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The complexities of fast fulfillment

complexities of fast fulfillment

Lightning fast fulfillment is here to stay, and ensuring fast delivery for your listings, whether on a marketplace or D2C channel, leads to new customers, more conversions, higher retention, and overall ROI.

However, achieving 1-day and 2-day deliveries across the USA is complex enough that merchants of any size would struggle. Without Deliverr, you need to know the complexities of different parts of your fulfillment process, and how to modernize your logistics models.

To help with this, we’ll share a little about how Deliverr’s model works, and how you can get your own fulfillment setup ready to meet the new wave of online shoppers.

Key parts of an eCommerce fulfillment machine

At Deliverr, there are three main components that go into 2-day and 1-day delivery. They are:

  • Inbounds: How items arrive into a fulfillment network, and where they land.
  • Warehousing: How items are stored and readied for delivery within the fulfillment network.
  • Outbounds: How an item moves from trigger (customer purchase) to delivery (item receipt) within 2 days or fewer.

All of the processes in these sections work together in an intelligent, efficient way to make sure our merchants’ customers get reliable, seamless fast fulfillment, every time.

Inbounds: Item goes from merchant or manufacturer to Deliverr

2-day delivery starts long before a consumer hits the “buy” button.”

The most important thing for any merchant to offer fast fulfillment is to position their inventory close to demand. That means you need to figure out: Where do your buyers live and work? Do they order items to their home, office, loved ones in another state, or somewhere else? How is demand distributed across the country? Where is it concentrated?

Once you have that figured out, then comes the challenge of getting your items into the warehouse network. There are a few approaches to this.

Merchants can send items directly to the different warehouses. This also means coordinating deliveries between suppliers, warehouses, and the shipping services that get items into those warehouses. This could potentially end up being various moving pieces, usually at small volumes, so you don’t get the discounts that you might by consolidating inventory with other merchants (like a fulfillment service might do).  All of these different variables essentially mean that it can be challenging positioning your products close to demand without a tool like Deliverr.

Alternatively, merchants can send all their items to one location (at Deliverr, we call this a crossdock, and it’s available to merchants who want to ship to one location) and have that location separate, prep, allocate, and finally send out their items to the warehouses across the network. Pooling inventory across merchants from a cross-dock to multiple fulfillment centers, also known as forwarding, also helps limit costs.This brings us to our next stage; warehouses.

Warehousing: Item is stored in the Deliverr network

In order to get enough coverage to affordably offer 2-day and 1-day delivery, merchants need to partner with warehouses across the country. In order to accomplish this without Deliverr, merchants would need to work with a handful of warehouses across the country and use airshipping or other fast methods (which can become quite pricey). 

Getting inventory in multiple states requires multiple contracts, which is a lot to manage on your own. This is why many merchants prefer to work with networks instead, or set up their own warehouses in-house.

To move inventory into those warehouses, you then run into line haul costs, which is the cost associated with getting your products from wherever they are located (a manufacturer, your head office, a shipping port) to all your warehouses across the country. This can get difficult and expensive for individual sellers who have to monitor various moving pieces across multiple locations.

What about keeping items in one warehouse, and still getting 2-day delivery across the country?

Some merchants want to simplify their inventory placement by keeping all items in just one or two locations, then making up for it with their shipping methods.

Unfortunately, when you do this, you’ll often have to ship via air to make your 2-day delivery promise for many of your orders. Then, you’ll have to raise prices to make up for the higher shipping fees, and you’ll lose out on demand when shoppers find cheaper alternatives. Single merchants likely also don’t have the order volume to negotiate special rates with carriers like FedEx.

So, in order to activate fast fulfillment and keep it sustainable, you need to build out a warehouse network.

Outbounds: Item goes from Deliverr to your buyer

So now we move to what happens when an order comes in after your inventory is strategically positioned. By this stage, your inventory should be distributed and safely stored in various warehouses across the country, just waiting for an order.

Once orders come in, items go through sortation, where they get routed out to the different carriers based on coverage area. Which brings us to the next key partners in the fulfillment process; carriers.

To get the outbounds process down, you need to partner with the right carriers. These carriers need to be able to deliver fast enough within a local area to achieve 2-day or 1-day delivery. 

