The vast majority of ecommerce merchants are heavily focused on selling. Increasing sales, marketing outreach to get more attention so sales can increase, developing new products to, you guessed it, increase sales. And although selling is incredibly important (after all, it’s hard to call yourself a merchant if you don’t sell something!), there are other processes that should enjoy equal footing to the act of getting products out the door. The truth of the matter is that the fulfillment process is arguably the one that makes the most difference towards improving end customer satisfaction, which, even if you’re extremely sales-minded, should only be a net positive. Happy customers are returning customers, after all.
This is why it’s integral for any fulfillment business (or any business that needs to fulfill products) to have intimate knowledge of the primary ecommerce fulfillment models, the difference between 3pl and fulfillment services, and so on. Although it’s not necessary to become as big a fulfillment nerd as we are, knowledge is power. Read on to inform yourself over the basics of ecommerce warehousing and fulfillment services, and why they’re so integral to your business.
In-house fulfillment is exactly what it says on the tin— the merchant themselves handles all aspects of the internet sales/e-commerce fulfillment process without relying on any third-party or dropshipping partners. Many sellers start out this way, especially if they’re making and selling products they’ve designed and manufactured themselves. It can seem easy to devote a small portion of your house or office space to the packing and labeling of products. As long as one has the space to store mailing envelopes or boxes, shipping labels, and any other necessary items, anyone can do it. However, in-house distribution and shipping can take up lots of valuable time. Many sellers find that once their business has grown big enough, most of their day is spent packing and shipping goods. Time spent on this can’t be spent on developing new products, improving marketing, or customer service. Merchants are left facing the dilemma of whether to hire additional staff to pack their goods at no small expense, or outsourcing to third-party warehousing and storage companies. However, the control an e-commerce company has over their orders is almost complete using this method. The only thing out of your hands is the occasional interruption in inventory, shipping supplies, or delivery, making this an especially customer-friendly fulfillment strategy.
When a merchant hands off their orders to a third party company, it often means the seller initially was doing the work themselves, but their business has grown to such a degree that continuing to fulfill all orders single-handedly has become unsustainable. Instead of building your own distribution infrastructure, which can be time-consuming and expensive in its own right, you might eventually choose to bring in someone else. Each and every third-party distribution company is different, and many offer perks such as packing services, temperature control, or prep for FBA orders. These companies also often have their own dedicated online ecommerce fulfillment warehouses. It’s important to research these companies beforehand, though— customers may be unaware that you don’t handle distribution yourself, and can misdirect their frustration with the delivery process onto your business, when in actuality it was completely out of your control. For this reason, it’s paramount that you fully research any third-party distributors before committing long-term.
Dropshipping is an incredibly popular omnichannel fulfillment strategy for new and veteran sellers alike. Like with third-party, there’s no need for a seller to develop their own e-commerce fulfillment system from scratch. Unlike third-party, however, the merchant never even lays hands on the products being sold. Instead, requests from your online storefront are routed directly to a wholesale manufacturer, which handles everything from product development to packing to shipping the product directly to your customer. To grow and expand your business, all that’s needed is to scale your marketing efforts and add new products to your shop. Your dropshipping partner takes care of everything else. However, you have to vet your partners carefully. If they deliver too slowly, or provide poor-quality or even the wrong products, all the heat from your customers will fall back on you instead. As mentioned before, customers are seldom well-informed about distribution strategies and whether something is or isn’t entirely your fault. All they care about is their overall satisfaction.
There are several ways these three classic models of the ecommerce fulfillment industry can be mixed and matched, meaning there’s multiple ways you can go about getting your orders into the hands of your customers. Everything can be customized to support your unique business needs. For example, you could use different fulfillment models for different SKUs. Perhaps, for example, you produce a certain subset of products yourself, leading you to in-house fulfillment for that particular group, but everything else is ordered from a manufacturer and therefore needs a 3PL. You also have the option of using multiple fulfillment methods for the same set of SKUs, or overlapping ones. Communication in this case needs to be crystal clear so each one of your partners understands exactly what they’re responsible for.
Bearing in mind the pros and cons of each of these strategies, take a moment to think about the size of your brand and your product distribution needs. Do you have the time and energy required to do everything in-house, or is dropshipping more your speed? How can you ensure that your customers remain as satisfied as possible through efficient use of fulfillment services? No matter what you decide, P2Pseller is proud to partner with you to make sure each and every order reaches your customer as quickly and efficiently as possible, all through leveraging the power of the shared economy.