Ecommerce fulfillment is the process of having a customer place an order online to the moment they receive the order. There are three kinds of ecommerce fulfillment: drop shipping, third-party fulfillment, and self-fulfillment.
Drop shipping is when a merchant acts as a middleman between the factory and consumer. The merchant is never in possession of the goods. In fact, the factory makes, stores, and ships the goods to the consumer. This method often has the smallest profit margin, however, it has an incredibly low threshold to enter the market.
Third-party fulfillment is when a logistics provider offers warehousing, picking, packing, and shipping services to online merchants. Third-party providers, like ShipBob, offer discounted shipping rates, extremely fast turnaround and delivery times, and lower error rates than self-fulfillment.
Self-fulfillment is when a merchant stores, picks, packs, and ships orders on their own, as they come in. Self-fulfillment is a popular choice for smaller merchants or those just starting out, because though time-intensive, it’s more manageable with a smaller volume and can be less expensive than third-party fulfillment until the company outgrows it.
The e-commerce fulfillment cycle can be broken down into five main areas:
- Warehouse organization and management
- Order management
- Picking and packing
- Customer communication
When an online merchant chooses a logistics provider like ShipBob, it eliminates the need to manage the first four areas and also reduces the need to communicate with customers. Additionally, there are plenty of other benefits of using a logistics provider:
- Reduce capital and operating expenditures. With ShipBob, there is no need to invest in warehouse space or heavy equipment. Merchants can avoid paying for expensive, niche fulfilment software. There is also no need to hire employees that might become liabilities, just to pack and ship orders.
- Purchase inventory in bulk. ShipBob can store inventory in any of its various warehouses that are strategically located around the country, so that e-commerce companies can save money and offer two-day shipping for their customers. This, in turn, helps increase profit margins by buying larger quantities of inventory at a time.
- Decrease time employees spend on administrative tasks. Picking and shipping orders is time-intensive. Outsourcing this work to a the experts that are built to handle large volumes can reduce expenses and increase time for creativity and innovation among your staff.
- Take advantage of bulk shipping discounts. ShipBob has negotiated the lowest possible shipping rates with the four major U.S. carriers: FedEx, USPS, UPS, and DHL. These discounts are for all customers – whether you’re only fulfilling a few orders a month or processing thousands. This also allows customers to offer service that’s on par with the major retailers, with a two-day shipping guarantee.
Companies that have been self-fulfilling orders for a while and are experiencing growth may consider outsourcing e-commerce fulfilment to a logistics provider if they can relate to any of the following:
- The volume of orders you’re processing is too much for you to handle
- You’ve run out of warehouse or storage space
- You are shipping out a large volume of pre-orders or Kickstarter rewards at once
- You want to reduce the amount of time your staff spends on administrative tasks
- Shipping or storage is not a core aspect of your business
- You want to offer your customers faster shipping times or reduce picking errors
ShipBob eliminates any logistical nightmares related to dealing with the moving parts of e-commerce fulfillment. Customers get to eliminate processes such as managing warehouses, maintaining heavy equipment, updating niche fulfillment software, and hiring and training additional employees. Companies using a logistics provider can focus on the reason they got into business – offering great products or services and acquiring and retaining new customers.
A logistics provider is the easiest way for e-commerce companies to save money and space, increase cash flow, and scale their business.
Try ShipBob today for free – no strings attached. See how we’ve helped our customers for yourself.