Tag Archives: Fulfillment

Trends in E-Commerce Sales

23 Jun

There is no disputing the growth of on-line sales. U.S.-based e-commerce sales are predicted to reach $350 billion by the end of 2015. Global sales are expected to reach $1.5 trillion! Even the holidays are predicted to be bigger than ever, with an estimated $617 billion in sales.

Along with this growth comes a shift in how consumers are perceiving on-line sales. Some people are calling 2015 “The Year of the Consumer” as buyers now have more power than ever and are flexing their muscles in terms of wants and expectations. What do you need to know to keep up with changes in e-commerce?

1) Big buying days are getting bigger and more volatile

You used to know all the big days in your local market (Black Friday, Cyber Monday), which made it easyecommerce to plan accordingly. However, with global on-line sales, there are holidays in other markets which may affect you. Alibaba alone reached sales of over $9 billion on China’s Singles Day (November 11) in 2014.

Global B2C sales mean you need to be flexible and ready to operate on demand as you enter new markets.

2) Keeping customers happy

Until recently, free shipping was everything. Now, in addition to free shipping, customers want more choices in packaging and delivery methods. Be sure to know what your customers are looking for and be prepared to offer new options.

Be aware, however, that customers understand the power they have, and that makes them vocal about their experiences. Make sure to keep your promises. Customers track every inch of the buying experience and will let you—and everyone else—know if you don’t meet their expectations. Bad reviews will affect not only your current customers but will put off potential clients as well.

3) Returns

Free returns ranked 6th in a list of 15 reasons why people buy holiday gifts on-line. Free shipping ranked first. Many retailers, including Zappos, have seen success by offering return policies which favor the buyer.

4) 24/7/365 Sales

With on-line sales, you’re always open. Can your supply chain, fulfillment center and customer service departments meet your customers’ needs? Carrier companies are beginning to support this trend by offering seven days per week delivery.

5) Discounting

One of the fastest-growing trends in e-commerce is that retailers will provide discounts in exchange for waiting for products. Zulily is the pioneer of this trend. It offers items at a steep discount for a limited time. The buyers’ orders are collected and then sent to the supplier. The buyers gain better pricing in exchange for a longer wait time.

Global e-commerce opportunities are changing the landscape of on-line selling, and giving consumers  more power and a bigger voice. Make sure you are ready to be a part of the expanding world of e-commerce.

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Seven Advantages to Outsourcing Fulfillment

21 May

Outsourcing order fulfillment has many advantages. Here are just a few to consider when looking at considering whether to keep fulfillment in-house or to outsource it.

1) Focus on business

Unless you own a fulfillment company, fulfillment isn’t your primary function. By outsourcing fulfillment, you gain time to spend on primary functions such as sales, marketing, supply chain, and innovation. Let the experts deal with storage, shipping, software, and other fulfillment-related requirements.

2) Financial considerations

There are financial advantages to outsourcing fulfillment. The costs of setting up a warehouse, staffing, managing, securing, and developing technological solutions is daunting.

3) Facilities

Start-up companies may not have adequate storage facilities or the funds to build them.

Fulfillment Services

Warehousing and Fulfillment Services

Fulfillment companies typically have thousands of square feet of warehouse space. Companies that warehouse their own inventory have additional expenses, too, such as staff and utilities. A fulfillment company distributes this expense through storage fees to multiple clients which results in a storage fee that is less than an individual company would pay to do it in-house.

4) Shipping costs

Unless a producer ships thousands of items per month, they don’t get the beneficial “bulk” shipping rates available to many fulfillment companies. The price these companies pay often deviate from standard shipping prices by 30% or more. In some companies, the savings associated with shipping bulk rates provided by fulfillment companies can outweigh the charges of the fulfillment company itself. You may also be able to negotiate a flat-rate for shipping—a single fee based on weight and service, as opposed to weight, service, and destination. This makes shipping expenses predictable, which makes budgeting easier.

