The 3 Guiding Principles of Ecommerce Fulfillment0
This is a guest post by Ships-a-Lot. If you are in the majority of eCommerce entrepreneurs who prefer to spend their time on sales and marketing, reach out to Ships-A-Lot.
Accuracy. Timeline. Efficiency. These are the north stars for any fulfillment process and customers have increasingly strict expectations for all three. A very common experience in eCommerce, to the point of being a coming-of-age tale, is early fulfillment processes failing to scale. When they fail, they typically do so in a spectacular fashion.
These principles are the distillation of our experience growing from a teeny-tiny jerky retailer to a specialized fulfillment company processing thousands of orders per day for clients with diverse needs.
Consider the following problems that may arise from inaccuracy in your typical fulfillment operation:
- Wrong product/quantity shipped
- Shipped to wrong customer
- Out of stock
- Wrong packaging used
- Customer receipt sent to wrong order
- Incorrect shipping method chosen
- Order not shipped in time
Those 7 little mistakes are expensive. They can prevent a customer from ordering ever again, decrease the customer’s lifetime value, and are typically expensive for customer service to “fix”. The really devastating factor for most businesses is that they are pretty likely to happen without some reliably high-accuracy machines in the mix.
We have automated processes in place to prevent these and when errors do happen, they are almost always human related. Take No. 3 as an example: we manage an inventory of packaging materials and supplies. Our software monitors the stock levels and periodically pushes out purchase orders when we need to reorder. Sometimes we have a very busy day and our receiving employees forget to take the extra step of recording new stock. When this happens, another purchase order may get sent out and we end up overstocking the material. Expensive mistake.
How do we prevent this? High-risk tasks are all delegated to machines, sometimes at the cost of a little bit of time. Take product recognition for example. We are obsessive about barcoding everything and use mandatory barcode scans for all merchandise:
These barcode scans feed into a warehouse management software which checks the information against the expected value. There are plenty of examples of great fulfillment plugins and standalone software, but we are fans and avid users of ShipHero.
Once the order is placed, the fulfillment process needs to launch into action. They have wagered their hard-earned money on your store’s promise to deliver goods. They want to know what’s happening with their order. They want the tracking link. They want to know when their package hits the last mile of delivery. We like to summarize consumer expectations about shipping timelines with the following graphic:
Shopify does an excellent job coordinating all of this; these tools go a long way in establishing the thriving base of repeat customers our clients enjoy. However, in order to reliably execute this timeline for every customer your business needs the ability to sort and prioritize orders, tools to identify and address stock problems before backorders start piling up, and a system to monitor stock levels.
Sorting and prioritizing orders is something that most selling platforms (Shopify included) do a very poor job of. Orders are displayed in a static list with limited filtering options. If you can’t ship 5% of your daily orders due to stock problems, then at least 5% of your fulfillment time each day is wasted looking at these types orders over and over again. There are many inventory & order management apps to help with this.
For inventory problems, a versatile tactic is the safety stock approach. It goes by many names: automated purchase orders, reorder-on-trigger, etc. This method involves a notification being pushed to someone in your business any time the inventory on a specific product goes below a certain threshold. You need something to sound alarm bells when you’re running out of stock and position you to avert the problem. For example the low stock alert app helps with this.
Here’s a golden rule for staying lean with any process: avoid working for the same outcome more than once! The example of double-checking order contents works well here. Do something once, get it right, and move on to the next step.
The owner of a successful chain of restaurants once told me that he did a study on labor efficiency in his business. He found that the average potato was moved about a quarter mile between receiving the raw potatoes at the loading dock and serving the finished product to the customer.
In fulfillment, the equivalent problem is pick and pack. I can recommend a very simple test to highlight any time sinks in the way you fulfill orders: film an hour or two of your shipping process in action. Classify the various types of actions you perform during your process and work out the percentage of time each step consumes.
I’m sure your process will end up with a graph similar to the one below.
This process spent 15% of its time walking, 6% folding paper, and 12% double-checking the order receipt. This is time that you can eliminate almost entirely with the right process. By moving to picking orders in batches, the walking time per order came down to less than 3%; by having pickers perform barcode scans on all products, the packer needs to neither scan products nor check receipts; by using smaller (and cheaper!) receipt paper, folding was eliminated entirely.
Fulfillment is a surprisingly complex topic and its impact on both your bottom line and customer experience needs to be continuously monitored. How far you pursue the excellence of your in-house fulfillment depends entirely on your taste for managing and improving the processes.
If you are in the majority of eCommerce entrepreneurs who prefer to spend their time on sales and marketing, reach out to Ships-A-Lot or email email@example.com.