For the last two decades, the field of e-commerce fulfillment (logistics) has been going through the golden age because of the equally growing market of e-commerce providers (online sellers). However, other logistics companies improved their fulfillment game in 2018. New players in the field, such as ShipBob, presented the public with cheaper fulfillment solutions.
With all the changes in the e-commerce industry, customers are expecting faster services and response times. Amazon suddenly changed the game by introducing the 2-day shipping program of Amazon Prime. Target tried to counter this move, but Amazon launched ‘Amazon Prime Now,’ which ensures deliveries over two-hour delivery time.
After the launch of these fantastic services, customers’ demand will only increase.
Online shopping has become an integral part of many consumers’ lives. The increased volume of parcels shows that this new way of acquiring goods and services and the provision of tracking information is here to stay.
While a lot of packages are successfully delivered, sometimes, they can get misplaced, damaged, and in worst cases, lost. For these reasons, many customers will want to know the exact location and status of the items they ordered to ensure that it will safely arrive in their homes.
E-commerce is defined as the buying and selling of products or services exclusively through electronic channels. If you’ve made an online purchase through eBay, Shopify, Amazon (through Amazon FBA), and other platforms, then you have made your purchase via an e-commerce site. More and more people spend their time browsing on the internet and the more likely they are to buy stuff online.
Admittedly, the e-commerce industry is booming. Retail e-commerce sales in the United States are projected to grow at a fast pace in the coming years, going from 322.17 billion U.S. dollars in 2016 to just over 485 billion US dollars in 2021.
Why You Need Order Fulfillment Services
If you’re looking for a business that will eventually get you out of your 9-5 job, or looking to expand your existing business, having an online presence and web-based store could fulfill this goal. For beginners in the e-commerce trade, what do you need to do to get more sales, with a lot of online businesses competing for customers’ attention?
Customers want products that will give the best bang for their buck with speedy delivery, and good after-sales support. Here’s where the different companies offering order fulfillment services come in.
What is an Order Fulfillment Service?
Order fulfillment is defined as the steps involved in receiving, processing and delivering orders to end customers. A fulfillment service is defined as a third-party company that provides these order fulfillment steps on behalf of another party, such as an online seller.
FBA, or Fulfillment By Amazon is a business model wherein e-commerce sellers on the Amazon Marketplace, big or small, can have their products stored in any of Amazon’s giant warehouses, pack and deliver them to customers, handle customer support, and returns.
FBA Pros
Expertise and Reach
Amazon has one of the most advanced e-commerce fulfillment service in the world, can help you scale-up or grow your business and as of the last measured period, the source estimated 90 million paying Amazon Prime subscribers in the United States, up from 63 million in June during the previous year.
Amazon Prime customers are eligible for 2-Day Shipping, Free Shipping and other benefits. If you sign up your products for Amazon Prime, your products are eligible for free shipping, too.
Customer Service and Returns
FBA handles customer service and returns. Listings are displayed with the Prime logo, so customers know that Amazon handles packing, delivery, customer service, and returns.
They handle the fulfillment services side of the business and saves your time, so you can focus on the other aspects of your business.
Multi-Channel Fulfillment
With Multi-Channel Fulfillment, you can fulfill orders from other sales channels using your inventory stored in Amazon order fulfillment centers. Single-source your inventory to streamline your fulfillment operations, manage your inventory through an online user interface and can direct Amazon to return your inventory in e-commerce fulfillment centers at any time.
Cons of using FBA
Customization
Little to no order customization. Sellers must comply with existing Amazon .processes.
Branding
Items are shipped in Amazon boxes. Sellers can ship in generic boxes which may cost extra.
Warehouse Pricing
Storage fees are generally higher compared to 3PLs and usually rise during holidays.
Higher order handling fees for non-Amazon orders.
Communication
Solutions are based in standard processes which may pose little opportunity for dialogue.
Conflict of interest
The fact that Amazon may actually be a competitor to the seller. Amazon is in the business of selling, they just happen to offer shipping services. For Amazon, it’s free product and market research, and they’re making money off you.
Third Party Logistics (3PL / TPL)
Third–party logistics in logistics and supply chain management is a company’s use of third party businesses to outsource elements of the company’s order fulfillment services.
Pros of Using 3PL
Customization
Boxes/bags and all internal packaging are customized to a specific brand. Processes are adapted to your business’ operation and specification.
Warehouse Costing
Attractive storage costs that is variable. Customer pays storage space on a given month. Some 3PLs even offer free warehouse storage for a limited time.
