Every Ecommerce business needs to deal with a lot of things in order to stay profitable. For a business having a bootstrap budget, the entire process becomes even more difficult. Order fulfillment strategy is something that can make or break your business.
Steps involved in Successful Order fulfillment
- It receives online order via its online shopping cart or a marketplace
- The company’s back-office system (such as an ERP) processes the order
- The customer is notified of the order being received and processed
- The company sends order for fulfillment to the warehouse
- Order is picked, packed, and prepared for shipping
- The order is shipped and the customer is notified of the same
- Shipping notification is sent to the customer
- Order arrives at the preferred location of the customer
- If needed, order returns are handled and refunds are processed
- Finally, the inventory is updated
Thus, getting it wrong would mean giving your competitors the chance to beat you in the game. When you are on a bootstrap budget, order fulfillment can seem like an uphill and expensive task. Here, we bring you five invaluable strategies that would let you sail through the process.
5 Strategies for Order Fulfillment in a Bootstrap Budget
1.Select the best suited order fulfillment option
Usually, three key avenues are used for order fulfillment: third-party fulfillment, dropshipping, and direct fulfillment.
The first option involves outsourcing your entire fulfillment process. From warehousing to picking and packing the orders to delivering them to your customers – everything will be done by a third-party service provider. Though it is a reliable way for order fulfillment, the process comes with additional fees that you would have to bear, which may not be a feasible idea at a bootstrap budget.
Dropshipping refers to the process in which you send customer orders to either the manufacturer or supplier for fulfillment. Undeniably, this is a great option when you have the minimal infrastructure, but there will be handling charges, paring down your profit margin.
Direct fulfillment is the most cost-effective and perhaps the best option when you are on a limited budget. Here, you fulfill the orders yourself. Though this process takes a lot of work, it offers some notable advantages like a substantial amount of cost saving, and total control over the fulfillment process, just to name a few.
While you can use any of these or a combination of them, you should ideally opt for the self-fulfillment option, especially when you are just starting out.
Whatever route you take, there are two key factors that you need to ensure in order to succeed.
- Accuracy: Products have to reach your customers. It means the accurate products that were ordered, not just any product.
- Speed: Products have to reach your customers within the promised time frame, always.
2.Select your physical location wisely
You may be wondering that when you don’t have a brick-and-mortar store, how your physical location would matter. When you are on a bootstrap budget, where you fulfill the orders from, plays a crucial role in helping you meet your expectations around delivery costs.
Based on your customer demographics, when you optimize your distribution center operations, it will help you cater to the maximum number of customers in the most cost-effective manner. For example, shipping orders to overseas customers can mean substantial additional cost for you, assuming you are trying to increase customer base.
On the flip side, you can charge more shipping cost to the customers, but there will be a probability of losing a sizable proportion of them. This can happen to domestic shipping too, especially when your customers belong to rural areas. Most shipping carriers calculate charge based on zones. The more an order needs to travel, the more zones it covers and the more costly it becomes to ship.
Ideally, you should try to distribute inventory locations that are within the vicinity of your customers. More fulfillment locations near repeated shipping destinations result into cheaper shipping charges than shipping from a greater distance. If possible, try to distribute the centers in such a pattern that they can help you in offering same-day or two-day delivery for the maximum amount of customers in major cities.
If your order fulfillment center is located in a major city, you can also combine it with your distribution center and develop a single facility and an omnichannel system. It’ll offer you a birds-eye view of the whole operation and you’ll be able to pinpoint issues immediately and resolve them before they trigger a negative impact.
However, this option may not be the best strategic option for every ecommerce company. When deciding whether to continue to operate separately or centralize these functions, remember to take factors like facility location, inventory management capabilities, cost, staffing requirements and scope of future growth into consideration.
It is important to remember that the success of your move would depend on being able to anticipate buying patterns and ensuring that orders leave the distribution center as effortlessly as possible.
3.Invest in an order fulfillment software
Instead of using manual labor, which is slow and prone to errors, for inventory management, picking, packing, shipping, and tracking processes, automate them with order fulfillment software. Whether you use a third-party logistics or self-fulfill orders, such software would be extremely valuable. It not only seamlessly integrates with common online marketplaces and ecommerce platforms, but also helps you in managing orders across different sales channels without requiring any manual effort.
There is a wide range of options available to take your pick from when it comes to selecting fulfillment software. Remember – a key component that makes successful ecommerce businesses stand apart from their average counterparts is often how robust their shipping strategy is.
If you too want to feature in the success league, your preferred shipping and fulfillment service should be aligned with your business strategy and perform accordingly. For example, you can make your ecommerce shipping easy, faster and efficient with ShipStation. Despite being a new entrant in the industry, ShipStation makes sure the shipping and fulfillment team works perfectly by knowing how to pick, pack, and ship parcels.
When it comes to choosing order fulfillment software, here are some essential features that it should offer:
- Ease of use: When you need information about a specific product or shipment in the fulfillment center, your software should quickly pull up accurate information. Stay away from too complicated operating systems as it would slow down the entire process.
