E-Commerce Shipping and Fulfilment: Learn the Basics!
One of key difference between an e-commerce business and a brick and mortar business is the fulfilment. Many e-commerce business owners invest heavily in marketing and advertising to attract customers and build their brand. They also work hard in identifying the right suppliers to get the best product at lowest price. However, many times they miss giving fulfilment its due attention. In brick and mortar business, the customer comes to your shop and picks up the product. However, in an e-commerce model, you need to get the product to the customer. How your customer receives the product, becomes a key part of the customer experience. Having the right fulfilment model can become a key differentiator for your business.
So, let’s start from understanding what fulfilment is all about?
On a broad level, fulfilment includes everything, right from the time a customer places an order to the point where she/he receives the product in their hands. Fulfilment primarily includes:
• Finding and picking the ordered item
• Shipping to customer
Fulfilment can be done directly by the company or they may choose to partner with a Third-Party Logistics Company to cater to all their fulfilment needs. Of the above points, while warehousing facilities have a great impact on business, the two more crucial things that can impact eCommerce business are Packaging and Shipping. Thereby, making them key aspects for success of e-commerce fulfilment cycle.
Right packing and packaging is not only important to deliver the product safely and securely but it is also the first physical touchpoint for the customer with your brand. Similarly, the customer’s experience with the quality of shipping relates to his mental image of your brand. Let’s look at these two in a little more detail.
Packing of your product serves two functional purposes. It ensures that the product reaches the customer is right condition and it’s look and feel creates an impression about your brand. As expected, the packing of the product adds to the cost of operation, hence you need to be careful while selecting the packaging to optimize the impact and the cost. You should pay attention to following key elements of packaging.
• Size: The size of the packing should be appropriate to the size of the product. Too small and it may not protect the product as needed leading to degradation of the product. Too large and it will add to the cost of the shipment and give wrong impression to the customer. Imagine getting a USB key in packing which is the size of the hard disk. Customers usually generate a negative impression if the size of packing is disproportionate to the size of the of the product. However, it is important that adequate safety of the product is ensured. If that needs extra material, then so be it.
• Material: The packing material, along with safety also gives the impression of attention that you give to your product. A firm, good quality brown box gives a good premium impression as compared to a brown bag packing. It shows that you care about your product and the way it is received by the customer. It also provides you with a much better surface for your branding. Having a properly visible brand logo on the packing material creates a much better impression than a crumpled logo or just shipping label with no logo at all.
• Arrangement: If your product has multiple components, such as wires, cords and manuals, the arrangement of these inside the box will make all the difference to the unpacking experience. A neatly arranged layout will save on your packing cost, ensure product safety and give a professional feel to the customer. Even if there is only one item in the packing, a well-arranged layout, which make the product easy to pick out of the packing, creates a better experience for the customer. The key to good packaging is the ease to pull out the product from it.
• Presentation: The external look and feel of the packaging, along with any paper (shipping bill etc.) that is pasted on the box along with the internal arrangement, gives the ‘unboxing’ experience to the customer. Your Brand logo on the external box, the feel of the material of the box, a well pasted shipping bill (with customer details) will give a good presentation. Many times, the businesses also add a sweet ‘thank you for choosing us’ card to the whole packaging. Such small additional gestures go a long way in establishing an emotional connect with the customer.
Packing of the product goes a long way in establishing a premium feel for the product. If it seems overwhelming to pay so much attention to the detail by yourself, you should outsource it to a third-party logistics provider (3PL). 3PL providers have experience in providing packing service and can design packaging and pack your product to your specifications at very reasonable costs.
How and when your product reaches the customer adds to the brand experience. It’s a no brainer that a Christmas present must reach before Christmas. But if the order is placed at last minute, this quick shipping will come at a price. The question here is: who bears the shipping cost. The key consideration for shipping are: how much to pay and who pays. For a true understanding of shipping, these two questions need to be looked at, together.
• Who pays: If you decide to pick up the tab on shipping, you have two options. One is to jack up the price of the product to include shipping costs. Customer can usually see through this one. They can easily compare the prices on other sites and may choose to shop there. Second is to absorb the cost of shipping. This will add to your cost of operations and reduce your profits. If the shipping charges for your product is low, the hit will be small but for large items, it will be significant. The decision really depends upon your business strategy, but one thing is clear. If you ask your customer to pay, you need to be clear upfront so that they can make informed decision. You could have marketing campaigns to absorb the shipping cost during certain periods to boost your sales. In any case, you need to be efficient, to keep the shipping costs low. Kind of packing you choose will also affect your shipping cost.
• How much to pay: The decision about what kind of shipping do you want to use, standard or fast, is important. This decision will decide the cost of shipping. This decision again depends upon number of factors. If it’s festive season, the shipping needs to be fast. But for white goods, customers may be willing to wait. At times, for many products quick shipping may not make sense either. Imagine providing a next day delivery for a refrigerator, say about 300 miles away. It’s possible, but is it worth the cost? Do you want to provide the tracking facility to the customer? If yes, to what detail? This facility will also come at a cost and someone must bear the cost for it. Remember, the customers purchase from online store to reduce the cost thus it should be lower than what’s available to him next door.
These two costs need to be looked together. You might be okay picking up the standard shipping cost, but could charge customer for quicker delivery. You might want to pick up the tab for smaller items, but might want the customer to pay the shipping cost for larger items. You will also need to consider the shipping distance while making this decision. Choosing a shipping company is also important. Each company has its strength area such as small items, large items, low cost, quick delivery, low cost over large distance etc. You might need to tie up with multiple shippers and use for their strengths.
The shipping cost is an important part of your business strategy. It can be daunting to choose the right option from the all available ones. Using a 3PL provider is advisable if you want to stay focused on your key area, i.e. the product. The 3PL providers usually have tie ups with multiple shipping providers and can help you achieve good deals for shipping. They also have the infrastructure to absorb the variation in volumes.
Fulfilment and shipping, often the easy looking part of the business, are key components of the customer experience. This is the first real world touch point you have with your customer, outside the virtual world, and it matters. With the number of decisions needed to be made to give a positive experience to the customer, it is better to outsource these to a third-party logistics service (3PL) provider. With a 3PL provider, you retain the control, while the implementation nitty gritty is taken care of by them. You also get your shipping done at the best rate.
A great article for beginners. You’ve addressed two things that form the core of customer experience. Often companies get so involved with product development that they ignore these two vital aspects.
Hello, Insightful post indeed!
From my experience, third party fulfillment is the best way to save money and time. If a third party handles fulfillment, the ecommerce website does not have to pay fixed cost for warehouse’s rent or utilities. It also helps to lower the number of staff members needed throughout the year.Smaller business will want to consider using third-party services to maximize their budget.
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