Communication
Has onboarding processes, frequent communication before and after product launch. Collaborative approach is encouraged.
B2B (Business to Business)
Certain 3PLs can handle both B2B and B2C (Business to Consumer) fulfillment, resulting in one e-commerce fulfillment partner for all sales channels.
Cons of Using 3PL
Finding a Trustworthy 3PL company takes time.
Not all 3PL providers are created equal. It takes time to find a good company to work with from the beginning. Once you find someone you can trust, you can rest assured that your goods are being properly cared for. The initial search could be stressful but it will all be worth it once you find a reliable 3PL company.
Bad Service Reflects on Your Company
An inefficient 3PL provider could make your company look bad. Your customers do not care who is in charge of getting the product to them. All they care about is the end result. It is very important to look for a good distribution center early on to avoid customer-satisfaction issues in the future.
Amazon FBA or 3PL in Conclusion
Order Fulfillment Services are a crucial part of your business and a major factor in determining its success or failure. Whether you entrust your fulfillment services to FBA or a 3PL, there is a greater chance that you will be in good hands – these are fulfillment experts, after all. The key difference is you as the owner, – what do you want for your brand and what kind of customer experience you want to give to your consumers.
If you are happy to use Amazon’s existing system and tap into their wide customer reach, FBA may be a perfect fit for your company. If, however, you would like more control over your order fulfillment services, partnering with a 3PL could be the best solution. Make sure your order fulfillment service provider is experienced with the type of operations you need before you entrust them with your reputation.
Amazon FBA article and permission to publish here provided by Dona Dimaculangan at 3p-logistics.co.uk. Originally written for Supply Chain Game Changer and published on March 8, 2018.
As consumers the complexity in the retail supply chain is usually oblivious to us. We go to the store and pick up the goods that we want. Or we order goods online from our devices at home, in the office, or anywhere for that matter. We consume the items, returning them if necessary, unaware of all of the work that went into making those goods available to us.
A phenomenal amount of activity goes on behind the scenes to make this experience as seamless as possible. I am not saying that it always goes smoothly. Sometimes items are broken. They are late. Or there is some other issue.
But behind the curtain that is Retail there are a lot of people managing a lot of processes and dealing with a lot of complexity earnestly trying to make your goods available to you.
When you order something Online there is great excitement in anticipation of opening your package when it arrives. With any luck the company you have ordered from has provided a positive experience in the online ordering and payment process. Now you are just waiting for the package to arrive. You certainly don’t want them to stop shipping.
Most recently we ordered a couple of items online. They were relatively small items and could easily fit in the palm of your hand. Within a couple of days a large box arrived at the front door. I wasn’t quite sure what it was because the box was rather big, big enough for a toaster or perhaps a couple of large board games.
I was surprised when we opened the big box, removed a bunch of crumpled paper and packaging material, and found the 2 small items we had ordered sitting on the bottom of this box. The items could have fit inside a standard envelope. Instead they were deliberately packaged in a box which could have held 200-300 of the items. Why don’t they stop shipping air?
The physical delivery part of the Omnichannel expectation can be very elusive. Many companies claim that they are Omnichannel service providers. But are they really?
How many E-Commerce Fulfillment options are there? And how many do you provide in your company?
The Black Friday/Cyber Monday shopping extravaganza is almost upon us. While it may seem like a long time for functions such as Marketing or Sales, for your Supply Chain the Black Friday push should be on right now! Your focus must be on Black Friday readiness.
If you have products manufactured overseas for instance then if those products are not either on the ocean right now or en route over land to your Distribution Centres then you are already in trouble! Black Friday readiness is critical.
Many businesses begin with single-channel distribution. That sole channel could be a brick-and-mortar store or an e-commerce website. In either case, all sales flow through one outlet.
The advantage of a single-channel distribution management system is simplicity. There’s only one channel to manage, one channel to stock, and one channel to market to customers. As a business expands, however, the single-channel model can limit growth.
Big news out of the grocery retail world as Amazon has announced its acquisition of major organic foods retailer Whole Foods Market – for an eye-popping $13.7 billion sale price that doesn’t look so massive given Amazon’s $136 billion sales volume in 2016.
Analysts across the retail industry are talking about the huge implications of this sale for a retail industry that many say is in the middle of a major meltdown, in part owing to Amazon’s massive growth in the eCommerce space. This foray into the grocery business is a big challenge to companies like Target, Wal-Mart, and others, and also a sign that reports of brick and mortar retail’s demise might be greatly exaggerated.