5) Shipping materials costs

Similar in concept to the savings associated with shipping costs, shipping materials bought in bulk also are purchased at more favorable rates. When compared to the cost of purchasing supplies for shipping through retail outlets, savings can amount to 50%. Of course, this depends on the fulfillment company.

Often, fulfillment companies include the packaging fee in the cost of shipping, or per order. This is how fulfillment providers can quote “free packaging.” Most order fulfillment service providers make a list of standard cartons available to their clients. A company whose product doesn’t fit one these packages may need to provide their own packaging or pay an additional fee.

6) Behind-the-scenes fulfillment services

There are many hidden aspects to running an e-commerce business. Don’t forget to look at these services when making your decision.

  • Receiving and unpacking merchandise
  • Receiving orders via mail order, email, phone or phone
  • Processing of credit cards
  • Handling of returns, including inspecting merchandise and restocking
  • Preparing documentation for international shipments
  • Generating reports
  • Updating customer databases
  • Issuing customer credits
  • Maintaining inventory
  • Making bank deposits
  • Answering customer service phone calls, e-mail correspondence

7) E-commerce software need

Fulfillment houses develop intelligent e-commerce systems to help manage the many elements within the business. The e-commerce system is adaptable and may be able to integrate into clients’ ordering system. Some fulfillment houses may even host commerce sites themselves. The software also enables integration into respective couriers’ systems to provide clients with live information about package deliveries.

As you can see, fulfillment isn’t for the faint-of heart. Why not let the experts take care of this for you while you focus on growing your business?

 

Fulfillment Services: Customer Service, Reporting and Procurement

23 Apr

This week we’re going to wrap up our series on fulfillment services with a look at three remaining — and very important — components of full-service fulfillment: customer service, reporting, and procurement.

Customer Service

Repeat business requires complete customer satisfaction. Not only do fulfillment companies need to ship orders on time and in good condition, but successful companies are able to provide an extra level of service. Look for companies which gracefully handle special requests, are prepared for increased holiday order volumes, and offer call centers and online chat services.

Reporting

Reporting is a function of the software the fulfillment company uses. We talked about software in an earlier blog, Fulfillment Services: Order Management. Most softwares offer a wide variety of reports. Are there special reports you’d like to see? Inventory, costing, month-to-month or year-to-year comparisons? If there is a report you’d like to see, check with your fulfillment provider as it may be an option.

Procurement

The procurement process involves more than just the purchasing of materials or products. Typically it involves purchasing or acquiring materials at the right quantity, desirable quality and for the best price. Materials should be from a trusted source and delivered for use at the optimal time. The process also involves procurement strategy, selection of suppliers and supplier networks, and preparation and management of contracts.Full-Service Fulfillment Options Procurement is one area that too few companies take advantage of. As business owners or managers, your focus should be on growing sales, not on ordering packaging materials and reordering well-established products. Once you have a supply chain in place for your standard products, why not let your fulfillment company take care of procurement? Who better to know when inventory levels are getting low than the people handling it every day?

Do you include advertising in every package sent out? If not, you should. Including flyers which introduce new products, display special offers, and announce upcoming events is an inexpensive way to grow your business. If you use a fulfillment company with in-house printing capabilities, they can manage this for you. Not only can they print pieces on demand but they can make changes as needed for special pricing or promotions.

This wraps up our eight-week session on full-service fulfillment. Remember, plain ol’ fulfillment without any of the ala carte services is like a turkey dinner without the side dishes. It may be okay, but the experience won’t be the same.

Fulfillment Services: Warehousing, Logistics and Shipping

17 Apr

Storage and warehousing

You will most likely need a place to store your inventory. You may also need a place that is willing to accept shipments on your behalf from your manufacturers. Storage options range from an informal self-storage facility where you drop off and pick up inventory yourself to a tightly-run warehousing operation that manages thousands of square feet of inventory, and handles receiving and shipping for you. Storage facilities are available for perishable items requiring refrigeration, temperature-sensitive items requiring air conditioning or heating or, more typically, warehousing providing protection from the elements. Third-party fulfillment services often charge a storage fee based on the product storage requirements and any required special handling.

