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Best Practices in Order
FulfillmentCoby Erez, 4Psite
OverviewOrder fulfillment is the complete process from point of sale inquiries to the delivery of a product to the customer
Merchant Pain Points…
• How to better manage my inventory ?• How to scale my fulfillment/operations ?• I feel that I am missing out marketing opportunities• How to better manage my returns ?• What is my true profitability and how to protect it ?
Fulfillment Workflow
Fulfillment Options
Fulfillment Options
• In House– Ship From Stock– Cross-Dock – You Are The Drop Shipper
• Outsourcing– Drop Ship– 3PL– Fulfilled By Amazon (FBA)
• Combination (same item, by item)
Outsource Snapshot
• 50% of our customers are outsourcing fulfillment
• 15% are using only one drop shipper• 60% are using dozens of drop shippers• 10% are using FBA for multi-channel
fulfillment• About 70% are outsourcing fulfillment and
also shipping from in-house stock
Ship From Stock (In-House)• Ship immediately• Excellent customer support• Build to order• Warehouse & inventory infrastructure• Operation oriented company
Carrier Landscape• Single carrier – USPS, UPS, FedEx, DHL• Hybrid solutions• Wholesalers and consolidators• Regional carriers• International consolidators• Channel specific shipping options
– eBay GSP– Amazon FBA
• Amazon same day or one-hour delivery - shorten lead time
Cross-Dock• Zero inventory• Suppliers work in “Just In Time” mode• Get products daily or even few times along the
day to your shipping dock
Benefits of Outsourcing
• Less or never worry about storage/receiving• Pay an expense, not an employee• Potentially keep logistics expenses low• Take advantage of better shipping rates• High quality work• More time to grow your business
Challenges of Outsourcing• Cost and financial control• Order assignment (optimization, cost,
geography, availability, ship from local warehouse if you have stock)
• Customer ownership, branding & customer service (returns, expedite order, gifts)
• Information exchange (SKUs, shipping methods, kits, ship confirm)
Drop Shipping
• No inventory management• D/S can be transparent• Time to market• Cost of shipping & handling• Lower margins• Inconsistent customer service• Compete on inventory
Fulfillment Centers (3PL)
• Similar to Drop/Shipping operations, but you do need to deal with forecasting, products purchasing and products shipping from suppliers to your 3PL
FBA• Amazon sales (Orders on Amazon.com)• Non-Amazon sales (Multi-Channel Fulfillment Orders)• Advantageous shipping rates• Orders fulfilled on Amazon.com are eligible for these
customer benefits:– Prime Member Access– Free shipping on orders over $35– Featured Merchant Status for some categories– Gift Wrap
• Managing shipping products to FBA
FBA Fees
• Core Fees– Order Handling (per order)– Pick & Pack per Unit– Weight Handling– Inventory Storage (per cubic feet)– Inventory Shipping
• Optional services
Select Your Fulfillment Strategy• Products
– Products and Product variety• Market
– Demand analysis– Lead time– Branding
• Orders & customers– Lines per order– Markets and geography
• Company– Your operations and your ERP infrastructure– Personality and Management attention – Control and customer service
• Hard to predict direct & indirect cost
Information Technology, the Key to Better Manage Your 3rd Party Fulfillment
• Two-way transmission – orders, inventory, shipping, invoices
• Avoid transmission of fraudulent orders• Use real time integration with major fulfillment centers like Amazon• Use the pulled shipping information to close the fulfillment loop• Enable the shipper to easily confirm orders were received
Tips & Tricks• Direct cost saving factors• Quality of shipping• Revenue assurance and potential fraud
Direct Cost Saving Factors• Address validation• Residential or commercials• Combine orders• Real time rate comparison and rule based shipping• Negotiated rates, commercial plus, Cubic, FedEx One-
rate• Alternative insurance providers• Handling voided labels• Use the Pay-on-Use Returns Labels from Endicia
Quality of Shipping• Product images on the pick-ticket• Scan before you ship• Integration with your CRM system• Consider using integrated labels
Revenue Assurance and Potential Fraud
• Auto capture funds as integral part of the shipping or the transmission of orders to your shippers
• Identify and block potentially fraudulent orders from shipping or drop/shipping
• Track employees activities to reduce theft• Log cancelled shipments• Scan labels to identify “double” shipments
Next Steps
• Set your fulfillment strategy and infrastructure• Place an incognito order on your web site• Improve real time inventory accuracy• Close the order-to-ship-to-get paid loop
