Faster fulfillment – E-retailers are upgrading their fulfillment service

Posted on June 25, 2012

fulfillment service – Faster fulfillment

E-retailers are upgrading their fulfillment service operations as customer expectations grow.

AS THEY BUILD NEW WAREHOUSES AND RECONFIGURE EXISTING ONES, MANY WEB RETAILERS ARE DECIDING THAT RISING CONSUMER EXPECTATIONS OF FAST AND ACCURATE DELIVERY REQUIRE NEW TECHNOLOGY, A QUICKER FULFILLMENT SERVICE AND NEW WAREHOUSE PROCEDURES.  FEW AREAS OF E-COMMERCE ILLUSTRATE THE CUTTING EDGE OF WAREHOUSE MANAGEMENT BETTER THAN FLASH-SALE RETAILING. IN ORDER TO OFFER SHOPPERS BIG DISCOUNTS ON SMALL QUANTITIES FOR LIMITED PERIODS, WEB MERCHANTS MUST BE ABLE TO BUY, RECEIVE, INSPECT, PICK AND SHIP ORDERS QUICKLY. THE SUPPLY CHAIN ITSELF HAS BEEN AN ACHILLES’ HEEL TO MANY COMPANIES FOR THE LAST COUPLE OF YEARS.

When it comes to shipping and fulfillment service solutions for small business, it is definitely NOT one size fits all. Key variables include the type, weight, size and destination of the items you ship, along with customer needs and expectations. Don’t take fulfillment service lightly. It is often the final touch-point with your customer, and poorly packaged items, slow, botched or overly pricy shipping can be a real turnoff. Don’t make a bad final impression and risk losing future sales to the same customer. Outsourcing a fulfillment service can be a big time saver. Here’s how it works: Your products, labels, barcodes and other unique packaging are stored in the fulfillment service company’s facilities. Then, when orders are placed — either through you and your Web site, or perhaps direct to the service — the fulfillment service firm can pack and ship the items.  Finally, a fulfillment service firm can also handle customer service and returns, if you wish.

However, there are some things to watch out for. Keep a close eye on costs. Using outside fulfillment service adds an expense you may not have factored into your budget, but you should also consider the costs you are avoiding by using them, such as storage space, payroll and your own time. If you charge customers for shipping and handling, you may be able to recover all or a portion of it.  Aim to break even on the shipping cost side. Some small companies try to make a profit on shipping, but risk alienating customers who are savvy about shipping costs.  List shipping and handling costs separately from the cost of the goods, and calculate the charge by weight, not the cost of the merchandise. Both steps will garner greater appreciation from customers.

One of the main challenges for e-commerce is that while only 10% of its inventory is typically on sale on a given day, it’s usually a different 10% each day. Many Fulfillment service put a lot more stock on accuracy than on speed. If a customer calls  and tells us we shorted the order, and we tell them we were at least fast in shipping that order, it’s not going to be a good conversation.

Larger companies will even use Robotic systems, however, will not appeal to every online retailer. The Golf Warehouse, for instance, does not use them because the technology is ill-suited for its products that can range from long, skinny golf clubs to much smaller, round baseballs, some merchandise doesn’t lend itself to being automatically picked very well.  At Best West direct everything is hand picked and packed.

There is a large investment needed for robots, the sporting goods retailer instead relies on manual labor and conveyor belts, along with consolidated fulfillment operations. In April, a similar retailer announced plans to consolidate and expand fulfillment operations in Wichita, KS.

The fulfillment service center upgrades are being driven, in large part, by online shoppers who are being trained to expect quick order deliver. Some 6 million shoppers have paid to get free two-day shipping from Amazon.com through Amazon’s $79-a-year Amazon Prime program. And more than 60 retailers have signed up to offer a similar service for the identical $79 fee through ShopRunner, a program started last year by GSI Commerce Inc., which is being acquired by eBay Inc.

With online rivals raising the bar in fast delivery, and e-commerce sales growing by nearly 15% last year according to the U.S. Department of Commerce, little wonder that many major retailers are building new fulfillment service distribution centers for their e-retail operations. Among the retail chains preparing to open dedicated e-commerce fulfillment service centers are Urban Outfitters Inc., Macy’s Inc. and Toys ‘R’ Us Inc. And web-only Amazon.com Inc., the world’s leading web retailer, is planning to build nine new distribution centers in 2011, about half of them in North America, adding to its 60 fulfillment centers worldwide. Kohl’s, meanwhile, is opening a third e-commerce fulfillment service center, this one in Maryland, in time for the holidays as the retailer works toward $1 billion in e-commerce sales this year.

fulfillment service