Logistics

BusinessDictionary.com defines logistics as the planning, execution, and control of the procurement, movement, and stationing of personnel, material, and other resources to achieve the objectives of a campaign, plan, project, or strategy. In the first article of this series, Fulfillment Services . . .so much more than filling orders!, we compared basic fulfillment without any other services to a turkey dinner without anything but turkey. To continue the comparison, it is logistics that turns the simple turkey dinner into the outstanding meal complete with mashed potatoes, cranberry, stuffing, and pumpkin pie. It takes planning and execution to create a mouth-watering, sumptuous dinner where all the food is done at the same time and the quantity is abundant enough to leave everyone satisfied. Likewise in fulfillment, it takes planning and execution to have the needed products on hand, and then fill and ship the orders according to customers’ expectations.

Shipping

It is rare for a fulfillment company to provide its own courier services. In most cases, companies outsource shipping to courier or delivery companies. However, many times fulfillment companies—because of their large shipping volume—can negotiate larger shipping discounts with major delivery companies such as UPS, DHL, FedEx and USPS than small retailers can. Fast, dependable shipping is critical to the success of your online business and your fulfillment company’s top priority should be getting your orders to your customers quickly, accurately, and to their specifications.

Most fulfillment companies offer a range of shipping options to ensure  the most reliable and cost-effective delivery methods. Options range from overnight delivery to slower, but more economical, forms of shipping. Several options are available for international shipping but be sure to discuss this with your fulfillment provider to make sure they are capable of shipping to (and providing the customs paperwork for) the countries you expect to do business with.Full-Service Fulfillment Options

Two other topics to discuss with your fulfillment provider are turnaround time and accuracy rate. Can your fulfillment provider ship out orders the same day they receive them? What is their typical turnaround time? A good fulfillment company will ship out expedited orders the same day they receive them and the remainder of orders within two days of receipt. Also, a good fulfillment company will have an accuracy rate of 99% or better. This means orders are picked, packed and shipped correctly, and to the customers’ specifications. This is important as errors are costly in expense, time, and customer satisfaction.

Next week we’ll wrap up this series with a final look at a few remaining pieces of the fulfillment puzzle: customer service, reports, and procurement.

Fulfillment Services: Custom Kitting and Inventory Management

8 Apr

Full-service fulfillment providers make fulfillment easy for you and your customers. Today we continue our series reviewing options found at full-service fulfillment providers by looking at Kitting and Inventory Management.

Kitting is a process where individually separate but related items are grouped, packaged, and supplied together as one unit.

Let’s say you sell children’s birthday party supplies on-line. You sell colorful paper plates, cups, and balloons, each packaged separately in quantities of 12. You also sell paper tablecloths to match the cups and plates. Custom kitting allows your customer to buy one set which contains 12 plates, cups, and balloons, and 2 tablecloths, all packaged together for one price.

The benefits of kitting are many. Your customers have an easier ordering experience as they order only one set instead of four different items. You save money. Rather than paying for the picking of several items, you pay to have one item picked. You will pay for the kitting but it is usually less than the cost to pick several items. Then, depending on your pricing model, you may be able to pass on part of the savings to your customer, making them happy.

Kitting also allows for faster picking and shipping of orders when sets are pre-packaged and ready to be picked.Full-Service Fulfillment Options

Inventory Management allows you increase your inventory accuracy and customer service levels while, at the same time, reduce your carrying costs, labor costs, and inventory write-offs.

A good Inventory Management system allows you and your fulfillment provider to:

  • gain real-time visibility into your inventory to guide swift and accurate decision-making.
  • create flexible controls, inventory tracking, and low-inventory flagging systems to reflect the unique way you do business—today and in the future.
  • strategically track all your demand requirements to maximize your customer service levels.
  • design flexible storage plans, track the physical location and transfer of items, and maintain lot and serial controls for simplified material logistics.
  • increase labor productivity and inventory accuracy by selecting your preferred automated data collection solution.
  • simplify third-party label formatting and printing by creating label-specific files of your bar code data.
  • Print bar codes on standard reports for easy reference.
  • Enter and maintain costing information quickly and easily, and use that information to calculate appropriate valuations easily.

