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Developing a smart e-commerce fulfillment strategy for your small business

Woman tapping package to prepare for shipping.

You might have the greatest new product backed by an advanced manufacturing process that you’re certain will scale up beautifully just as soon as online orders spike.

While growth is great news for your business, what does it mean in practice? Getting your product manufactured is one thing, but how do you manage the cost and complexity of fulfilling orders for your customers?

Of course, you’re not the first business to face these questions. In fact, very few companies end up managing their e-commerce distribution independently, instead relying on third-party logistics (3PL) firms to take care of it for them.

If you haven't already taken the plunge, it's probably only a matter of time before a managed fulfillment solution will make sense for your business. The question is when to make the leap and which solution is right for you.

Growing consumer expectations around e-fulfillment

According to the UPS Pulse of the Online Shopper study, consumers increasingly expect quick fulfillment and speedy delivery of their e-commerce orders. With this comes sending the right product to the correct address in great condition—at a cost that works for your business.

How well you get the product to the customer is as important as the product itself these days.

Driving this explosion in e-commerce are the online marketplaces that serve consumers near-endless choice and a wealth of product information in the form of reviews, visuals, and technical specifications. According to the UPS Pulse of the Online Shopper study, more than 96% of U.S. online shoppers surveyed report making a purchase at an e-commerce marketplace that lets multiple merchants sell products. "The top reasons for using marketplaces are better prices and free or discounted shipping," the report states.

The reality of e-commerce fulfillment

How do you affordably fulfill e-commerce orders in a way that meets customer expectations for speedy and reliable delivery while simultaneously driving repeat business? There’s a lot to bear in mind, from:

  • Warehousing
  • SKU classification
  • Inventory Management
  • Marketplace Listings
  • Shopping Cart Integration
  • Vendor and Dropship Management
  • Kitting and Assembly
  • Picking and Packing
  • Labeling
  • Sales and Fulfillment Analytics

And let's not forget shipping. Each of these areas is a specialty in itself and requires a level of expertise that takes time (and a considerable investment) to build. No wonder so many companies turn to third-party operations to support their e-fulfillment needs.

As retail analyst Andrew Busby explains in his article ‘E-fulfillment for Everyone,’ the complexity of e-commerce, from multiple logins to managing inventory, can quickly prove too much of a burden for small businesses, frantically fulfilling orders with minimal infrastructure while desperate to keep the lights on. 

When is an e-fulfillment service right for your business?

Many businesses begin by shipping product out of their own facility, which may be as simple as a basement or a garage. As growth kicks in, however, it’s likely your homegrown solution will no longer cut it.

Even if you decide to go at it alone, you’ll probably find that the complexity of managing your order fulfillment process becomes a distraction to your core business.

Just think of the time involved in running your own fulfillment, from managing leasing costs to hiring people to run it. Is it becoming too time consuming and costly to handle?  Is it failing to meet the expectations of your customers?  If you answered yes to either of these questions, then you should begin considering your alternatives. 

When deciding if an e-fulfillment partnership solution makes sense for your business, consider such factors as:

  • Your average daily order fulfillment.
  • The number and complexity of your products.
  • Your packaging requirements.
  • The geographical footprint of your orders and if you are looking to expand to new areas.
  • Your ability to meet the customer’s or marketplace’s requirements on order to delivery time.

One way of getting a pulse check on your situation is to run a cost analysis on your current e-fulfillment strategy. Next, compare these costs with the projected cost of working with an e-fulfillment partner. That should give you an indication of when to make the jump to enlist an e-fulfillment partner.

But don’t forget it’s sometimes not all about cost – it is also about being competitive in your market and growing sales by meeting customer needs and possibly expanding your product reach geographically.

Asking the right questions of an e-commerce fulfillment provider

Once you have decided that an e-commerce fulfillment solution is right for you, it’s important to vet potential partners thoroughly. Remember, when things go wrong, your customer will still point the finger at you and trying to hide behind your e-fulfillment service provider won’t improve their experience.

Areas you should ask questions of prospective partners include:

  • Their flexibility when it comes to managing spikes in demand. No company wants to fall short when a large order suddenly materializes or summer sales for your new product lineup go through the roof as a heatwave kicks in.
  • The depth and breadth of their personnel. However smart the technology and streamlined the processes, the best measure of a logistics partner is the caliber of its people.
  • The scale of their warehouse network. If you’re based in the Upper Midwest but are regularly fulfilling orders in the Southern states, is your third-party provider able to serve you in the most robust and cost-effective way?
  • What is their level of investment in software solutions and other technology?
  • If you tell them you’re ready to start expanding internationally, do they lean in or step back? Can they comfortably take care of international fulfillment for you?
  • Their ability to leverage their expertise in driving supply chain efficiencies on your behalf.

Remember that entering into a longer-term contract with a fulfillment provider may leave you with insufficient wiggle room as your business develops. Make sure they offer the core resilience your business requires before signing the dotted line.

Delivering with UPS eFulfillment

UPS® eFulfillment gives small and medium-sized businesses around the globe the opportunity to streamline their shipping fulfillment to consumers in the U.S. and Canada.

Supporting e-commerce orders from more than 20 leading marketplaces and webstores, the technology platform offers easy enrollment and covers all aspects of your fulfillment needs. From managing listings across multiple e-commerce sites to strategically located centers ready to pick, pack, and ship your online orders.

Take footwear manufacturer Tidal New York, which saw sales of its New York City-made flip flops more than triple during its pilot of the eFulfillment platform. The ability to sell its product across multiple online marketplaces and fulfill to additional geographies allowed the startup to concentrate on new market opportunities that were previously untapped due to the time constraints of operating their business, says Tidal New York co-founder Tim Gibb.

Drawing on UPS’s deep network of global resources for all your e-commerce needs, UPS eFulfillment combines full-service capabilities with simplified integration, pricing and billing, a service that many businesses couldn’t easily build themselves designed with ease of use and transparency in mind.

Fulfilling e-commerce

You know the importance of delivering on your promises to your customers, and getting your product out the door and on time. Product delivery is increasingly as important as the product itself.

But when it comes to logistics, there’s no need to reinvent the wheel. Focus on your core product and rely on trusted solutions for fulfillment. Businesses that plan proactively and seek out expertise in managing their supply chain set the precedent for future success.

Sign up for a virtual consultation, or if you’re a startup, email us at  startupteam@ups.com, and let’s put our heads together in making e-commerce fulfillment work for you.

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