- Errors in fulfillment become increasingly expensive with returns reached 550 billion dollars in the United States in 2020
- Fulfillment costs varied from 10% to 15% of sales revenue, according to an independent review by fulfillment firms, but might rise to 20% if inadequate mechanization is implemented.
- The corporation must either invest in warehouse technology and automation or subcontract this to a 3rd distribution channel to decrease its cost per transaction.
- Warehouse management systems can assist organizations in scaling up to more quickly during peak periods.
- Brands should consider an ERP system that will assist them to analyze data and cut costs.
- To meet the specific supplier expectations of big retailers and marketplaces, an electronic data exchange (EDI) system is necessary.
With already established e-commerce brand owners first starting, order fulfillment is typically seen as the final and easiest phase in the sales process. However, they quickly discover that the bigger they get, the more difficult it gets. As a company grows, the fulfillment process becomes more demanding, requiring greater efficiency, reliability, and accountability.
Behind material products, fulfillment becomes one of the highest line-item costs. According to an independent analysis by fulfillment companies, fulfillment expenses ranged from10% to 15% of total sales but could grow to 20% if there is insufficient automation in place. Missteps become more costly, with 2020 returns at $550 billion in the US. Hence, fulfillment is now becoming a vital factor separating success from failure.
To get the right product to the right client economically and on time, seamless integration of several entities connecting different technologies is required. Brand owners must be able to store, manage, and replenish inventory, schedule orders from numerous channels, monitor volume surges, pick and pack orders accurately, find reasonable shipping choices, and handle returns. Customer service nightmares can be caused by a single hiccup.
Partnering with a third-party distribution channel allows brands to reach infrastructure and technology that they might not otherwise have access to or cannot otherwise purchase. This can alleviate a significant amount of stress for any brand. This is especially important because online firms are infamous for significant seasonal swings in volume and unexpected periods of rapid growth. The brand’s ability to capitalize on these growth spurts is mainly reliant on its fulfillment capabilities.
Things to consider when it comes to company fulfillment:
- Increases in Volume
A surge in traffic can quickly overwhelm a labor-intensive fulfillment operation, resulting in inventory shortages and shipment delays. If your fulfillment operations are not agile enough to manage high seasons and offers, even the best-laid business plans might backfire. Warehouse automation can help businesses scale faster throughout busy periods.
- Business Expansion
When an e-commerce business hits an average of 200-500 orders per day, Shopify, the popular shopping network for DTC companies, advises that it’s imperative to consider an ERP system to assist it to analyze data and cut costs. Many system setups will need to be readdressed at this moment to see if they still operate in light of the new volumes.
- Selling Through The Channel
When an e-commerce company adds a B2B fulfillment, they need an electronic data interchange (EDI) system to accommodate the particular vendor demands of major retailers and marketplaces.
- International Expansion
When a company wants to expand worldwide, it usually finds that the demand is there, but the logistics are a huge challenge, from cross-border shipment, customs and duty costs, taxation to language hurdles. Some technologies can accomplish this a lot easier if the brand has the required international abilities and integration.
Brand fulfillment capabilities play a huge role in establishing a successful e-commerce business. Access to technology, automation, and partnerships will make things much easier for brands as the business expands and assure that fewer mistakes are being made.