Table of Contents
More Fulfillment Content
Get the latest e-commerce industry news, best practices, and product updates!
Table of Contents
More Fulfillment Content
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Get the latest e-commerce industry news, best practices, and product updates!
Table of Contents
Share This
More Fulfillment Content
Get the latest e-commerce industry news, best practices, and product updates!
E-commerce is a massive industry that runs on several diverse operations that need a significant amount of your attention, especially if you are a new fish in the ocean that is the e-commerce world. And one such vital operation is fulfillment logistics.
To leverage the benefits of optimal functioning fulfillment logistics, e-commerce companies need advanced technology, proper infrastructure, an insightful team, and supervision. There’s no shortage of tasks that will constantly require your attention, from inventory management and fulfillment expenses to customer support and keeping consumers satisfied.
Fulfillment logistics goes beyond just delivering an order. Other aspects need equal attention and management to provide customer satisfaction, including receiving inventory, order packaging, storing inventory, and managing returns. Even a slight misdirection in one process can often lead to poor customer reviews. Therefore, many e-commerce companies partner with third-party logistics (3PL) providers who offer fulfillment logistics services.
What is Fulfillment Logistics?
Fulfillment logistics is the supply chain component that entails conveying client orders and shipments, storing products in an e-commerce warehouse, packaging boxes, delivering orders on time, and the return process. Because they both focus on delivering client orders, fulfillment logistics and order fulfillment frequently overlap in numerous ways.
The following is an outline of the fulfillment logistics process:
- Taking delivery of inventory
- Storage of inventory
- Processing of orders
- Processing shipping returns
Fulfillment logistics can often be a complex and arduous process for e-commerce companies to handle on their own. Therefore, many choose to employ 3PLs to supervise and complete the order fulfillment tasks effectively and in a timely manner.
What are the Challenges Faced During Fulfillment Logistics Processes?
As mentioned above, fulfillment logistics consists of multiple operations. Whether big or small, all these tasks pose their own set of challenges. Let us have a look at some of the most common challenges faced during fulfillment logistics processes:
- Effective management of inventory is a big challenge that almost every company faces. This challenge comes with drastic consequences if not handled properly. Customers will quickly abandon your store if you run out of goods. Companies that maintain ideal inventory levels don’t have to fear losing consumers to competition due to stockouts.
- Predicting and planning the demand for products is essential to eliminating over-stocking or under-stocking. Poor demand planning can often waste inventory, delay product delivery, or prevent more revenue. All of this has a direct impact on the success of your business.
- The delivery process is what leads to a successful sale. Even if the customer makes a sale, no fulfillment experience is complete unless and until the customer receives the product in hand. This process can pose a challenge in many cases; your logistics operation might not have advanced technology for accurate tracking of the delivery process, and it might cause delays.
- You need to constantly be in touch with your manufacturers to ensure that you never run out of stock during unavoidable changes in external factors. Effective supply chain execution is essential to maintaining the functionality of your business.
How can Outsourcing Fulfillment Logistics Benefit Your E-Commerce Business?
Aside from dealing with the challenges above, there are many other benefits of outsourcing fulfillment logistics of your e-commerce business to a third-party logistics company (3PL). Let’s have a look at these benefits in detail.
Well-Managed Inventory Storage Space
If your company is growing successfully and more customers are willing to buy your products, you will need more inventory storage space and facilities. And while it is a sign of expansion for your company, it is often challenging to handle these crucial phases.
Strategizing convenient and spacious inventory storage can become an arduous task for the company, especially if they do it without proper administration. This is when 3PL comes into action. Outsourcing fulfillment logistics also means not worrying about inventory storage anymore. The 3PL company is not only going to store your stock of products for you, but will also handle and organize everything.
Employing such expertise to manage your inventory will give you more time, space, and opportunity to look at other operations that inevitably bloom in a thriving business. Moreover, it will be cost-effective for your company, and these savings will later reflect in the growth of your other operations and, eventually, your business.
3PLs help you manage the flow of inventory from a manufacturer to their fulfillment centers; they will notify you when inventory levels fall below a certain threshold, and order new inventory to be sent to their fulfillment centers, lowering your fulfillment costs.
Timely Packaging and Shipment of Your Product
Fulfillment logistics is not a one-team operation. There needs to be a different team for each task, both small and large, to ensure that everything is done adequately and the customer is satisfied with not just your product but the service. An important aspect of providing good customer service comes from timely packaging and shipment of the product.
There are several phases involved in efficiently delivering items to customers, and all of them work in amalgamation. Each step is equally crucial, from product packaging to loading the products on the delivery vehicle. A simple example is finding boxes of accurate size and characteristics according to the product – this is just packaging. Contacting the delivery man whenever required and tracking the product journey are other tasks that can be taken care of through outsourcing fulfillment logistics.
