What Entrepreneurs Need to Know about eCommerce Order Fulfillment

January 21, 2021 by Amware Fulfillment

We’ve all heard the expression, “What you don’t know can’t hurt you.”

We also know that it’s dead wrong, because when it comes to key functions like picking, packing, and shipping, your pockets of ignorance could wind up costing you big.

That’s why it pays to know as much as you can about the ins and outs of eCommerce order fulfillment.

ecommerce order fulfillmentBut here’s the problem: You’re a busy executive whose daily dance card is already full, especially now that events like COVID-19 have significantly increased your order volumes and workload. As a result, you may not have time to study up on this important subject.

Thankfully, Amware Fulfillment has got the antidote. Read Fulfillment for Dummies, our handy primer about fulfillment operations that will help you catch up on the essentials in no time flat.

Here’s just a small sample of the useful takeaways you’ll find.

Takeaway 1: The fulfillment warehousing odds aren’t working in your favor.

Even as recently as a few years ago, it was possible to meet customer requirements for eCommerce order fulfillment delivery from one or two locations. But that’s all changed thanks to macro-trends such as:

  • Increasing delivery expectations. Not everyone is an Amazon Prime member. However, that hasn’t prevented most Americans from expecting other eTailers to match Prime’s rapid delivery promise – a fact that has substantially driven up the optimal size of most companies’ fulfillment networks.
  • A tight market for warehousing space. According to Cushman & Wakefield, the average warehouse vacancy rate will remain at only 2% by the end of 2021, while the average warehouse rents could be up to 15% higher than they were in 2019.

Takeaway 2: As much as half of your manual order picking time doesn’t involve hands. (And yes, that is a problem.)

In a non-automated warehouse, associates can walk 5–10 miles a day, which is great for their fitness but bad for your bottom line. Why? Because these miles represent travel time, which can often comprise as much as 50% of your picking process. And the more time it takes associates to find and retrieve product, the more it cuts into your profit, because labor represents your biggest expense within the warehouse.

This explains why technology-aided picking processes are growing in popularity, because under the right circumstances they can significantly reduce associates’ required travel time and your related eCommerce order fulfillment costs. You’ll find detailed data on various picking strategies in our eBook.

Takeaway 3: It’s a parcel carrier’s market, especially right now.

Parcel delivery costs have always accounted for the lion’s share of companies’ eCommerce order fulfillment costs, usually about two-thirds. But these costs have become even more pronounced throughout 2020, due to the vast increase in online shopping and shipping volumes. In fact, over the past year, parcel carriers have hit some shippers with double-digit price increases.

Thankfully, you still have some strategies at your disposal to avoid, defer or offset these additional costs, including:

  • Aligning with a 3PL. Because 3PLs handle large volumes of business from multiple customers, they should have a high aggregate parcel shipping spend. Thus, they can leverage this volume to negotiate better rates for your company – usually anywhere from 10% to 40% lower than you can negotiate on your own.
  • Changing carriers. If you’ve been working with the top parcel carriers for the last few years, it may be time to consider alternatives in your quest for higher quality and lower prices. Don’t be afraid to put your contract out on the open market and shop around for a better deal.

For more great insights, give our Fulfillment for Dummies a look. We’ll provide you with a birds-eye view of the pitfalls and opportunities that exist within this function and provide insights that will help you control costs, increase customer satisfaction and ultimately improve profits. If you have specific eCommerce fulfillment needs right now, talk to an Amware fulfillment specialist.

FULFILLMENT FOR DUMMIES    A crash course for entrepreneurs and business leaders on the pitfalls and  opportunities within warehouse fulfillment operations Download our eBrochure

 

Filed Under: Fulfillment Operations