Custom kitting and inventory management are two additional services provided by full-service fulfillment professionals. Next week we will look at Warehousing, plus Logistics & Shipping.

Fulfillment Services: Payment Processing and PCI Compliance

2 Apr

Today, we are continuing our theme of looking at services provided by full-service fulfillment companies. Today’s topic is Payment Processing and PCI Compliance.

Payment processing is an area of order fulfillment with fewer, but considerably more tricky, options than we talked about in the Order Management article last week. Some fulfillment providers simply do not get involved with payment processing because of the risks and regulations.

A website owner needs to decide what forms of payment to accept. The most common options are checks and credit cards although options have expanded to include digital cash, smart cards, electronic checks, and other technologies. We will talk more about these options in a later blog.

Credit card payments are accepted through either merchant accounts or through third-party providers (also known as payment gateways) such as PayPal, Authorize.net, or Intuit. Both options have merit and the costs vary greatly according to provider and volume of orders.

Being involved with payment processing means that a fulfillment services provider must be compliant with a standard called the Payment Card Industry Data Security Standard (PCI DSS). The standard was created to reduce the potential for fraud by increasing the controls around cardholder data. Annual validation of compliance is mandated for large processors.

There are six main requirements for PCI compliance. The vendor must:

1. Build and maintain a secure network

  • Install and maintain a firewall configuration to protect cardholder data.
  • Not use vendor-supplied defaults for system passwords and other security parameters.

2. Protect cardholder dataFull-Service Fulfillment Options

  • Protect stored cardholder data.
  • Encrypt transmission of cardholder data across open, public networks.

3. Maintain a vulnerability management program

  • Use and regularly update anti-virus software.
  • Develop and maintain secure systems and applications.

4. Implement strong access control measures

  • Restrict access to cardholder data by business need-to-know.
  • Assign a unique ID to each person with computer access.
  • Restrict physical access to cardholder data.

5. Regularly monitor and test networks

  • Track and monitor all access to network resources and cardholder data.
  • Regularly test security systems and processes.

6. Maintain an information security policy

  • Maintain a policy that addresses information security.

PCI compliance is an important conversation to have with a fulfillment services provider. What steps are being taken to protect your clients’ information? Is data sent only over secure ftp sites? Are computers monitored for malware? Is staff trained to handle confidential information?

Data breaches are serious, and the security of customer payment data is directly related to the image of your brand, the retention of your customers, and the sustainable profitability of your business. Don’t leave it to chance.

Fulfillment Services: Order Management

27 Mar

This article continues our series of looking at services provided by full-service fulfillment companies. Today’s topic is Order Management. 

If you are selling a product over the internet, you want it to be easy for your customer to place an order. You also want your customer to feel valued and informed about the status of their order. When done right, your customer’s great buying experience will keep them coming back for more.

Your customer’s buying experience will be largely dependent on the software used by your fulfillment provider.

It’s important to know that not all softwares used by fulfillment companies have the same capabilities. Options vary greatly and depending on which software your provider uses, they may not be able to provide all the services you’d like to see.Full-Service Fulfillment Options

Put yourself in your customer’s shoes for a minute. Is it easy for them to place an order? Do they receive an email thanking them for the order?

Can your customer submit an order by phone? By email? By fax?

What about timelines? What happens when your customer places an order through your website? Is the order automatically uploaded and processed, or is it held until there is sufficient volume to warrant processing orders? Is there a regular schedule as to when orders are processed?

Do your customers receive an email letting them know if an item is on back order? If an item is on back order, does your provider immediately send the available portion of the order or do they wait to ship until all of the items are available?

How about shipping—do your customers get an email with a tracking number? If your customers are local to the fulfillment provider, can they pick up the order from the fulfillment company?

As you can see, there are many options for handling orders, and options vary by fulfillment provider. Be sure to discuss your thoughts with your fulfillment provider so that you understand the available options and your provider understands the services you’d like implemented.