- Simple integration: The software should be able to optimize your existing systems while preparing your business for future upgrades. You shouldn’t be rewriting everything or starting from scratch.
- Analytics: Regardless of your business volume, data analytics plays a crucial role in the ecommerce domain. By tracking purchase history and predicting trends, your fulfillment software can become a powerful tool for your online business.
Integrating automation systems in your order fulfillment process is a substantial capital expenditure. Yet, it would pay you substantially in the long run. However, you need to exercise extreme caution while doing it. Be prepared to experience initial hiccups too. The following are some tips that can help you sail through the process.
- Look for a consultant who holds a good understanding of your industry before investing in the fulfillment software.
- Compile business requirements for the new system and the process. Itemize details like product storage at peak seasons/hours, active products, orders to be processed, returns etc.
- Considering your business is growing, chalk out the cost that will be needed for logical expansion of the automation system.
Finally, get someone adept involved in the process, who can offer you a second opinion about the positive outcome of the investment. From your requirements and the implementation plan to the expected ROI – everything should be double-checked as it may bring out a better yet cost-efficient option for you to proceed with.
4.Consider the power of packaging
With technological developments in the ecommerce field, expectations of customers making online purchases too have increased exceptionally. It means that for any ecommerce business, regardless of its financial constraints, competing effectively means delivering an experience, not just a product. Your packaging has the ability to help you rise above the competition. For example, you can consider Trunk Club, which is a monthly subscription service that sends men and women a curated selection of clothes and accessories every month. Just see the packaging below and you’ll understand how an exceptional packaging should look like.
Despite being made of cardboard, the boxes have a stylish design and look like an old school trunk or suitcase that comes equipped with a carry handle. Once you open the box, you will find all your ordered products neatly organized, just as you would have with a suitcase.
There are certain methods that you can use to offer a better customer experience through your product packaging in a cost-efficient way. First comes packaging options that have to be durable enough to ship the products safely. There is a wide range of options available including envelopes, boxes, bubble wraps and more.
You can see the products from Uline to get an idea about the variety of packaging materials.
If you ship non-fragile items, you can think of poly mailers as well. They can not only adjust to different weights and volumes, but are lightweight too, which means reduced shipping costs for you.
Now, the weight and size of packaging come into the picture. As most shipping carriers base their charge on these parameters, put your best foot forward to keep the packaging light and small. This not only helps in shipping costs for both you and your customers, but also keeps the packaging costs within your budget.
5.Select the right shipping vendor
While big names like FedEx and UPS feel established and safe, and using just one vendor may seem like a hazard-free solution, it may not be the most cost-efficient solution. There are certain things to consider when you are on a limited budget. For example, if you ship bulky products regularly, you can try out the postal service instead of private carriers. Also, remember to calculate surcharges for services like holiday or weekend delivery to identify the most economical options for fulfilling customer delivery expectations.
Often, third-party logistics providers and dropshippers can help you in terms of reducing your shipping costs.
Third-party logistics providers leverage the merged inventory volume of a bunch of smaller merchants and thus, are able to offer better shipping alternatives. Dropshipping services like Oberlo, Doba etc can also be an attractive option when you are looking to boost your shipping volume without increasing the space required to store your inventory. Again, prefer dropshippers and suppliers in the locations closest to your customer base to reduce the distance between the destination and the origin.
Last but not the least, consider the power of negotiation. Try not to accept standard shipping costs offered by the vendor. Go through the negotiation process instead. Compare costs among other vendors and pick the one that works best for you. It may take some time to identify the right mix of shipping vendors, but once you are done, you’ll be able to deliver products conveniently at your customers’ doorstep in a cost-effective manner.
Depending on the product you are selling and its value, shipping insurance as well as tracking can bring a great amount of security. With most shipping vendors, insurance and tracking is generally inexpensive and place you in a position to demand compensation in case any of your packages get damaged or lost.
So, remember to purchase insurance on pricey items to stay covered in the event of a package getting lost. Since some shipping providers offer their service with built-in insurance, consider it when comparing different carrier prices to bag a cost-effective deal.
Whether you plan to outsource your ecommerce order fulfillment or take the DIY route, consistency with process improvement is of utmost importance throughout the journey. If you consider process improvement as an event, it will become difficult to improve the fulfillment operations. You may not have adequate experience or bandwidth to rethink processes, but you can remove the barriers with expertise and effort.
At the same time, when you are creating your strategy for ecommerce fulfillment, consider the resources you can use in your delivery. For example, if your profit margins seem to be low, a relatively expensive fulfillment service will not let you earn much money. Similarly, if you have just one distribution center, you shouldn’t guarantee that orders placed from anywhere in the world would be delivered within what is the standard delivery period for your business (2 or 3 days).
Take enough time to review your entire order fulfillment process, and identify the areas where improvement can be done while staying within your budget. If required, engage adept consultants who can help you in identifying avenues to improve productivity, service levels, and customer satisfaction, while reducing the costs. Continuous process improvement is perhaps the best and only way to remain competitive in the ecommerce domain at a bootstrap budget.