If your business isn’t already selling through multiple channels, you’re probably considering it. With good reason, given that 85% of American shoppers purchase through a minimum of two channels. However, along with the benefits of multi-channel sales comes the challenge of multi-channel order fulfillment.
When you sell through a single channel, you generally have one set of product listings, one pool of inventory and one stream of sales data to manage. With each new sales channel you add, the process becomes more complicated. You have to take into account variations in demand and turnover rates, and the complexities of returns and shipping, among other factors. You also have to merge product SKUs and keep a sharp eye on available inventory across channels.
If one of the channels you decide to add is bulk shipments to retail stores, you face a whole new set of requirements, because B2B and B2C fulfillment are two distinctly different operations.
B2B vs. B2C Fulfillment
B2B fulfillment involves high frequencies of similar orders. Inventory is stored and shipped by the pallet or case, and there is less labor involved per sellable unit due to the bulk nature of the business.
- Warehousing bulk products requires racking built for pallets and cases, forklift trucks to move them, large spaces for receiving and staging outbound freight, and docks for loading and unloading trucks.
- Each retailer has its own set of shipping and receiving demands for pallet size, labeling and more. These requirements can vary by where shipments are going (e.g., the retailer’s distribution center or directly to a store), as well as by product category. Retail compliance is very challenging, and missteps will result in chargebacks, which can range from as little as a few cents to several hundred dollars per infraction. You’ll need fulfillment systems and processes that ensure compliance.
B2C fulfillment is less predictable, because it depends on the changing needs and desires of the buying public. Picking and packing individual orders requires far more staff and time than fulfilling bulk shipments, so labor comprises a significant portion of costs.
- Each SKU is stored in its own slot or bin, and each unit within each SKU must be tracked and accounted for.
- Fulfillment warehouses need lots of pick-facings for picking items into totes or carts, as well as space for preparing small package shipments.
- Because pickers can spend as much as 50% of their time traveling around the warehouse to retrieve product, it’s important to organize inventory efficiently. This requires a good warehouse management system to determine the most efficient picking method, and streamline SKU slotting, inventory tracking and product put-away. Many B2C operations employ RF devices and similar technologies to help personnel pick more accurately and efficiently.
Given the very different operational requirements of B2C and B2B fulfillment, many companies manage them separately in different facilities. Or they may run one operation on their own and outsource the other.
But a siloed approach makes it virtually impossible to get accurate data on how much inventory is in distribution centers, what’s in transit and what’s in stores. Without that big picture, companies end up carrying more inventory than they actually need, duplicating overhead for buildings and labor, and scrambling to move stock from place to place as demand dictates – all of which dramatically drives up costs.
So what’s the answer?
Despite the different demands of multi-channel order fulfillment, it’s more efficient to combine fulfillment under one umbrella. And, rather than taking on this important, but non-core function yourself, outsource it to an experienced multi-channel third-party logistics (3PL) company.
Partnership with the right 3PL will allow you to reduce costs by eliminating redundant facilities and staff and providing real-time inventory, order management, and shipping and tracking management information to proactively guide decisions and workflow.
When choosing a 3PL, you should look for a partner with extensive experience in both retail and direct-to-consumer fulfillment, as well as a nationwide fulfillment network.
Amware Fulfillment is one such 3PL. The company has been named a Multichannel Merchant (MCM) Top 3PL for 2021, based on industry experience, services offered, performance and range of capabilities. If you’re looking for a single fulfillment provider for all your sales channels, contact Amware today.
For more information on this topic, read our eBook, Mastering Multi-Channel Fulfillment.
