Pick, pack, and ship. It’s that easy, right?
I’ve been asked that question a lot lately. It certainly can be that easy, but for a living breathing business to operate on such a simple model, there are bound to be consequences.
Advancements in supply chain technology have been a boon for sellers. Now more than ever, anyone can start a small ecommerce business as easy as they can put up an online store. Platforms like Shopify have simplified the process so that sellers can launch with just a few clicks. The tools available to sellers today enable more visibility for a very low cost and barrier of entry.
Over the last decade ecommerce growth has steadily increased and by the end of this year, it’s forecasted that ecommerce will make up 20% of retail sales in the US. Growth driven by online marketplaces like Amazon has drastically changed consumer buying habits—Amazon has become its own search engine for products! Plus consumer expectations are catalyzed by this tech giant’s ability to offer 2-day (now same-day) shipping. This has become the gold standard for the industry.
Like any ecosystem, the surge in ecommerce growth has built a cottage industry of fulfillment providers. Amazon has been at the forefront of providing turnkey fulfillment for any seller, regardless of size. They launched their fulfillment service, Fulfilled by Amazon (FBA), in 2016 and now have two and half million sellers using their FBA service. Following suit, fulfillment providers like FlowSpace, Deliverr, and Flexe have made it easier for e-commerce sellers, ones that manage their own digital storefront, to store, prepare, and ship inbound orders on their behalf.
On one hand, outsourcing fulfillment has become easier, more accessible, and more efficient, which has driven costs down. However, there are key elements of fulfillment that require so much more than just pick, pack, and ship. To successfully execute (success meaning produce with accuracy, quality, and scalable growth) fulfillment for anything other than a one-product company, a third-party fulfillment partner must be flexible, agile, responsive, and above all human in their interaction with the brand.
One Size Doesn’t Fit All
As a seller’s business adapts to the market and their customers, fulfillment needs will need to adapt as well. This is especially true with DTC brands who get near real-time feedback on their product and brand, purchase habits, and market trends.
Fulfillment involves a complex web of systems and networks to efficiently process an order, and move it through the supply chain to the end-customer. A 3PL has to have organization, process, and experience, they should be able to adapt to the sellers needs, not the other way around. While fulfillment costs are a key factor to consider, it’s a moot point if the 3PL can’t adapt to the sellers’ ever-changing business needs.
Whether it’s a small kitting project or including branded tape on outgoing packages, there are innumerable custom solutions that can make or break a brand’s customer service—often these are what create the biggest headache for a seller. It is operationally challenging to figure out a smooth process for these seemingly minor changes, and a 3PL should be able to collaborate with you on the fly, develop a cohesive operational process, and execute without disrupting your day-to-day fulfillment requirements.
When a Service Gets Commoditized
Last year, when looking for someone who could help redesign our company website, I made the assumption that all web developers were created equal and I simply needed to enter into a pricing exercise. Boy was I wrong.
I posted the below on LinkedIn soliciting recommendations for a web developer. I received 347 comments, 260 direct messages, and 85 direct emails pitching their services. Most sent a pseudo rate card, one cheaper than the next.
I admit, I was naive in thinking that I would find someone great to help with the project. I hadn’t even considered if I needed an ad agency, a designer, or a developer. Finding a good partner who is going to take the time to understand your business and adapt to your needs doesn’t happen by punching in a question on social media and hitting the publish button. It takes a real conversation. It takes building a relationship.
Service Should be the Focus, Not an Afterthought
Let’s face it, we’ve all been on the receiving end of bad customer service. Just try calling your cable company. You’re routed to a centralized call center, you’re asked to wait in line, and then you have to troubleshoot with someone who knows nothing about your needs. Imagine having the same client service structure supporting your business. It’s doomed to fail.
If your fulfillment partner is committed to your brand in a way that they are an extension of your own team, the opportunity for scalable growth is so much larger. The individual or team supporting you should understand your business, be held accountable for the successes and failures, and fully comprehend the impact fulfillment will have on your customers’ overall experience. With a commoditized fulfillment solution (just pick, pack, ship) you’ll get the status-quo at best—and probably a call center feel when you reach out—but any growth you achieve will be yours alone, not from your partners.
When dealing with the ebbs and flows of your business, it may be important for your account manager to be onsite at the fulfillment center. This way they can step onto the floor and work with the operations team to identify and quickly resolve issues. This is especially true during peak season and sudden spikes in sales when you really need your account manager to be your eyes and ears at the facility. At DCL, it’s not uncommon for our customers’ holiday sales to make up greater than 40% of their annual sales—I can’t imagine not being on the frontlines for them.
Fulfillment Networks Face an Uphill Battle
Some sellers might be tempted to look for cheaper fulfillment options through fulfillment networks, a grey area of fulfillment commoditization known as 4PLs. Airbnb has revolutionized the way consumers think about travel accommodations by making it seamless to temporarily rent someone’s house or apartment and allowing homeowners to monetize their unused space. The same concept has been applied to warehouses to create fulfillment networks, often referred to as 4PLs, where sellers can manage the storage and fulfillment of their products.
On the surface, fulfillment networks are a great idea. By leveraging unused space, the seller gets discounted storage and fulfillment rates. However, sellers using fulfillment networks have to take into account some of the downsides they may face, including:
- Small, less experienced 3PLs will be managing your business. The 3PLs that are part of these networks and actually doing the brunt of the work, tend to be the smaller, less savvy 3PLs. It’s important to understand who is managing your business, their experience, and ability to scale and adapt to your needs. You’re probably fine if you’re shipping a few dozen orders a day, but it can be a whole different story when your business takes off.
- Service may suffer. In a fulfillment network scenario, a seller would be one or two steps removed from the fulfillment company or companies doing the work. This type of arrangement can lead to a bad game of telephone as you work through the fulfillment network service teams to manage your business. Not to mention the administrative headache when an issue arises.
- Syncing a network is hard. Each fulfillment center has its own unique systems, from warehouse management systems (WMS) to transportation management systems (TMS), and the fulfillment network is responsible for syncing them all together to manage the sellers’ businesses. Syncing a few systems is hard, but syncing dozens gets exponentially harder. It just takes one small error to create major failures putting the seller’s customer service at risk.
Advancements in ecommerce and supply chain technology have increased efficiency and as a result, driven costs down making it a win-win for service providers and sellers. So in some ways, fulfillment has become commoditized, and that’s perfectly fine. It may get some companies from point A to point B just fine. But just because it seems “modern” or “innovative” doesn’t mean it’s the best long term strategy for your brand. What may appear simple on the surface, might require much more complex interaction to really be of value. Before working with a 3PL ask other clients about their experience. See if they’ll go the extra mile to flex and change with your business needs.
Tags: Expert Advice & Tips