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The Technology Behind Successful Ecommerce Fulfillment

Online sales in the United States have more than surpassed expectations. In 2012, online sales hit a record $226 billion, and accounted for 7% of all total retail sales. Experts projected $327 billion by 2016, but they were wrong… Total online sales in 2016 were $394 billion! If your fulfillment company isn’t participating in the ecommerce segment, no doubt you know that you’re missing out on an exceptional opportunity!

In this article, I’ll focus on the technological capabilities a warehouse needs in order to implement an ecommerce fulfillment service. The article isn’t going to be about listing the pros and cons of the Top 10 software programs on the market, because I don’t know your current capabilities or strategic goals. Instead, I believe that the most productive approach is to breakdown the process to help you identify where you can improve your systems.

Let’s talk about process integration. Ecommerce clients will typically approach a fulfillment company with an established business infrastructure. Integration means adapting your systems to plug into those of your customer. The processes that are frequently affected are:

  • Order Capture & Management
  • Picking/Packing & Shipping
  • Synchronizing Order and Inventory Status
  • Visibility
  • Client & Customer Service

Order Capture & Management

There are more than 300 ecommerce shopping cart companies on the market. Your company needs to be technically capable of adapting to the wide variety of methodologies for communicating with those carts. Orders from carts need to be harvested on a regular basis, controlled to insure none are dropped or duplicated, and converted into a form that is compatible with your system.

I believe this area represents the greatest technical challenge for fulfillment companies in the ecommerce space. Your tool bag for interfacing with a client’s systems must include a wide array of technologies, including the ability to interact with flat files, Application Program Interfaces, Web Services, File Transfer Protocol, call center systems, and the occasional manual-order entry. IT resources to plan the implementation and support this process need to be broadly skilled and creative. Administrative resources that perform the daily-order harvesting routines need to be highly attentive to detail.

Picking/Packing & Shipping

This process is probably the most straightforward. Picking slips are generated, product is picked and boxed, and shipping labels are applied using traditional fulfillment methods. Although there may be special requirements for packing slip and box branding, those requirements don’t vary much from conventional fulfillment. It is essential to operate at a very fast past as ecommerce performance is measured in hours and the volume of orders is measured in thousands per day.

Synchronizing Order and Inventory Status

Ecommerce fulfillment requires that the client’s shopping cart has the most recent inventory and order status information. Your systems need to regularly communicate inventory availability to the cart to ensure that a client’s customer is made aware of out-of-stock situations before placing an order. Customers also need to be able to reference the shopping cart to find the status of their order. Process synchronization between your operation and that of your client is an absolute necessity.

Visibility

Ecommerce fulfillment is very fast moving! We used to joke that customers would press the “buy” button and run to the front door looking for the UPS truck! With Amazon’s latest experiments in same-day delivery, this joke is almost a reality. Given the speed of ecommerce, it’s important for your clients to be able to have a real-time window into your process and inventory. At a minimum, clients should be able to see orders and inventory in near real time. The leading-edge, ecommerce fulfillment companies have taken a more pro-active stance by publishing “alerts” when important events are happening in the fulfillment process. Alert examples might include: Product X is running low on inventory; a new shipment of stock has arrived; or a customer has returned an order.

Client & Customer Service

The fulfillment process is heavily impacted by fast-paced marketing and promotional decisions. Ecommerce client support typically requires a designated coordinator to represent the client’s requirements to the fulfillment organization and to coordinate program changes. The volume and minutiae of detail often warrant the implementation of “issue logging” and “project workflow” processes within the organization. Given the pace of the business, these processes are best automated.

Some clients, particularly the Entrepreneur and Offshore segments, may ask the fulfillment organization to manage customer support. This might involve call-center work, authorizing returns, handling the occasional complaint, and so on. These client groups often have too small a volume to outsource their work to large call center. Having an arsenal of exceptional customer-support tools, therefore, positions you to capitalize on a good revenue opportunity.

In summary, successful ecommerce fulfillment relies on solid technical foundations. Warehouses and 3PLs must understand that ecommerce clients have very different needs (and expectations) for the technical aptitude, agility and pace of their fulfillment partners.  To fully capitalize on the ecommerce segment, your fulfillment service must meet–and exceed–these requirements.

