“Scalability” is a modern buzzword. You may wince at the sound or sight of it. It may even be combined with other buzzwords to create a larger, even more intolerable phrase (“scalable enterprise solutions” perhaps).
If you are an eCommerce professional, however, you must immediately separate scalability from “onboarding,” “deep dive,” or “game changer.” Because, when it comes to eCommerce order fulfillment, scalability is not a buzzword; it is very likely the factor that will determine the success or failure of your business.
In our current paper, 5 Reasons Why eCommerce Supply Chains Fail, the lack of a flexible fulfillment infrastructure was identified as a major pitfall. Let’s examine what many companies do wrong – and what you can do right – when it comes to the non-buzzword-y concept of scalability.
eCommerce Fulfillment Scalability
In terms of eCommerce order fulfillment, scalability simply means operating as large or as small as you need to, when you need to. It also means that your distribution and fulfillment costs parallel your revenue. To illustrate, let’s look at three real-world examples of companies who failed to scale or scaled incorrectly.
Company A was very confident in the success of its product. Expecting very high order volume, the company leased a large warehouse and bought loads of equipment to handle the perceived demand. Launch came and went, and order volume was way below anticipated. Company A began bleeding money as their overhead costs were significantly higher than sales revenue. The company folded months after launch.
Company B had a relatively small operation in terms of manufacturing and fulfillment. Orders were steady for a while and easy to keep up with – until a celebrity mentioned the company’s product on Instagram and orders went through the roof. The company scrambled but ultimately was unable to keep up with order volume. Unhappy customers had to wait a long time to receive their orders, so they gave negative product reviews and voiced their dissatisfaction on social media. Sales slowed to a crawl.
Company C was enjoying a fair amount of success. They had a steady stream of orders with the usual peaks and valleys. Then the holiday season arrived and their order volume increased by 300% compared to the previous months. Like Company B, they were unprepared for this spike and had to scramble. They shipped most of their orders in time for Christmas, but still disappointed a sizable portion of their customers with post-holiday delivery. The company is still in business but their growth has stalled.
In looking at the above examples, it’s clear that Company A over-scaled; Company B under-scaled; and poor Company C almost had it right, but didn’t scale in anticipation of a holiday rush. So what’s the solution?
The solution is (wait for it…..): scalability. You don’t buy multiple belts with a single hole, right? You want one belt that affords the flexibility to accommodate the skinny you or fat you. Think of your supply chain the same way and consider aligning with a third party fulfillment provider to help you scale.