For an owner of a small eCommerce business, managing order volume can be a real struggle. If you’ve come to the point that your inventory levels have gone past the capacity of your living room or garage, this could be the time to consider the service of a trusted eCommerce fulfillment company. For many startups that have found little traction, changing to outsourced order fulfillment has saved them time and money, improved overall customer experience, optimized inventory management, and enhanced scalability.
In the increasingly competitive field of eCommerce, the benefits of choosing a reliable order fulfillment company that offers next-day or same-day delivery service can make a whole lot of difference. In this article, we will take a closer look at the factors to consider before moving to an outsourced order fulfillment company, the multiple advantages it can provide, and lastly, the importance of ultra-fast fulfillment.
Should I Move to an Outsourced Fulfillment Service?
Not all small eCommerce startups are a good fit for outsourced fulfillment services. It’s crucial to perform a thorough evaluation of your business and your budget. This will help you determine if working with an order fulfillment provider would be the right choice for you. Here are some important questions to consider:
- Is your business growing fast?
- Are you overwhelmed with managing order volume?
- Do packing and shipping distract you from other areas of your business?
- Does your budget allow for outsourced order fulfillment?
If your answer is yes to most or all of these questions, it may be worth your time to get in touch with an order fulfillment provider who can help you decide if using their service makes sense for your business. If partnering with an outsourced order fulfillment is right for you, a wide range of potential benefits await.
What Are The Benefits of Partnering with a Trusted Outsourced Order Fulfillment Provider?
If you’re doing your delivery operations in-house, packing and shipping can take up a lot of your time. Partnering with a trusted order fulfillment provider will cover the entire picking, packing, and shipping process. This can save you time so you can focus on other important areas of your business that require your expertise.
Great benefits come from partnering with an order fulfillment provider, especially if you have the volume. If you’re partnering with a bigger company, you will likely get discounts on packaging and shipping rates for high-volume orders because larger companies have already negotiated those warehouse discounts (smaller companies usually don’t have enough volume to unlock them). Furthermore, their high levels of efficiency and accuracy will also reduce costs from returns, exchanges, and customer complaints.
Improve Overall Customer Experience
Partnering with a trusted order fulfillment provider expands your shipping options, improves speed and accuracy, and reduces the chance of errors and delays. This in turn improves overall customer service and your reputation and leads to increased revenue over time.
It’s natural for a fast-growing startup to experience surges and bottlenecks, and this can overwhelm your entire operation, especially if everything is done in-house. Order fulfillment providers have the organized infrastructure, experience, and technology to efficiently handle the operational hurdles that come with scaling. Not to mention, they typically communicate deadlines about important dates to prevent stockouts during surges.
Optimize Inventory Management
One of the most apparent benefits of partnering with an order fulfillment provider is the peace of mind that your inventory is somewhere safe and organized. This puts you in a much better position to refocus on the more important aspects of your business such as advertising or investing in your website.
What Do Customers Expect When It Comes to Delivery?
Customer expectations are growing as eCommerce sales have accelerated. Throughout the pandemic eCommerce has taken a huge percentage of physical retail sales; as eCommerce has grown as an industry, so too have the consumer expectations which is ultimately a natural byproduct.
For most customers, 2-day delivery is considered the baseline. Fast delivery is now a basic consumer expectation, eCommerce is fundamentally moving towards next-day and same-day delivery. New apps like Instacart and Doordash, as well as well-established companies like Walmart and Target, are expanding their same-day delivery. Consider the data:
1. According to McKinsey & Company, 90% of consumers see 2- to 3-day shipping as the baseline delivery promise. Anything slower fails to meet consumer expectations. And for almost a third of consumers (30%), same-day delivery is the expectation.
2. A study by AlixPartners shows consumers expect 40% faster shipping than they did in 2012, and this trend is accelerating.
3. Fast delivery will make or break conversions. According to studies, there’s a 44% increase in sales for 2-day delivery and a 75% increase for next-day delivery. Conversely, 24% of consumers abandon carts because of slow delivery speed.
This leads to the fundamental shipping problem: consumers demand fast delivery, but no one wants to pay for it. This is the primary hurdle that holds online retail back from truly becoming the dominant shopping medium for consumers. It’s important to seize the opportunity and make fast fulfillment pay for itself. This is how to effectively bridge the gap to meet the expectations of the consumer.
How to Meet Consumer Demands
It’s important to know these 4 Fundamental Pillars to grow your Direct-To-Consumer business:
- Increase Conversion
- Drive-up Average Order Value (AOV)
- Drive-up Lifetime Value (LTV)
- Bring down Acquisition Costs
Shipping and fulfillment impact these components. You should build products that address each of these different business goals. For example, if you want to increase conversions, there’s the option of using Fast Tags, which provides free 2-day and next-day delivery with no minimum to drive baggage order value.
Fast shipping doesn’t have to cost you. You can position it in a way that it pays for itself, but you have to ask yourself these things:
- What is my goal when activating Fast Tags?
- What are the current margins for each of my products?
- How much incremental demand does using Fast Tags bring for each product?
You can come up with a goal(s) by using the 4 Fundamental Pillars listed above. Once you’ve done so, you’ll want to determine your margin profile for each of your products (and don’t forget the cart minimums feature!). Then you can evaluate what your increase in revenue would be when implementing Fast Tags vs the increase you’ll have in shipping costs. You can use a profit calculator to help with this one. This will give you a clear idea of whether you’re going to make a profit or not, or and whether it’s worth it to implement a strategy like Fast Tags.
Don’t wait to empower your business with ultra-fast fulfillment. If you are experiencing rapid growth or plan to scale your business soon, investing in a trusted and experienced order fulfillment provider could easily be the difference between success and failure.