grow.
The Four Fulfillment Models
1. In-House Fulfillment
This model means that all of the storing and shipping occurs in your place of business (or even your home if you're just starting out). This is a common approach for small brands that are beginning to find their footing in the ecommerce world, but take note, this method may limit the variety and quantity of goods you can store and sell. It can also lead to high overhead expenses. In-house fulfillment will work for you if you:
Sell a low volume of products
Have a functioning logistics network
Sell products with intricate packing and shipping requirements
2. Third-Party Fulfillment
In a third-party fulfillment plan (also known as third-party logistics, or 3PL), a service company is engaged to handle merchandise, pack orders, and sort out the logistics of shipping to customers on your behalf. With this method, you would have some or all of the products that are listed on your store in your third-party fulfillment company's warehouse so when a buyer places an order, all you need to do in contact the fulfillment company to process the order, pack the product, and arrange the delivery to the customer. You can even use a software tool to easily contact contact the fulfillment company.
Using a third-party fulfillment service is a great choice, especially if you're an eCommerce seller who has enough capital to purchase and maintain inventory, yet find yourself short on space or labor necessary to pack orders. It is also good for a seller who is confident that their inventory will have a quick turnover or are looking to expedite their shipping times, since 3PLs often have warehouses throughout the country and even sometimes the world.
3. Multi-Channel Fulfillment
This fulfillment process is helpful with managing and fulfilling orders across multiple channels where your customers purchase products. Orders originating from your website, in an Amazon store, on Etsy, through your social media platforms, or any other network that you sell from can be fulfilled in the same place, making managing orders a breeze. There is no need for an exclusive fulfillment option for each individual channel. Moreover, this method of fulfillment can be a way to diversify your ecommerce marketing and sales channels while also keeping fulfillment simple and manageable.
Third-Party Fulfillment providers often offer Multi-Channel Fulfillment where they will automatically import your orders, but shipping softwares such as ShipStation will import your multi-channel orders for simple In-House Fulfillment as well.
4. Fulfillment by Amazon
Amazon is a convenient selling and fulfillment platform that can spring your business forward. With Fulfillment by Amazon (FBA) you are able to use Amazon's quick warehouse and shipping network to meet customer expectations.
This may be the perfect method for your business if you:
Are looking to save time and scale your business
Need an end-to-end solution for storage, shipping, and returns
Want to attract Amazon shoppers with Amazon Prime
With FBA, you are able to ship inventory to Amazon warehouses at a competitive cost that is far below carrier rack rates. Then, when an order is placed, Amazon will deliver your product to your customer’s doorstep automatically.
Common misconception: Some people hear Fulfillment by Amazon and think that their services are only available for orders placed through the Amazon Marketplace, but this is far from the truth! Amazon will fulfill orders from several other platforms automatically and also send your items to customer addresses on demand.
What is Dropshipping?
Dropshipping involves outsourcing the majority or even all of the supply chain process to a manufacturer or a third-party, allowing for a low barrier to entry as the third-party owns the inventory. The third-party handles the production, storage, shipping, and delivery processes. This option is incredibly appealing to some sellers as it can reduce overhead. With this method, you are able to handle marketing and other business operations while a fulfillment service manages the physical goods.
Keep in mind: While dropshipping can be an appealing option since it doesn't require maintaing an inventory, it's important to note that much of the order process will be out of your hands. If there's supply chain or fulfillment issues, customers will turn to you for answers, not the third party. This is especially important on marketplaces like Amazon or eBay, which will penalize you for not meeting order metrics.
Choosing the Best Fulfillment Model
With all these options for fulfillment, it can be difficult to decide what method will give your customers reliable order process and quick shipping. Here are a few factors to keep in mind when thinking about fulfillment:
What is the size of your eCommerce business?
What products do you sell?
How many sales channels does your fulfillment service need to serve?
How well can you track supply levels?
Who will answer customer questions?
How convenient and affordable is shipping?
Where will your products be stored?
How will returns be processed?
Do you need fulfillment software?
Do you intend to sell internationally?
Does the fulfillment service offer distributed warehousing, where items are kept throughout the country or world?
Can the fulfillment provider bundle products?
Can your vendor provide subscription fulfillment?
What do fulfillment services cost?
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