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Online Returns are Growing Faster than E-Commerce Sales

Return Policy

We have been writing about return merchandise more and more throughout this year as the business of reverse logistics heats up to a record pace.

When 20% of your revenue is in a revolving door, forecasting can get pretty dicey. Add to that the overwhelming percentage of customers who expect easy, inexpensive return options, and it’s clear no business can overlook the power of reverse logistics.

Incidentally, if you like statistics, this article is going to be a fun read. The numbers on the subject are compelling, to say the least.

Breaking Returns Records

In the U.S. alone, Statista estimates return deliveries will cost $550 billion by 2020, an increase of more than 75% in four years. If that seems pretty bleak for the bottom line, let me point out that this figure does not include inventory loss or restocking fees.

The rate of returns is always higher during the winter holiday season. In 2019, UPS predicted an impressive number of returns even before Christmas Day even arrives… to the tune of 1.6 million per day. Merchandise is literally flying back and forth, changing hands constantly. For statistics fiends, this means there are more than 18 returns per second before the holidays are over.

January 2 is typically the biggest day for returns, forecast at nearly 2 million in 2019 (an increase of 26% in a single year). But online sales are only projected to increase by around 12% in 2019, which means returns are growing at twice the rate of online sales.

New Models

The current digi-centric commerce model relies on returns. According to Shopify, a full 90% of customers “highly value” free returns as a key factor in their buying decision. And nearly 70% avoid buying from companies that do not offer completely free returns.

Online sales returns are now averaging 20%, with 30% for holiday orders and even as high as 50% for “expensive items.” This is more than twice the rate of brick-and-mortar retails. Ironically, the physical storefronts often limit returns to re-saleable merchandise and simply put it back on the shelves.

Online Returns Are Another Species Entirely

Amazon encouraged a “no questions asked” returns policy, but has recently begun to address the overuse of the policy. Many of the returns cannot be resold and end up on liquidation sites. Small sellers on the giant platform may end up losing significant revenue if they cannot minimize returns, since they don’t always have the option to refuse and remain in good standing with Amazon. And with Fulfillment by Amazon sales, the decision is out of the seller’s hands entirely.

So what’s the bright side?

Benefits of Reverse Logistics

When handled correctly, reverse logistics can actually improve your bottom line as we described in our guest post at Storeya.

Planning for returns is actually quite similar to planning inventory requirements. If you address it ahead of time and have a strategy in place, there is nothing to fear. Although it’s hard to adjust the mind set, your business will benefit from letting go and embracing the inevitability of growing returns volume.

Get out ahead of the returns spiral by offering alternative programs. For instance, the Amazon wardrobe program allows customers to buy clothing with the intention of trying it on and only keeping what they like. It’s a perfect example of embracing the problem. This way, the business is prepared and can also charge accordingly.

Zappos is another company who made it a policy early on to accept returns, for free, all the time. And although they struggled operationally, the customer satisfaction rate was very high. They found that customers who returned the most also spent the most overall.

Reverse Logistics Strategies

Of course, the strategy will vary greatly depending on your business category. Apparel is the number one returned product category, with over 50% of these due to sizing issues. In this case, providing detailed sizing information up front can help cut down on the number of returns. And including accurate images from all angles, preferably with 3D viewing and human models helps too. Beyond that, designing a loyalty program around returns, similar to the examples above, mitigates the inventory loss and manages customer expectations.

For products that are easy to restock, such as DVDs and books, focus on the packaging and restocking needs and streamline the process so it makes a lesser impact. These items don’t expire and they rarely show wear, making it easier.

However, vitamin companies need to have a clear policy to avoid restocking expired (or close-to-expiring) products, which will only make a bad impression on the next customer to receive the item. This factor can impact the supply chain even earlier in the process, to manage inventory with longer shelf lives to allow for returns without gumming up the works.

Proactive Management

In some categories, it may make sense to build the cost of returns into product pricing. Since an average of 20% of merchandise will be returned, consider factoring this into the margins from the beginning. There are many elements to evaluate for improving reverse logistics flow.

Embracing the New Normal

The bottom line is returns are the new normal. How your business handles them can make all the difference between loss and gain.

