You can tell a successful and floundering eCommerce business apart by their strategy to combat eCommerce fulfillment challenges. In an “I-want-it-now” economy, customers are brand-faithful only so long as sellers have an extraordinarily high success rate of delivering orders on-time and accurately.
With the online space teeming with competition, a fulfillment strategy can dictate the extent and sustainability of success, and several brands opt to either fulfill in house (self-fulfillment) or rely on 3PL in the bid to digitize workflows.
In this post, we’ll examine the top 9 eCommerce fulfillment challenges with measures to preempt and in some cases, eradicate them altogether!
What is eCommerce fulfillment?
eCommerce order fulfillment covers the entire process of shipping orders to customers. It applies to both B2B and B2C orders, where fulfillment differs by the customer, fulfillment model, order volume and shipping methods.
eCommerce fulfillment may not be the most glamorous part of the supply chain, but it’s the most vital component to customer satisfaction and involves
In order to fulfill orders coming from different sales channels that include your website and marketplaces, you need inventory which can either be in-house or outsourced.
Also known as inventory storage, warehouses store products and categorize them with SKU barcodes for better shelf organization, item identification and retrieval. In larger organizations, these storage options can be bins or pallets
Once an order is placed, the customer is invoiced for it and the order is picked, packed and prepped for dispatch. The packers attach a packing label which denotes the quantities and storage location of the ordered products. Labels typically include handling instructions to indicate whether or not the contents within are prone to damage.
After order processing, the order is shipped through courier partners or palletized trucks, depending on whether it is a B2B, B2C or D2C order. Once the order goes out, it’s the seller’s responsibility to share tracking information with the customer to facilitate real-time updates while the shipment is enroute.
While inevitable, returns can be lucrative provided they are properly managed. When an order makes its way back to the warehouse, the seller has to conduct a quality-check in order to decide what to do with the return. If it’s a question of a wrong fit or color, like in clothing, it can simply be restored back to the inventory with an update applied to listings across the channels applicable.
Why does eCommerce fulfillment matter?
Every eCommerce business has to start somewhere. In the early stages and when order volume runs into a few hundreds, managing it on your own is the right choice. But when growth hits, the room for error and delays expands. The obvious signs of needing eCommerce fulfillment are
- Increased order volume: As orders grow and more sales are made, fulfillment is difficult to scale up.
- Rudimentary infrastructure: You have inadequate manpower and machinery to run things on the ground.
- Space constraints: storage is never a flexible expense, and limited space limits how many orders can be fulfilled on time without incurring damages.
- Rising shipping costs: generally speaking, if shipping costs exceed a few thousand bucks, it might be time to look for fulfillment services. Fulfillment companies can help you save more with bulk discounts.
- Limited data visibility: the absence of dashboard tracking and analytics makes it impossible to know what’s happening once shipments leave your warehouse. .
With an automated eCommerce enablement solution, you can bring your omnichannel strategy to life and get an advantage by
- Obtaining real-time reports on inventory, sales and order performance to apply corrective measures.
- Store and organize products such that warehouse space gets optimally utilized
- Replenish stock to avoid running out.
- Unify several offline outlets and online channels without risking a sales loss.
- Maintain and elevate customer relationships with updated tracking information that keeps both seller and buyer on the same page.
- Investigate high return rates and bring them down with proactive returns management.
- Perform financial reconciliation to avoid extra deductions, missing payments or being wrongly invoiced.
Returns are a necessary evil for eCommerce merchants, particularly those operating in the clothing and shoes niche. According to the National Retail Federation report, the average retailer incurs~$165 M in returns and online returns outstrip brick-and-mortar returns by a factor of 20-30%.The reasons for customers initiating a return may be genuine or in rare instances, arising from impulsive buying or bracketing. Either way, merchants need to be prepared to manage returns such that they can avert sales losses by updating listings with true quantities of quality-checked products.
While returns may not be the first thing on your mind when an order goes out, it turns into a costly affair if it is mismanaged or overlooked. If your returns policy specifies the conditions under which returns are accepted, or offers a free replacement or refund against the customer keeping the item, it offsets the cost of accepting returns. Another option some merchants offer customers is a donation or giveaway at a dropoff box from which the item finds use. However you formulate the policy, the goal here is to make it clear and free (or at minimal costs) . In fact, 76% of first-time customers report that they would return to shop again with a retailer if the returns experience is easy.
- Returns stems from a negative sentiment, and needs to be turned into a positive one to influence repeat purchases.
- Only quality returns should be restored to qualify as saleable inventory.
