There are a lot of articles out there telling you what a “perfect” order fulfillment looks like. This blog is going to help you avoid getting the wrong idea about what “perfect” fulfillment means. We’ve chosen 5 major misconceptions you should know about.
IN THIS ARTICLE:
Perfect order fulfillment isn’t the fastest fulfillment
Ecommerce retailers have been spoiling online customers in the last few years. Shipping speeds have skyrocketed and customer expectations regarding shipping time have followed suit (even more so with COVID-related restrictions). We now exist in a space where overnight or even same-day delivery is a viable option for many businesses.
Shipping speed can very quickly turn into a race to the bottom for businesses. Arvato found that about a quarter of online customers cancel their orders due to shipping times being too long for their needs. This can be concerning for businesses that are trying to maximize their conversion rates as well as their retention rates. So, naturally, they will try their best to offer the fastest shipping options possible.
And all this sounds right, doesn’t it? If the consumers are expecting faster and faster shipping times and the infrastructure allows for those expectations to be met, then why not do it? This sounds like “Fulfillment 101”.
There is, however, an ethical problem when it comes to fast shipping. Extremely fast delivery options like Amazon’s one-day delivery can have and great human and environmental costs. Warehouse workers that are part of the one-day order fulfillment chain are under extreme pressure when working.
Additionally, the way a company like Amazon does one-day deliveries is by sheer brute force: by using as many delivery trucks as necessary to fulfill the customers’ needs. This results in extreme inefficiency (but high effectiveness!) where one house can receive 3 or 4 one-day deliveries within a week, with a different delivery truck completing the last mile. Having so many unnecessary trips made by a courier has a negative impact on the environment, and could easily be minimized.
Fast shipping as a service is detrimental to the environment, but fast shipping as a culture is also problematic. By creating a culture where fast shipping is the norm, companies are teaching consumers to expect fast shipping. Currently, consumers are not informed enough on the environmental cost of fast shipping to take a strong stance on it. This could easily change in the coming years, given that there is more than enough information already publicly available on the ethical and environmental problems that come with fast shipping.
So, as an entrepreneur, you should ask yourself whether your choice of shipping aligns with your ethics. Can you have perfect fulfillment if this “perfection” comes at the cost of your ethics? If not, then perhaps the true “perfect” order fulfillment is the one that both works for your business and is in harmony with your values as a person.
Perfect order fulfillment isn’t one-dimensional
Sure, you can have a single option for shipping that you’ve refined to perfection. It’s the only choice customers have when it comes to shipping, but you execute that one option flawlessly. This is far from being perfect.
The thing about order fulfillment is that there is no one-size-fits-all. What you need to do is to create a service that allows your customers to find whatever option they like best. If you personalize the fulfillment process, then you can hope to reach perfection.
Options are the most important thing to offer to a customer because it is only then that you will understand what your customers are actually looking for. If you only offer one option, you will only see who chooses that option, and who chose to not complete their purchase. But, if you have multiple options, you can keep track of how when, and why each shipping option performs, and what demographic it is best suited for. If your order fulfillment process is one-dimensional, you’ll be locked away from even knowing how to perfect fulfillment. Adding options is what’s best for both you and your customers.
The best thing about creating choice and personalization for your customers is that it’s an opportunity to experiment and learn. You can test a pick-up or drop-off option. You can test working with premium courier services or cheaper postal services. You can see whether these options actually have an upside for you, rather than just trying to guess beforehand. So don’t be timid when thinking about shipping options!
Perfect order fulfillment isn’t unrealistic
Order fulfillment is all about knowing what your customers want and finding a way to deliver on those expectations. However, it’s important to know what your business is capable of at any given time and not overextend yourself for the sake of fulfillment. You might have an idea of what perfect fulfillment looks like on paper, but if you don’t have the budget, resources, or infrastructure to execute on that, then it’s not what’s perfect for your business. Perfect fulfillment is a fulfillment strategy that meets your customers’ needs without forsaking those of your business.