When you are ready to explore options for fulfillment services, Medallion Fulfillment & Logistics and Sprocket Express are ready to step in and handle shipping and return processing.

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How Fulfillment Service Impacts Customer Satisfaction

“If people are failing, they look inept. If people are succeeding, they look strong and good and competent. That’s the “halo effect.” Your first impression of a thing sets up your subsequent beliefs. If the company looks inept to you, you may assume everything else they do is inept.” – Daniel Kahneman

When you work with a fulfillment partner, it is easy to oversimplify their involvement. True, a fulfillment house picks and ships orders. How could that hurt customer satisfaction?

Final Hands

Simply put, they are the last hands to touch your products and they are responsible for delivering the final product to your customers. To see where you stand, ask yourself a few questions:

• When your customer receives an order, how does it look?

• What packaging materials are used?

• How quickly does it arrive?

• How is the tracking information transmitted?

• How are returns handled?

If you have not audited the results in a while, it may be time to check your fulfillment results. Check our Guide for Fine Tuning Fulfillment for more tips and remember: A great fulfillment provider increases customer satisfaction, while a poor provider can actually damage satisfaction.

Case Study

One of our clients moved from a different 3PL because of customer dissatisfaction. The business started receiving complaints that orders were arriving in junky old boxes with newspaper used as packaging. Many orders were incorrectly shipped, leading to reshipments and delays.

If customers had not reported these issues, our client would not have known the impression their former 3PL was leaving on the customers. You have spent time and money making a good impression on customers. The last thing you need is a lousy box or a packing error to erode your credibility.

Errors Undermine Credibility

Mistakes not only cost money and time, but they damage customer trust. Medallion and Sprocket Express have a 99.9%+ accuracy rate and exceptional customer service personnel. In the case study above, errors and complaints stopped after the business switched to Sprocket Express for fulfillment for East Coast servicing. Customers almost never received incorrect items again, and the clean uniform packaging made a great impression on the recipients. The client added a packing tape printed with their logo, for a complete branded solution.

Speedy Delivery

When we first opened, our CEO used to joke that someday customers would hit the “buy” button and then check the mailbox. Ironically, we’ve nearly reached that point!

With Amazon leading the charge, customers continually have a higher expectation of speed (and shipping cost). To answer the call, most 3PLs expect to provide same day delivery within the next 5 years. And 40% say they anticipate 2 hour shipping by 2028. Interestingly, when Amazon offered 1- and 2-hour delivery in select markets, many customers preferred the free 2-day shipping instead. Speed is not everything, but shipping value is essential. The best shipping strategies offer a few options with a range of costs.

Knowledge is Satisfying

Immediately after placing an order, most website systems generate an order confirmation email. The more transparency a business provides during the order process, the more confident a customer can feel when interacting with the company. Therefore, as soon as an order is released to a carrier for shipment the tracking information should be communicated in real-time.

Both Sprocket Express and Medallion Fulfillment & Logistics sends automatic tracking information to your customer. And we can brand the email with your company information for a consistent image. We ship the same day and we also offer rush and special services.

We Are Here When You Need Help

These are just some of the ways that your fulfillment service partner can affect customer satisfaction. We strongly encourage you to call references when choosing a fulfillment provider and ask some of these questions. Your choice will be representing your business in public view, so it’s no easy decision.

Whichever partner you choose, we invite you to connect with us to share challenges and ideas via email or social media. To learn more about our services and our low industry pricing, see “What We Do”, or get a quote today.

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How to Reach Customers Now During the COVID-19 Crisis

With shut downs, shipping delays, and customers sitting at home, there’s never been a better time to keep you name in front of anxious buyers using an e-newsletter.

The COVID-19 epidemic is of unprecedented proportion. Many people have never experienced a work stoppage or for that matter a quarantine. While customers wait for orders that may be delayed due to shipping issues or supply chain problems, email is the best way to soothe worries and keep customers loyal to your business.

Here are some tips to take to heart with how to communicate with customers during these unusual times.

1. Be honest of what is going on with your business. If there are delays due to supply chain issues – share the challenges in a positive manner.

2. Accept and acknowledge the uncertainty of the situation. Be real, people truly want to connect with you during this crisis.