- Warehousing and staging space should be optimized to make room for the returns.
Any eCommerce automation solution you use must include returns reconciliation, with returns reports that offer status confirmation to signal to the ground staff what days and times to expect the items. By streamlining the process, countless hours are saved in identifying and sorting out the items, shortening the time to push new inventory onto sales channels. Integrating this with customer and store data can organize information and allow sellers to reconcile returns in quicker cycles, ensuring further decisions are not made in haste.
Last-mile delivery snags
Quick deliveries set sellers apart, but it’s a promise that requires a last-mile delivery strategy, with multiple fulfillment partners doing their bit. While LMD is an expensive and time-consuming part of the shipping process, it is key to satisfying customers, because delivery speeds and accuracy drive up reliability and trustworthiness, encouraging return visits and repeat purchases.
While order processing, picking and packing can be done in bulk for greater efficiency, things get a little more specific in delivery. It would typically boil down to the quantity, dates and types of orders going out by pin code, customer location and courier partners, which increases the probability of making mistakes.
- The biggest snag in last-mile delivery is the hold up and uncertainty between the “out-for-delivery” message and the actual delivery time. Numerous stops can delay deliveries,
- In rural areas, there are fewer orders and longer distances to cover. It makes sense for courier agents to save time and fuel by grouping orders by pincode while meeting all delivery targets in a single location.
Brands are held accountable for late, wrong or damaged deliveries, so it is important to use a reliable courier network. The carrier integrations list that you are familiar with should sync with an order fulfillment system so that everybody is looking at the same information regarding shipment statuses.
In the interest of keeping inventory close to customers, many retailers are relying on dark stores and using crowdsourced delivery to speed up parcel deliveries. Other measures that curb last-mile costs include click-and-collect or curbside pickup which is worth exploring if you run multiple offline outfits.
eCommerce companies whose order volume outstrips their fulfillment capability find themselves in a paradoxical situation. It would have almost been comical had it not been for the missed and lost opportunities. As volume grows, fulfillment needs to be scalable such that it can accommodate an influx in sales as well as remain surefooted during an economic ramp down.
According to Statista, online retail sales will jump by 16.43% in the next two years, implying a need to upscale warehouses by capacity and quantity.
- Balancing warehouse real estate costs with growing storage requirements.
- Disparate and outdated legacy systems that are incompatible with newer APIs.
- Labor shortages and increasing costs of robotic helpers.
Partnering with a fulfillment provider ensures that sellers only pay for the services they need and save a bundle on real estate. Considering the need to accelerate ship velocity, merchants can explore micro fulfillment centers or hub and spoke models which strategically feed centers across the country and allow a deeper degree of control over how inventory gets distributed. Depending on the order volume some retailers can save money and achieve space efficiency through an eCommerce enablement software, which features the capability to store commingled items in a single bin.
Data Visibility and Reporting
Reporting analytics are a way of looking into the future before it gets here, while avoiding repeating failures and mistakes. The right reports across channel-specific sales, orders, inventory, finances and tax and returns can help you to save money in the long run and drive customer engagement.
- Slow uploads and information retrieval.
- Data mismatches and decentralized dashboards.
- Working with single-purpose systems that are out-of-sync with each other.
- Delayed and unreliable data.
A centralized dashboard that imports and unifies data streams can populate your panel with the most critical, time-sensitive data you need in a snapshot. You can monitor inventory levels, replenish stock, check pricing fluctuations and apply adjustments accordingly. Further you can retrieve product performance information from reports to see what sells best and when, and accordingly make informed decisions when reordering items from your supplier for upcoming demand. This is why it is advised to opt for a solution that syncs with multiple integrations across marketplaces, warehouse aggregators, shipping partners, ERP and accounting, giving you all options in one place instead of having to repeatedly go back and forth between systems and then having to match records manually.
As they say, ‘ all stock is inventory but not all inventory is stock’.
And knowing the differences makes it easier to understand what causes your inventory capital to go up. When forward and reverse logistics get mismanaged, it’s the inventory that gets impacted the most, because you are then left with mounds of unusable inventory creating an excess that drives up storage and resource utilization costs.
- Infrequent cycle counts that are manually-intensive and take longer time and more labor.
- Outdated information on listings
- Subpar product quality from blindly restoring items on the shelf from the time of return.
- Expired and unsaleable inventory that gets mixed in with original items, risking the probability of a customer receiving a defective piece.
- Unsold inventory consuming storage costs the longer it sits at warehouses.
