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The Corona crisis has led to a large number of retailers significantly intensifying their efforts in the area of digitalization. Numerous initiatives have been launched to support companies in creating an online sales channel that can also generate long-term revenue growth, giving e-commerce an additional boost.
Nevertheless, while it is relatively easy to open a webshop in a short period of time nowadays, it is all the more difficult to assert oneself against the competition and grow successfully. To tackle the challenge of early-stage visibility, boomerank offered their expert insight on the topic.
In the first part of this article, boomerank explains how to gain visibility on the internet in the early stages to increase website traffic and generate more purchases (in german). This being the second part of the article, we will address how to successfully handle and scale an e-commerce business with increased order volume and complexity.
Meeting high customer expectations for shipping
Logistics is often an underestimated but critical success factor for your online shop. After all, the delivery options offered, the delivery time, and the quality of delivery service play an important role in the purchase decision. According to the study, 50% of online shoppers have reported abandoning the purchase process in the past because no satisfactory delivery options were offered. Adding to that, 54% of consumers state that they stopped the ordering process because of shipping costs. In short - if the fulfillment of orders from your online shop is not optimized, many potential buyers will be reluctant to place an order.
When the order volume is still rather low, e-commerce merchants can send parcels to customers themselves without any problems. Many Shopify Shops use shipping apps to generate shipping labels or bring the parcels directly to the post office.
However, the more parcels you send, the more complex the logistics becomes. You have to consider the packaging material, there are more returns, the stock has to be checked regularly, there are complaints and you have to make sure that parcels are sent as quickly as possible. This creates even more stress and oftentimes there is no time left to focus on your core competencies.
Sooner or later you'll realize that you'll have to build up a warehouse and hire employees to take care of order fulfillment. Having a suitable warehouse management system is also essential to ensure that this is done efficiently. In addition, packaging and shipping costs also increase. For this reason, many e-commerce companies, especially D2C brands, decide to outsource their fulfillment to professional service providers, also known as 3PL service companies. In this way, fixed costs can be minimized and buyers' expectations of shipping can be successfully met.
What to look for when choosing a fulfillment service provider
Choosing a fulfillment partner is not an easy task. There are numerous providers on the market and for the outsourcing of logistics to work smoothly and scale successfully, various factors must be taken into account. This is a fundamental decision that can have a strong influence on the further development of the business and should therefore not be made hastily.
Technical integration of the e-commerce system
Many fulfillment service providers today offer technology solutions to connect the online shop directly via digital interfaces. This enables a Shopify retailer, for example, to fully integrate and automate logistics. Due to the automated transmission of order data from the shop system to the warehouse, fulfillment can commence without delay to enable a fast delivery - no need for the online merchant to intervene.
Concerning the technical integration, however, it is necessary to question exactly which functions are available. Above all, real-time stock management is advantageous to avoid stockouts. In addition, the return of shipment data to the online shop should function smoothly so that full transparency is provided for both seller and buyer.
Flexible packaging process
The packaging not only ensures that sold products arrive safely to the customer, but they can also further be used as a powerful marketing tool. Through a unique unboxing experience, e-commerce merchants can successfully strengthen their international branding and add a touch of personalization, which will boost customer satisfaction. This increases the probability of repeat purchases as the first step towards customer loyalty.
Therefore, it is important to consider whether they offer individual packaging solutions that can put the brand in the spotlight and communicate the corresponding values when selecting a fulfillment partner. Especially popular are ecological packaging materials that emphasize the environmentally friendly and sustainable aspects of an online shop.
Peak-Management
In logistics, seasonal fluctuations often lead to critical bottlenecks. Especially during the Christmas season, when online trade is booming, parcel service providers experience severe delays, delivery problems, or even overloads of the technical infrastructure.
However, fulfillment service providers also have to cope with higher order volumes and have to hire additional staff to ensure the punctual fulfillment of shipments.
Therefore, if seasonal peaks are very relevant for your online shop, which is true for many retailers, it is of utmost importance for you to choose a fulfillment service provider that can easily avoid peaks by having a proper peak-management process in place. This includes the following:
- Shipping with various parcel service providers
This flexibility ensures that the dispatch of parcels can continue in case of bottlenecks and the need to switch to another parcel service provider. - Efficient processes
A warehouse management system that is optimized for increased order volumes and supports the operative work of warehouse employees. - Flexible expansion of capacities
Is the fulfillment service provider able to provide more storage space and hire personnel to process the orders in the shortest possible time? - Good technical infrastructure
Find out whether the e-commerce fulfillment company of your choice has a stable technical infrastructure that can withstand turbulent times.
Geographical situation
One mistake that many online retailers make at the beginning is, that they look for logistics service providers in the vicinity so that they can be near the warehouse and have a close look at it. But this is often the misguided approach. Instead, online shops should try to find a logistics partner that has a fulfillment center or a network of fulfillment centers in the target market. This depends on where most parcels are sent to.
Due to the geographical location of the fulfillment center, the distance to the end customer can be minimized significantly. This saves on shipping costs and minimizes delivery time. In turn, fast delivery and optimized shipping costs will have a positive effect on the conversion rate.
Find the best-fitting fulfillment partner for your online business
As demonstrated, there are many factors to consider when choosing a 3PL service provider and the list extends much further. One of them also being the costs for 3PL services, as this is also one of the most important factors from the perspective of an e-commerce company. Here we would like to emphasize that when comparing the prices for the 3PL service, you should also take a close look into more hidden costs and additional surcharges that are often included in the offer as these hidden extra charges can quickly turn the initial attractive offer to one of the more expensive offers on the market.
Last but not least, similar to selecting the appropriate shop systems that work best with your webshop’s needs, when it comes to choosing a fulfillment partner, individual needs and preferences play an important role. It will not be a surprise that they differ greatly for fulfillment of small businesses compared to 3PL services for large enterprises. For this reason, different online merchants will not make the same decision but will opt for the fulfillment partner who can best meet the respective requirements.
