Developing the right strategy for your eCommerce fulfilment and implementing it in the right way are vital for the success of your online business. There are many different schools of thought regarding online logistics and order fulfilment and numerous ways of organizing your business. Which route you choose will depend on the nature of your business, your internal organisation, your location and the type of product you are selling.
The Cost Of Winning New Business
To acquire a new customer costs money. Depending on your business, it can cost a lot. The fastest way to lose your new customer is to fail to deliver what you have promised, when you have promised it. Get it right however, and they will be back for more – and research has shown that on average customers spend even more on their return visit to your store than they do on their first purchase.
Ultimately, therefore, the effectiveness of your fulfilment activities has a direct bearing on the long-term profitability of your business.
Knowing this is one thing, but organizing your business in the right way and putting the right systems in place to meet customer demand cost-effectively is of course a greater challenge. To begin, there are two key questions to answer: What activities are required in order to satisfactorily meet the fulfilment needs of your customers; and which of these should be outsourced and which should be owned internally by your organisation.
Know Your Business
Determining which activities are required to meet your customers’ needs depends largely on the nature of your business. Only by understanding customer expectations for the type of product you provide can you make decisions regarding warehouse location, inventory levels, transportation options, packing and returns.
Customers’ delivery expectations vary widely between several days or even weeks for books and collectables to next day for grocery products and perishables. Therefore for grocery provision, multiple fulfilment centers are required in major areas in order to meet demand quickly. On the other hand because customers are willing to wait significantly longer to receive a book, companies are able to use fewer fulfilment centers in more diverse locations.
To work out the best logistics to suit your product, it is important to make an end-to-end calculation for all the supply, freight and inventory-holding costs and balance these against the value of your sale.
Embrace The Digital Age
One of the primary keys to the effective planning and implementation of your ecommerce strategy is the use of technology. When buying on line, most customers look for instant, detailed information on product availability and all-in cost, the latter being particularly important if the product is being shipped from overseas. Consumers are looking to be empowered with the tools they need to make an instant, informed purchase. They want to know when to expect their product, and track its progress from the point of purchase all the way to its delivery destination, while the demands of business customers are becoming even greater. Leading logistics companies are developing highly sophisticated technologies to meet the future demands of the online marketplace, changing expectations and becoming the benchmark against which others will be measured.
There are considerable benefits to the development of digital technologies like these. More detailed manufacture and supply information means reduced inventory and lower overheads as well as possibilities for completely redesigning supply chains to focus fully on the customer.
Deciding whether to outsource all of part of your supply chain activities is a major consideration. It is vital to calculate your costs and expected demand levels carefully and to balance these against the level of control offered by the various options. Ultimately, if you have the right technology in place, whichever option you choose should work equally well in achieving its role within the supply chain.
No matter how well designed your e-commerce fulfilment strategy, the key to its success is in its on-going management. Assessing the ability of your operations to achieve their objectives, measuring customer satisfaction and analyzing the financials are vital and these activities need to be owned at board level in order to be sure that your business is best placed to meet the future of eCommerce head on.