Merchants will need to find out which carriers service the areas their buyers place orders for next day delivery. Figuring out who those carriers are for every region across the USA is complicated, because you need to do your research, sign contracts, and negotiate rates. An individual merchant alone likely doesn’t have the same volume density to get the same rates that Deliverr and other fulfillment companies can get, which means you’ll end up paying more for that next day service.

Troubleshooting mistakes

We’ve gone over inbound deliveries, warehouses, and carriers — as well as the volume of partners you’ll have to work with to get truly nationwide coverage for 2-day and 1-day delivery.

The main business focus of most merchants is growing their catalogs, finding SKUs that become best sellers, and boosting sales. That means most merchants don’t have dedicated teams to monitor their many logistics partners to prevent mistakes, or provide visibility when something goes wrong.

When a delivery is late, or something shows up damaged, it hurts your brand reputation and costs you future sales. That means you need to figure out where the point of failure originated — was it the warehouse, or the carrier?

You need to get a unified process in place so you can monitor your network for any delays, and get clarity on where something went wrong so you can prevent it from happening again. Be sure you’re using a good WMS (warehouse management system) or learn the tools your warehouse partners use so you can monitor what happens that way.

How Deliverr can power 1-day and 2-day delivery for your stores

Negotiating favorable rates with carriers

Since Deliverr serves a diverse base of merchants, we fulfill thousands of orders across every metro, every day. That’s good business for any carrier we work with.

Deliverr can consolidate all merchant volume to negotiate better carrier rates, which makes fast delivery more economical for our merchants.

We do the same with our warehouses, where we can access more areas at affordable rates with the promise of business spread out across our merchants. Even if one merchant’s inventory and local demand couldn’t justify renting warehouse space in Chicago, 10 merchants would.

And finally, the same applies with material suppliers, where ordering 10,000 boxes gives our merchants a cheaper per-box rate than a single merchant ordering 100 boxes.

Directing your items to access more carriers

Thanks to the high volume of items Deliverr deals with, we’re able to sort goods based on where they need to go. This helps to drive costs down and speed delivery up, even if it’s not immediately visible to our merchants. The more we can handle internally, the more it’ll help down the line.

Unless a merchant has the same volume, approximately 5000+ orders a day in a given metro, it’s difficult for individual sellers to achieve the same ROI. The cost of doing this doesn’t make sense if you’re selling fewer than thousands of items a day in that region, since you have to sort to a carrier- and-route-level, and you need enough volume to balance the investment.

However, since Deliverr is able to sort and send out items per region, we’re able to partner with more and more local carriers to get access to their capabilities.

Finding and fixing errors in the fulfillment process

At Deliverr, we have visibility across the process. Instead of dealing with a warehouse saying it’s the carrier’s fault, and a carrier saying it’s the warehouse, we can actually go in and see what deadlines were missed and what actions were taken.

In addition to pinpointing where the mistake happened, we can work quickly to rectify it. Since we have our merchants’ inventory in so many places, we can immediately send out another shipment, whereas an individual merchant might get stuck looking at who messed up, making their customer wait even longer.

Handling sortation to speed up operations

In most fulfillment operations, the warehouse preps the items then schedules a time for carriers to pick them up. Items get delayed and deliveries are late when the warehouses cannot get items to carriers on time, or when carriers don’t pick up items quickly enough.

With Deliverr, we handle this entire process, deciding where items need to go and then sending them directly to the carriers.

This streamlines the entire process, and ensures we have visibility into this step of the process. It keeps a smooth flow of goods, and the faster we can get items to carriers the faster they can deliver to your customers.

Where fulfillment is heading

Increasingly as we move forward, optimized fulfillment will rely on economies of scale. The more merchants in a network, the better coverage and better sharing of resources.

Individual merchants will need to build up their own networks to compete with the delivery speeds that consumers want, while facing more expensive operating costs depending on their leverage to negotiate rate discounts with carriers and warehouses.

Merchants can also, and are increasingly, send their inventory to fulfillment providers like Deliverr. The benefit of this is that they can use only as much space and fulfillment resources as they need, which can grow or shrink depending on demand — while still accessing the same rates and infrastructure that Deliverr’s full network offers.

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