One key area where companies fail is setting up a consistent and reproducible fulfillment model. If what you’re working with is very effective but is extremely fragile (for example, your shipping model falls apart in stormy or snowy weather) then you don’t have the perfect model.
The most important thing is to set up a strong, replicable base for your fulfillment process that you can improve upon. If your strategy is fundamentally sound, then you can iterate and experiment with it with greater ease.
So, maybe now isn’t the time to invest in drone delivery like Amazon does. Perhaps it’s best to set up a strong land-based delivery system, and once you’re working on solid ground you could try experimenting with newer alternatives like drones — that’s how Amazon does it!
Perfect order fulfillment isn’t too expensive for your business
With the rise of free shipping, fulfillment is becoming a greater and greater cost for businesses. However, this doesn’t mean that you should be ignoring costs and profitability when setting up your fulfillment chain. It’s important to always keep in mind that fulfillment is a part of your business, and so it should assist you in turning a profit — not be a hole in your wallet.
The best way to balance the profitability of fulfillment is to offer a variety of options when choosing shipping methods. If you give a lot of choices to your customers, you can turn shipping from a simple cost to an upselling strategy.
There are many ways to set up a more profitable fulfillment strategy. One way is to offer free but slower shipping, and counterbalance it with faster but premium options. This will let you work with cheaper postal services for free shipping orders while reserving the more expensive courier services for customers that are willing to pay the premium.
If you have reliable customers, there are a few things you can do. For businesses, you can set up contracts or partnerships that will guarantee free and fast shipping in exchange for a flat but monthly fee. This is a great way to avoid unnecessary paperwork and streamline the number of payments you do. It’ll also strengthen your bond with your customer, making you more of a partner and less of a service provider to them. This established partnership will greatly improve the loyalty other businesses have to your service, as long as you deliver your end of the bargain!
For individual customers, you can have a subscription-based shipping service, where customers pay a small monthly fee, and as long as they are subscribed they are given free shipping. Amazon Prime is the perfect example of this.
You can also offer free but conditional shipping. Typically this takes the form of “free shipping for orders over $X!”. This is a great way to drive sales in exchange for covering the cost of shipping. And customers are much more willing to spend on products than on shipping, so it’s a win for both sides!
Perfect order fulfillment doesn’t leave room for human error
Fulfillment is a complex procedure that involves multiple teams, departments, and most likely multiple companies. Everyone is working together to get your customer your order. The backside of this complex process (that your customer will never see) is all the administrative tasks: data entry, paperwork, logistical procedures, etc.
Each of these tasks is one cog in your fulfillment machine, and they all must run smoothly in order for things to work properly and for you to be able to seek improvement. If someone enters the wrong address on a shipment, you’ll run into delays, and customers absolutely hate delays. If you have errors during data entry, then you won’t be working with the right information and you won’t be making the best decisions to improve your business. You can see how mistakes in one area can damage the whole process.
The biggest source of mistakes in this area is human error. Humans aren’t machines, and when given these tiny but laborious tasks, they will tend to make microscopic mistakes here and there that will eventually add up. What you’re looking for is a well-oiled machine, which runs perfectly on its own.
The best way to do that is to minimize the potential for human error in your fulfillment process. Try to identify the areas that suffer most from human error, and find solutions for each situation. For example, automating data entry by using scannable stickers that are tied to individual orders is much more effective than entering shipping data manually. Not only will it reduce the chance of running into human error-based shipping delays, but it will also make other data entry easier.
At LOCAD, we specialize in helping you find the best solution for your fulfillment chain. Get started with LOCAD here.
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With extensive experience in e-commerce and logistics, Constantin Robertz is the Chief Executive Officer and Co-founder of LOCAD — an end-to-end fulfillment solution empowering online businesses through warehousing, picking and packing, sales analytics, and last-mile logistics integrations. Prior to LOCAD, Constantin was the Chief Executive Officer and President of technology-driven logistics solutions provider Entrego and the Managing Director of Zalora, Asia’s leading online fashion destination. With a background in Business and Management from Universität St. Gallen combined with his expertise in e-commerce, Constantin leads the business strategy and development operations of LOCAD to ensure success.