According to Statista, in 2016 alone Amazon opened 26 new fulfillment centers in the United States and shows no signs of slowing down. In January 2017, the company announced plans to open new facilities in Maryland, Texas, Florida and Colorado, with more certainly to come. By summer 2018, Amazon plans to create 100,000 additional jobs in the United States, most of them in logistics.
But, why is Amazon investing so much time and money in opening new fulfillment centers? Why is Amazon testing alternate delivery options using drones?
Because, they have found the secret to e-commerce success – efficient and faster order fulfillment.
Brand affinity and customer satisfaction today, are largely influenced by faster, efficient, and reliable order delivery – forcing businesses to look for ways to achieve that without increasing costs.
Everything from efficiently managing product inventory to keeping customers informed about order and shipping status plays an important role in the SUCCESSFUL fulfillment of an order. In this blog, we will look at the 6 challenges that businesses must address to streamline and efficiency to the order fulfillment process.
Note – There is a reason why SUCCESSFUL has been capitalized. Faster order fulfillment alone is not sufficient. It has to be done in a way where the customer is happy and is affordable for the business. SUCCESSFUL order fulfillment hence refers to fulfilling orders faster while meeting customer expectations and in a way that is affordable by the business.
1) Starting on the Right Note
It all starts with the customer visiting your e-commerce store. While the order is not yet placed and yes the order fulfillment begins only after the order is placed, the expectations you set now have a huge impact on how the customer perceives and rates the overall experience.
For example, if you do not display the right product information (or insufficient product information) and inaccurate stock levels it can easily lead to situations like misselling and overselling of products. Hence, businesses must give the customers all the information they need to make an informed decision.
2) Reducing Redundancy and Automating Processes
Once an order is received in the e-commerce store it has to be transferred back to the ERP system for fulfillment. This can be done manually. However, as the order volume goes up, the manual data transfer process is not scalable.
This will lead to order aging (where the order sits in your e-commerce store waiting for long, to be fulfilled) and delays in order fulfillment. In addition, the manual data transfers are prone to errors and can cost businesses dearly – shipping a wrong item, shipping it to a wrong address, shipping incorrect order quantity, etc.
Hence, businesses must spend the time to automate processes like the movement of orders from e-commerce to ERP systems, picking and packing, and more. This will not only help in saving costs but also reduce redundancy and improve operational efficiency. Integrating e-commerce and ERP systems can go a long way in helping businesses achieve that. Businesses can further extend their integrated environment (and drive more efficiency) to include other channels of sales like POS, online marketplaces, etc.
3) Streamlining Inventory Management
Efficient inventory management lies at the heart of every successful e-commerce business. Poor inventory management has a huge impact on everything from profitability to customer experience and often leads to situations like pending orders with no stock, rising fulfillment costs because of poor warehouse location planning, dead inventory, and more.
Spend time to understand your products and orders to accurately forecast demand across channels. Open warehouses on strategic locations and stock the right inventory to reduce costs and expedite the order fulfillment process.
Note – Integrating your e-commerce store with your inventory management system (ERP) can help you to further streamline your inventory management process while making it easy to display accurate inventory levels on your e-commerce store.
4) Partnering with the Right Shipping Providers
Shipping, the final step of order fulfillment that businesses do not necessarily have complete control over. Partner with the right provider and they can subsequently enhance your business and customers’ experience. Partner with a wrong provider (or choose a wrong shipping method) and they can quickly make your businesses unviable.
Imagine this, you have done everything to ship orders the same day you received them. But, the customer receives the order a week later. Why? Because you choose the wrong shipping method, because you partnered with the wrong shipping provider, etc. Consider the impact this could have on the customer – the customer may never come back because your competitor could deliver the same order in next day.
Spend time to understand your products and customer needs, evaluate various shipping options and shipping providers and choose the options that best suits your business. You can even tweak around with your shipping strategy (like prioritizing orders, etc.) to streamline things further. You can even partner with players like ShipStation, Shipwire to help you overcome shipping challenges.
5) Keeping Customers Informed
Not everything is operational. A lot also depends on how your customers perceive it. Customers expect brands to keep them informed about the order and shipment status and failing to do that can dramatically impact the overall experience.
While this seems trivial, some businesses struggle to offer this to their customers. The reason, because all this information resides in their ERP system while their customers look for updates on the e-commerce system. In some cases, businesses are so caught up with their operations that they completely ignore this aspect of business.
Businesses can very easily automate this by integrating their ERP and e-commerce system. The integration then automatically ensures that information like order status and shipping tracking number are synchronized back to the e-commerce system and e-commerce system from there can worry about keeping the customers informed (through email, messages, or any other medium).
6) It is not End with Order Delivery
Yes, you have read it right. Just like how it begins even before an order is placed, it continues even after the order is delivered. Let us go back to our definition of SUCCESSFUL order fulfillment. SUCCESSFUL order fulfillment refers to fulfilling orders faster while meeting customer expectations and in a way that is affordable by the business.
Focus on the three phrases – fulfilling orders faster, meeting customer expectations, and affordable by the business. All points mentioned above address one or more of these. However, there is still one aspect left. Returns.
Imagine what if all your fulfilled orders are returned? Did you just shudder at the thought of it? Hence, businesses must do everything to either reduce returns or to convert a return into an opportunity to sell. Only then, will businesses be able to call their fulfillment process a success.
Note – E-commerce and ERP integration can again be of great help to businesses in streamlining and automating returns and other aspects of returns – the returns process, impact on inventory, refunds, etc.