3. Express gratitude and appreciation for orders and for those that will wait to receive their goods due to unforeseen delays.

4. Keep a regular connection with your client-base. Specifically, contact during this uncertain period should be several times a week or once or twice a month.

If you need help setting up an e-newsletter we have expert providers that are ready to set up an account at iContact for you, load your list, and even customize our own mobile-friendly reusable HTML e-newsletter template. Just let us know and we will put you in contact with one of our experts or get you started fast.

For Medallion Fulfillment & Logistics clients, our provider has created a special mobile-friendly template for newsletters that can be updated with your logo and content. Ask us for more information about this concierge-level e-newsletter program including setup, implementation, content creation, and scheduling. Pricing is customized based on your need.

http://medallionenterprises.com/newsletters/medallion-sample-template.html

For do-it-yourselfers, an iContact account provides access to easy to use templates. You can enter in your own e-newsletter information and set up your own e-newsletter issues to send on your own schedule.

Our team or our experts can work with you directly to assist with your needs. Just give us a call and let us know that you would like to reach out to your clients by email – fast!

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How Can You Compete Against Amazon

Yes, when it comes to ecommerce, Amazon is the proverbial elephant in the room. Ignoring the online giant isn’t going to make it disappear, so the only business you have control over is your own. Do you wave the white flag or dig in and fight?

The good news is that, with a little creativity and skillful marketing, you can successfully compete against Amazon. Incorporate these valuable tips to reinvigorate your digital storefront and your ecommerce fulfillment services will be running on all cylinders in 2020.

1. Refine Your Focus

Amazon’s blessing and curse is that it wants to be all things to all people. As a small- or mid-sized online business, you have the flexibility to find your company’s specific niche and learn that segment inside and out. Once you’re established as an authority, you’ll become the go-to source for your product offering.

2. Leverage Content Marketing and Social Media

Amazon is a faceless behemoth and they do nothing to counteract that image. Use content marketing and social media to personalize your company and forge a connection with customers. Start a blog, share interesting stories and articles, run a contest, post pictures and videos. Be sure to track results and fine-tune your strategy based on what’s working and what isn’t.

3. Optimize Customer Experience

Can you even remember the last time Amazon made any changes to their website? Product pages are busy, clunky and boring, regardless of the device. A sleek, streamlined, user-friendly interface that’s consistent across all platforms and devices goes a long way toward making your company stand out. By the way, if you haven’t optimized for mobile traffic yet, what are you waiting for?

4. Don’t Fall Into the Price Trap

Some retailers make the mistake of lowering prices as a knee-jerk response to competition. Almost no one has the same economies of scale found at Amazon, so slashing prices is a losing proposition. Memberships, limited-quantity items and customization are just a few ways you can make shopping your storefront feel exclusive, which is a more effective way of differentiating yourself.

5. Offer Rewards and Loyalty Programs

Did you know that, until Apple Pay finally edged it out in late 2019, Starbucks had the most widely-used mobile payment app? Part of the reason is because users earn points toward free Starbucks food and beverages. Programs that offer discount codes, special offers and similar perks to frequent shoppers or members are a reliable way to build loyalty and encourage repeat sales.

6. Create a Subscription Service

According to a study by top management consulting firm Bain & Company in conjunction with Harvard Business School, just a five percent increase in customer retention can boost profits anywhere from 25 to 95 percent. A subscription service is easy to implement and brings in steady revenue while reducing costs. As a bonus, repeat customers are more likely to make referrals.

7. Provide Top-Level Shipping and Delivery

Thanks to Amazon Prime, online shoppers expect prompt, free shipping and convenient delivery. While it may not be feasible for you to offer 100 percent free shipping, you should provide at least some type of option, such as free delivery for a minimum total purchase. Tracking details and a no-fuss return policy should also be included in your shipping and delivery program.

Medallion: Ecommerce Fulfillment Services for Today and the Future

Are you looking for ecommerce fulfillment services that will grow along with your business? Medallion Fulfillment & Logistics offers a full range of services that are flexible enough to scale according to your needs.

Contact us to learn more, including information about our Amazon replenishment warehousing service. We now have a warehouse in Boston, Massachusetts in addition to our Los Angeles, California location to serve your need for fast delivery nationwide.