An automated inventory management software provides sellers with built-in reports on inventory aging, planning and SKU views. You can fulfill orders by reserving the required inventory and plan ahead of demand to prevent last-minute stockouts and shortages. What’s more, with automated cycle counts, you can compare actual inventory with what gets recorded on company balance sheets, averting shrinkages. By crisping your inventory, you can update channels with the appropriate availability and reduce the working capital.
Disjointed Omnichannel Approach
Even with eCommerce retail sales climbing, customers are not ready to completely drop the offline experience. Instead, what’s happening is a recreation of the personal touch through online and establishing multiple touchpoints that connect two worlds. Interestingly, omnichannel strategies help retailers out by prompting 80% of in-store visits from customers. Of these, 74% are likely to have done their research online before an actual visit. This means that the experience needs to be consistent throughout or risk leaving customers mistrustful and unsure of proceeding. The decision to employ an omnichannel strategy must be well thought out, because it involves a significant investment in ground level and digital coordination so that you can reel your customers in and seize lucrative opportunities.
- Buyer journeys that are fragmented and inconsistent, leading to missed opportunities.
- Buggy software that delays information retrieval and causes missed deadlines.
- Product availability mismatches arising from incorrect or outdated information.
- Limited channels that restrict sales potential and customer engagement.
An omnichannel eCommerce solution like EasyEcom can prevent stock-blocking by ensuring products can be listed on all sales channels. Further, it can help you reorder inventory according to product performance, ensuring that you are stocking up more on items that are saleable and of superior quality rather than getting stuck with expired, slow-moving inventory. How? Through SKU performance reports that reveal which products are making you money, and which aren’t! What’s even better is that you can go paperless and use a mobile-WMS app to scan shelves, pick up goods and expedite last-mile delivery without losing sight of the origin of orders, customers, locations, warehouses and shipping rules.
The advantage of an omnichannel solution to multichannel marketplace management is that the experiences are connected and allow you to follow the customer, whether they started out on your website and landed up at a store, or placed Whatsapp or app-orders. However they start and end, you’re able to pick out the customer and order and match them to avoid a wrong, damaged or delayed shipment. It is important to have an omnichannel eCommerce solution that connects data and systems of fulfillment center operations as well, because a breakdown there can still disrupt the experience!
High Shipping costs
Did you know that ~50% of prospective buyers abandon their carts due to unexpected shipping costs? Since the spring of 2022, global freight rates have been in freefall with the US-Asia ocean rates dropping by a further 5%, according to Freightos. But with customer loyalty on the line, eCommerce sellers are offering a range of shipping options that offer the best value without impacting their profit margins.
- Absence of industry professionals to draft a winning shipping strategy.
- High DIM weight of shipped packages
Be upfront about shipping costs applicable to products. You can add them to the pricing, or set a threshold after which free shipping applies, or offer it for a limited time or to certain locations. As of May 2023, Amazon is encouraging U.S based customers to pick up orders by offering them $10, thus saving shipping time and costs. By streamlining several carrier partners to your eCommerce platform, you can even pick the most value-driven, low-cost shippers who charge you by volume,thereby lowering the dimensional weight.
Backorders occur when an item becomes unavailable due to the current inventory falling below demand till the time the supplier gets you your new inventory.
- Accepting an order that you later realize you cannot commit to leads to dissatisfaction and a loss in sales with requests to cancel and/or refund the order value.
- Loss of customers when they switch brands and take their custom to a competitor.
- Stock running out and inventory reducing on account of insufficiency.
Reducing backorders starts with demand forecasting. You can create a sales pipeline and tap into the window of opportunity based on historic seasonality which indicates those months in a financial year that saw the bulk of sales versus a dip.
You can check time and date stamps of supplier interactions to decide whether those dates work for future purchase requests, or need to be moved up or pushed back. The conversation ensures sufficient stock reaches you ahead of schedule, enabling you to streamline your eCommerce fulfillment process. In fact those sellers who work with multiple suppliers have a default Plan B already so that even if one supplier is all out, another can step in and fulfill the orders, lowering the probability of backorders.
Despite these measures, if a delay occurs, it is essential to inform your customers and provide realistic ETAs so that they are assured of getting the product that they paid for even at the cost of a delay or deviation from the usual timeline. You can consider discounting or throwing in complimentary item combos that win them over!
We know you can take a hint, but the reiteration is a mark of how important it is to maximize eCommerce sales and operational growth with automation. Want to know how EasyEcom streamlines eCommerce fulfillment operations? Sign up to get a callback from our ever-ready team of product experts!