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Cutting Costs Using Ecommerce Fulfillment Solutions 

Posted by MoneyNet Staff on March 5, 2017

fulfillment solutions

Introduction:

Choosing the right fulfilment solution for your e-commerce store is essential to keep your costs down and deliver great service. Your fulfilment solution of choice needs to run like a well-oiled machine and save money at each step of the way in order to stay competitive. Here are some guidelines and considerations to do just that.

 

A fulfilment solution contains the following components as part of the overall process:

  • warehousing (storage)
  • packing of your item
  • despatch (release to the shipping provider)

 The major cost of warehousing and inventory management can make a huge difference in a merchant’s profit margin. The two main options are handling your fulfilment in-house, and using a solution provider, especially one which specialises in comprehensive e-commerce solutions. 

The In-House Solution

This will involve obtaining your own storage space, which could be anything from your own household space to rented warehouse space, and staffing it yourself to do all necessary tasks of handling, packing, inventory and despatch. There are definitely advantages in that you will have complete control over the process. However, most e-commerce merchants find that this solution is impractical unless they are very small, and do it all themselves in the classic “garage” fashion, or very large, where it can be run as a full-scale commercial enterprise with professional standards and staff. For those in-between, where it’s no longer practical for a single person to handle the job in their spare time, it will usually be cost effective to use fulfilment solution providers for these tasks. They will be able to provide professional standards with reduced costs due to their economies of scale. Don’t even try to set up yourself to reduce your fulfilment costs to a level of a provider like Amazon – they will likely save you considerably, and eliminate your headaches as well. 

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Services Of Fulfilment Solution Providers

Fulfilment solution providers vary in their ability to implement particular packaging requirements, with some able to set up your labels, logos and branding, and others not including that as part of the service. If you are changing fulfilment providers, make sure that the new provider will be able to provide the same level of branding and packaging that you need.

 

Timely despatch is crucial and requires good coordination and logistics at the warehouse, as well as excellent systems. In fact, the key to all of these components, and much of the added value given to you by the fulfilment solution provider, lies in their systems and processes, particularly their CRM and inventory management. In managing all of these parts of the process remotely from you, the merchant, they need to be a full solution, not just a “warehouse”. That’s where some of the most popular e-commerce fulfilment solutions come in, promising to do all that and more. Let’s take a look at some of them. 

FBA (Fulfilled By Amazon)

FBA is one of the biggest players in the marketplace and they offer a large number of centers in the United States for flexibility and speed of shipping to your customers. They also offer a full solution in terms of bar-coding, packing and so on, as well as excellent shipping options. One of the most powerful factors with AmazonFBA  labels is their access to the biggest range of discount shipping options available. 

Amazon will receive and store your inventory, and you will be able to track every item through your FBA dashboard. They will take orders through Amazon.com or other channels. You don’t have to sell through Amazon.com – it could just as well be on your own site using BigCommerce or any other platform. Once the order comes, in they pick and pack, and offer to the customer various shipping options. This is where Amazon’s huge resources come in. Their shipping network and options are the biggest in the USA, and the “Fulfilled By Amazon” badge on Amazon.com can be reassuring for customers and drive more sales as well. 

One area that can can be controversial is FBA’s commingling of goods. More than one seller might have identical goods stored in FBA, and if an order comes in, FBA will ship from the nearest location, even if it was actually stocked by another seller. Very occasionally there have been problems with substandard goods being shipped to a customer due to commingling, where the seller was not actually responsible for the problem. However, FBA does handle all returns and customer service and have an excellent reputation in these areas. 

Shipwire and Others

Shipwire is one of Amazon’s biggest competitors and is used by many e-commerce major stores, whereas FBA tends to be favoured by the myriad of smaller stores due to its ease of use. Shipwire offers very good rates, especially if you are shifting a larger volume of inventory. In fact, although individual cases will vary, Shipwire comes out ahead on fees over Amazon in some comparisons. Shipwire also markets itself as being more friendly to you building your brand than Amazon, which naturally tends to favor using the Amazon sales channel and ultimately building up the Amazon ecosystem and brand rather than your own 

Other Ecommerce Fulfillment Solutions

In addition to the biggest two, there are many other fulfilment providers, such as RakutenSL, which may also offer a large network of fulfilment centres and other benefits, as well as the many smaller providers. Some of the smaller companies may not be able to offer the fastest or cheapest shipping and other benefits of the big players, but they may be able to offer solutions such as special packaging and branding for your goods which providers such as FBA do not. They may also have industry and niche specific knowledge which can be helpful for those with particular needs in storage, handling or shipping options. 

Cutting Costs

As a merchant, you will be used to maximising your savings at each point of the sourcing and delivery chain. The relevant steps here are storage, packaging or other processing, and handling. Take note of per unit handling charges charged by some providers. You will need to have a clear idea of the specifications of your items, and the volume of sales in order map out the full picture of your costs and compare providers. A low-cost solution can be a genuine competitive edge, if you leverage it and find the one that works for you. 

Bottom line: The Real Reason You Need Fulfilment Solutions

With all the importance that keeping costs low undoubtedly has, you need to look at the bigger picture as well. That involves the total system that the fulfilment provider can offer, including packaging, bar-coding, shipping options, customer service and returns, as well as their systems to for CRM and inventory management. So while something like FBA may not be the cheapest, they might prove to be a good choice for those looking for a robust, easily-implemented system that is trusted by consumers. Depending on your individual needs, with the right guidelines and research you will be able to find the right solution in terms of pricing and service.

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Topics: ecommerce