Order fulfillment is not a case of one-size-fits-all. The needs of your fulfillment operations can vary greatly depending on your business model – from omnichannel to subscription box services to direct selling.
Here are key considerations for several popular business models.
Omnichannel Fulfillment
Delivering omnichannel fulfillment from all sales channels with speed, accuracy and cost effectiveness is “extremely important” to 63% of retailers, according to a 2017 Targeted Research study by Retail Info Systems. To achieve that trifecta, omnichannel retailers and ecommerce merchants should focus on three key areas:
Network optimization: Many omnichannel merchants prefer a multi-site distribution model. Moving inventory closer to the customer helps to reduce delivery times and control transportation costs. In fact, with strategically located DCs it’s possible to reach more than 99% of the U.S. within two business days via ground service.
Visibility: With an expanded distribution network, it’s important to be able to see inventory across the enterprise, view orders throughout the supply chain and identify the best fulfillment source for the fastest and most affordable service. To achieve this enterprise-wide visibility, you’ll want a sophisticated order management system (OMS), so you can seamlessly manage your entire inventory and provide accurate, real-time information about product availability, order status and shipment tracking.
Customization: Assembling gift sets, embroidering apparel, or creating multi-packs enable you to offer custom products that your customers can’t get anywhere else. These value-added services also allow you to better manage inventory, expand product offerings and get to market faster. Many companies find that performing these services close to their end customers allows them to be more responsive to customer demand.
Subscription Fulfillment
The subscription ecommerce market has grown by more than 100% a year for the last five years, a 2018 McKinsey & Company study reports. While subscription boxes are a hot trend, it is important to prepare for challenges like these:
Business growth: Order volume often reaches critical mass almost overnight, leaving you scrambling to keep up. But with little historical sales data, predicting demand from month to month can be difficult. You need scalable resources on hand – space, staff, technology – to accommodate fluctuations.
Personalization: Many subscription companies allow customers to pick and choose the contents of their subscription to suit their personal tastes. While curated boxes are popular, they are very labor-intensive, often requiring significant product customization within a tight timeframe. You’ll need flexible space and staffing as well as proven processes to handle a variety of configurations based on client profiles, wants, interests, etc.
Coordinated deliveries: The timing of deliveries can also be important for subscription companies. Since subscription boxes often are promoted extensively in social media, arrival dates must be carefully synchronized. You may need to fill hundreds of thousands or even millions of orders with a shared drop date once a month. You might also choose to coordinate deliveries according to customer location so that subscribers in different parts of the country receive their orders at approximately the same time.
Direct Selling Fulfillment
Delivering products to consultants efficiently and cost-effectively is a top priority for multi-level marketers. However, unpredictable sales patterns and the additional layer of sales consultants add complexity to fulfillment operations. Direct sellers need to accommodate these variables:
Inconsistent volume: Dramatic peaks and valleys in order volume can be challenging to accommodate, particularly in terms of planning for required space and staffing. Your fulfillment operations must be prepared for maximum volume, even when there is a lull in the action.
Advanced technology: The software designed to manage your sales consultants is probably not the best fit for your fulfillment needs. Like omnichannel merchants, direct sellers (especially those with a multi-site distribution model) benefit from robust technology solutions such as an OMS that can optimize inventory, improve visibility and determine which stock location to pull from. To further improve order turnaround and delivery times, automated fulfillment and material handling solutions can increase speed and accuracy while reducing labor.
Shipping costs: Save on outbound freight costs by negotiating rates, pooling parcel packages and leveraging postal workshare options like presorting and drop shipping. Economies of scale and established relationships with carriers can give you the ability to select the optimal mode/level of service for each shipment at the best price.
Many companies find that partnering with an experienced third-party fulfillment provider can help them to address the challenges of their particular business model without a major overhead investment. With resources such as scalable space and labor, proven processes, a network of facilities, sophisticated technology and transportation management capabilities, they can help you accommodate a wide variety of unique needs.
Whichever way you decide to meet the needs of your fulfillment operations, anticipating the unique requirements your business model demands will give you a head start on effective fulfillment.
Perry Belcastro is vice president of fulfillment services for Saddle Creek Logistics Services