Outsourcing fulfillment to a 3PL can ease all of these issues. Furthermore, a proper 3PL will have the most up-to-date technology to facilitate quick and precise communication among the different actors in the supply chain. Moreover, they will most likely provide you with data to assist you in optimizing your goods and logistics.
Helps You Focus on New Operations
This point has been briefly mentioned in the above benefits because it works in association with the other advantages of 3PL. For growing companies, fulfillment logistics is an entirely different pitch to play on. It will need your time and energy to understand and learn the skills required to manage logistics without significant failure. Developing expertise in fulfillment logistics will also cost you money, especially if you go on this journey alone. And losing money and time can make you lag behind your competitors.
Employing 3PL is like forming a partnership and getting a helping hand to assist you by providing your company with expertise and facilities. As you delegate fulfillment logistics to another logistic service provider, you will be able to focus on other important decisions for continuing the scaling of your company.
Outsourcing will assist you in moving forward even more quickly to achieve scale. It can free up time for you to enhance and create products, promote your brand, and lead other vital parts of your e-commerce business that you are intimately familiar with.
Acquire Logistics Expertise Along the Way
It goes without saying that when you work with the experts, you are also becoming an expert along the way. Fulfillment logistics is a separate branch of business operation that needs a different set of skills and managerial comprehension than other tasks. By working with 3PL, your company will grow because of effective shipment, but you will also gain insights from industry experts. Working alongside people who are trained and experienced in doing their job will also help you understand the fundamentals of many new skills.
Having worked with hundreds of sellers and having processed thousands of orders has given 3PL companies the required experience to excel at logistics and shipping. This enables them to bargain with large shipping carriers and obtain substantial reductions on shipping costs, which they can then pass on to you.
A well-established and effective 3PL has the infrastructure to manage complex demands and swiftly resolve challenges, resulting in faster scalability for your company.
Have Access to Multi-Fulfillment Centers
If you started your e-commerce business on your own and continue to self-fulfill your orders, most probably you are shipping all of them from one or two locations. Sticking to only a given number of fulfillment warehouses is harmful to your business growth in the long run, making it stagnant after a given period. Therefore, to achieve scalability, you need to be able to provide customers who are spread across different locations with timely delivery of your product.
Many 3PLs have multi-fulfillment centers strategically located around the country, ensuring that delivery is made in the least possible time to the customers. By ensuring the warehouse is located closer to your customers, you can even provide them with same-day delivery, which has increasingly become the standard for most firms.
Make Your Company Technologically Advanced
We live in technologically advanced times with technological disruptions happening everywhere. Like any other industrial operation, technology has also penetrated fulfillment logistics. Technology-focused third-party logistics (3PL) service will give you access to accurate and faster packaging, storage, and shipment of your products.
Using data and analytical tools, you will be able to predict future shipments and track your product precisely. This will help you make informed business decisions that are going to have a direct impact on your company’s growth, and will prove beneficial in getting good customer reviews. You offer customers a sense of personalisation when you give them information on their product shipment status. This minimizes cart abandonment rates, completes return processes effectively, and eventually increases your revenue.
Conclusion
If your business is growing, you are most likely facing challenges with handling fulfillment logistics, or you will start facing them in a while after you thrive on scaling up. Either way, you will notice that it is becoming difficult to manage operations like inventory stocking, timely packaging, delivery, and processing returns. Most of the time, it starts with something as basic as needing more storage space for your goods. If you don’t have enough storage space, all your other operations are bound to crash due to the domino effect.
So to effectively manage inventory as well as ensure quick shipment of products, you should employ the expertise of a 3PL company. 3PLs will provide you with the right equipment, team of experts, and fulfillment centers across different locations. You may acquire what a third-party logistics provider has to meet your logistics and fulfillment needs without investing in infrastructure, labor, supplies, and other resources. This will help you establish a solid ground in a competitive environment and raise revenue by making customers satisfied.
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FAQs
Fulfillment logistics is a single term that refers to the process of packaging, storing, and delivering the product.
The steps of the order fulfillment process are as follows:
1. Receiving inventory
2. Storing inventory
3. Order processing
4. Picking
5. Packing
6. Shipping
7. Delivery
8. Processing returns
Fulfillment can be divided into the following broad categories:
- In-house order fulfillment
- Outsourced fulfillment
- Dropshipping fulfillment
- Hybrid fulfillment
When the product is in fulfillment, it means it has been accepted to be delivered to the customer, and the logistics process has begun.
The fulfillment status of an order indicates whether it has been processed and is now awaiting shipping.