Five Types of eCommerce Businesses

Fulfillment Warehouse Owner

Which Type of Fulfillment Service is Right for You?

From a fulfillment warehouse perspective, eCommerce businesses have a unique set of service needs. Third-party logistic companies (3PLs) have made significant technical changes in recent years to adapt to the new market structure and the consumer’s need for speed and transparency.

Within the online marketplace, each category has different support needs. When choosing an order fulfillment service, it’s useful to keep in mind that some providers are better adapted to particular types of clients.

There are five categories of eCommerce businesses with different approaches.

The Outsourcer

This is an established company that sells products through traditional retail or wholesale channels and has decided to outsource their ecommerce business. They sell primarily through an established website and a single channel, and have skilled business and technical staff that work with the fulfillment company to implement an integrated process.

Often, these companies have their own technical platforms and require customization to connect to the warehouse for order capture and post-shipment reporting.

The Offshore Company

This client typically has an existing ecommerce business overseas that has been “discovered” by Americans who are ordering product. Given the high cost and lag time in handling B2C offshore shipments, the company needs a partner in the United States to be their local “arms and legs.”

Having a U.S. base helps reduce their transportation costs and improve response times. Outsourcing fulfillment presents challenges with time zones, language/communication, customs, and the establishment of U.S. business entities to handle import duties and taxes. These clients are similar to the Outsourcer, but have the added layer of dealing with a foreign company.

The Entrepreneur

The rapidly falling costs of running an ecommerce business, coupled with the low-entry costs of participating in major marketplaces like Amazon and eBay, have enabled many more people to be able to afford to run an online store. This has created an industry of one-person small businesses and part-time entrepreneurs that usually have other jobs outside of ecommerce.

While the failure rate for these ventures is high, a small percent become successful, either because they have a unique product or hold a niche in the marketplace.

When filling orders or storing inventory gets to be overwhelming, the Entrepreneur needs a company to support their fulfillment. These businesses – especially the part-timers – may lack the support structure of an established business and look to the fulfillment company to be more than someone who stores product and ships orders.

They may need IT support, business-process design, business consulting, purchasing, assembly, and other back-office services. The Entrepreneur can often benefit from an experienced warehouse’s business and technical coaching.

This segment benefits from a highly sophisticated, self-service business model. (Think ATM machines!) Most fulfillment centers offer automated interactions to profitably support this customer segment.

The Multi-Channel Marketer

This is the eCommerce business that has progressed beyond selling through a single website. Marketplaces may include Amazon, eBay, Buy.com, Fab.com, to name just a few. They may be involved in direct TV, small retail or even large retail (Best Buy, Kohl’s, Walmart).

They may sell through drop shippers or boost volume with flash sales. Order volumes in this category may be high, but a high level of technical support is often required, particularly in the setup phase. Each selling channel has a unique fulfillment flow. Significant IT challenges exist in supporting the special selling, branding, distribution and reporting requirements of each channel.

EDI capabilities will often be required. Undoubtedly, the future of ecommerce selling is through multiple channel marketplaces.

Omni-Channel Selling

When a customer interacts with your company in different channels, but their experience feels seamless, this is called omnichannel selling. It differs from multi-channel selling in that the interactions are all connected in one central data hub.

This is a customer-centric experience with a powerful impact. For example – you sell in stores, social media, by phone, and through mobile shopping, and your customers can move between the channels without obstacles.

They can order online and pick up in the store, or visit your Facebook profile and then order via mobile app. This strategy retains the most customers and offers them the most options. Plus, your analytics are more meaningful because they cover all channels to give you an accurate picture of your entire operation. Platforms such as Shopify and BigCommerce are excellent foundations for omnichannel selling.

What All This Means to You

It’s clear that each business has its own priorities, but understanding the categories will help you select the right fulfillment center for your needs. Medallion Fulfillment & Logistics has coached many clients on supply chain and logistics strategies. Read our fulfillment transition guide to help you plan a successful move that causes little or no disruption to your customers.

Our robust array of services meet the needs of the most discriminating customer. Contact us for more information and a free price quote.

How Can You Compete Against Amazon in 2020?

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.