Anyone who has been through a holiday peak season recognizes the opportunities – and potential pitfalls – it presents for e-commerce brands. The spike in order volume can help meet short- and long-term growth projections if fulfillment is done well. However, mistakes in getting holiday customers their gifts can lead to lost opportunities that can turn into long-term problems. Outsourcing your fulfillment responsibilities to a quality third-party logistics (3PL) partner creates the operational efficiencies necessary to drive sales and position yourself for a strong 2019. However, you can’t just outsource these responsibilities and assume everything will go as planned. Here’s how to ensure that both you and your fulfillment partner succeed this holiday season.
As orders spike in November and December, you need to rely on a capable fulfillment partner to properly pick, process, and ship orders without hiccups. In fact, most 3PLs operate under daily service level agreements (SLAs) to guarantee efficiency and to ensure both parties understand fulfillment expectations.
Fulfillment partners also use robust technologies such as an Order Management System (OMS) to help streamline operations by allowing for constant tracking and active monitoring of purchases and inventory levels across all available channels at every stage of the fulfillment process. If errors occur, a quality fulfillment partner will have the proper project management techniques to respond and rectify any resulting issues.
Ensuring that orders arrive at shipping carriers on time is a key to building customer satisfaction during the holidays and can reap benefits year round. In fact, Dropoff’s 3rd annual report found that 69% of shoppers wouldn’t purchase from a brand again if they received an item late. An experienced fulfillment team will have the proper strategies in place to minimize errors and delays for improved customer retention. However, it is critical that both client and fulfillment partner are actively communicating and sharing peak season forecasts so that the right strategy can be created and executed.
Improved Shipping Efficiency
The “Amazon effect” has created a strong shift in consumer expectations for e-commerce order fulfillment. The most notable impact is the demand for fast and inexpensive shipping. Many online shoppers expect delivery within two days, and shipping fees are one of the top factors people consider when making an online purchase. To attract more first-time customers, make sure you can deliver on their expectations for hassle-free order fulfillment and timely delivery, as most shoppers are looking to stay within their holiday budget and have specific dates as to when they need items.
An experienced 3PL will likely have the knowledge and resources to help you rate shop and find the best freight prices. They’ll also be highly knowledgeable of holiday peak season delivery cutoffs by carrier to make sure you meet your customers’ shipping expectations. This is especially beneficial for emerging brands who have traditionally handled these operations on their own.
This is often achieved when a 3PL has a reliable Transportation Management System (TMS), which can significantly improve fulfillment transparency and efficiency. In many cases, you can use this software to rate shop, seamlessly choosing the most cost-effective methods possible to minimize your shipping prices while still achieving on-time arrival. This will help you figure out what the best shipping prices are that you can offer customers and how this will affect your business margins. Additionally, if your fulfillment partner’s facility is located close to customers or major transportation routes, you may be able to provide faster shipping, helping you satisfy more customers.
Optimized Inventory Management
With the influx in sales brought by holiday promotions, properly tracking and monitoring inventory can become especially strenuous. A quality fulfillment partner will help improve total visibility, giving you on-demand access to information about the availability and location of your inventory. After analyzing SKU velocity, your 3PL can properly organize warehouse flow to provide more efficient picking access to top sellers and fast-moving SKUs.
This strategy improves inventory turnover, as you’ll more quickly convert products into cash. Understanding what inventory is moving quickly will help you plan for pre- and post-holiday sales that can positively impact your cash flow. As the peaks bring rapid shifts in product demand, managing inventory becomes more important. Identify the best methods for organizing products and clearing out aging inventory now to maximize cash flow. Ensure that your 3PL partner is prioritizing this as well.
It’s never too early to begin preparing for the busiest e-commerce season of the year. Upgrading fulfillment capabilities removes the risk of facing hiccups and inefficiencies that can lose sales and cause irreversible damage to your brand. If you don’t feel 100% confident in these areas, outsourcing these operations to a 3PL can prove valuable, as you will have a committed partner that can help navigate the busy holiday season.
As a founder and CEO of third-party logistics provider Dotcom Distribution, Maria Haggerty leads the charge toward helping retail brands achieve loyalty and return sales by acting as a catalyst for improvement. Recognizing that the e-commerce journey does not end at delivery, Dotcom guides clients in transforming lackluster packages into unboxing experiences worthy of excitement, praise, and sharing. Previously, Maria was a CPA at Arthur Andersen and CFO of GoodTimes Home Video, where she helped grow the company’s distribution business. Follow on Twitter @dotcomdist, @mhaggertyceo, or email email@example.com for more information.