For many new e-commerce players, there comes the point when choosing a third-party logistics (3PL) partner is the most practical way to manage growth. Instead of grappling with staffing and warehousing issues, using a 3PL to handle fulfillment frees you to do what you do best: managing and marketing your product line.
Not all fulfillment partners are created equal, of course. Some are best suited to operators with basic fulfillment needs, while others offer a range of customizable capabilities. Whether you opt for basic or highly customized fulfillment depends in large part on your needs and ambitions.
The Case for Basic Fulfillment
Longtime e-commerce vendor Krista Fabregas is blunt about the basics of fulfillment. Fabregas is the founder and owner of Simply Smart Living, an early e-commerce site (dating back to the turn of the century), and has written extensively about the ins and outs of fulfillment.
“At the end of the day, it’s putting something in a box and shipping it out the door,” she says. “There are many customers for that. A customer often sells an easy-to-ship item, which can be packaged very securely and shipped easily. Often, those items are also going to be things people buy quickly and buy one of.
“You also have bulk shipping. Some companies do that — they have just three or four items, and that’s all they sell. Some places sell a whole lot of one thing, and then they switch to something else.”
Another latter-day example of bulk shipping, Fabregas says, is crowdsourced items. “You’re trying to get funding together for an indie film, let’s say, and then once you get the money together, you’re going to send everyone a T-shirt. Or they’ll do a photography book, and once it’s crowdfunded, they print the book and ship it. That’s a bulk thing many companies do because it’s a whole lot of one thing shipping.”
For vendors whose needs are similarly basic, such as commodity “brown box” items entering and leaving the warehouse with little intervention, or large quantities of just a handful of things, a low-cost, basic fulfillment solution may be all that’s required. This isn’t to say it’s an easy niche to fill. The companies best equipped to handle volume warehousing make a significant investment in AI and robotics, so they’re able to provide a high-volume pick-and-pack capability that can “surge” to meet demand as needed.
Going Beyond Basic: Customized Fulfillment Options
That basic level of fulfillment won’t work for everyone. “There are three ways to go when you’re outsourcing fulfillment,” says Fabregas, with essential fulfillment being the first. The product itself doesn’t have to be a generic brown box, as long as you get it to that stage before it reaches the 3PL warehouse. “Some companies are ‘quick in, quick out,’ Fabregas says. “They want something on the shelf that’s ready to just throw a label on it and go, so you’re doing the hard work, or your manufacturer’s doing the hard work on the pre-packaging or inner pack for you.”
Alternatively, she says, the second option is to partner with a fulfillment center capable of providing that level of pre-packaging for you. You’ll pay a premium over the cost of essential fulfillment. Still, it’s a cost you’d otherwise have to absorb somewhere else along the supply chain, either in the form of your labor or increased unit cost at the manufacturing end.
“Then you’ve got this third thing — what I call ‘fussy fulfillment,'” says Fabregas. “It isn’t hard stuff to ship; it’s just that the way you want your orders done is fussy. For example, I sold plastic drinkware, and one of my lines came in 19 colors and three sizes. With bulk fulfillment, you’ll sell that like a box of eight in one color. With fussy fulfillment, you’re going to offer that customer whatever they want, and you’re going to pick each one of those as an open-stock item. So as a small business owner, you need to look at your products and go, ‘how does my customer want to buy it, and how can we ship it effectively?’ Somewhere between those options, there’s a marriage with a fulfillment center that will work for you.”
5 Ways to Customize Your Fulfillment
How can customized fulfillment open the doors to new markets or new customers? The answer to that question will differ for each seller, depending on your market, product, and ambitions, but a few examples can provide helpful food for thought.
1. Up Your Paperwork Game
If you sell to retailers, meeting each client’s — usually very specific — requirements for shipping labels, barcodes, bills of lading, and other supporting paperwork can be a significant challenge. Just keeping up to date on compliance with your client’s requirements can be a full-time job in itself. The stakes are high because incorrectly printed labels or forms can result in profit-sapping chargebacks from your client or, in extreme cases, losing the account. A top-quality fulfillment partner can bring that capability to the table, expanding your reach in the retail market.
2. Add Some Channels
Becoming a multi- or omnichannel merchant poses a significant challenge for your shipping and logistics, but it can also insulate you against downturns or challenges in one channel or another. If you currently sell directly through the B2C channel, for example, you might open a retail storefront or curbside pickup locations or branch into wholesaling to existing retailers. This requires a fulfillment partner that can package and ship the same product in multiple ways to accommodate the needs of each market.
3. Bundle Accessories for Retail Partners
Consider offering your retail partners customized bundles if you sell readily accessorized products, such as electronics, small appliances, and other kitchen goods. With the right fulfillment partner, you can easily match up a handful of accessories and a few core products to create differentiated customized bundles that would be “exclusive” to each of your retail channels.
If you go this route, be conscious of the overall size and weight of your bundles. “That stuff tends to be big to store,” Fabregas cautions. “You have to be careful with your forecasting and your ordering on those because you’ll lose money in fulfillment if you don’t watch your storage fees. That’s what gets many people on [Fulfillment By] Amazon; it sounds good until they do it.”
4. Offer A la Carte Ordering from Diverse Product Lines
This is what Fabregas meant by fussy fulfillment (her term). Shoes or housewares, for example, might come in dozens of different sizes, colors, or variations. Customers are unpredictable, and outlets in other parts of the country will find significant differences in the colors and styles that sell best. Working with a fulfillment partner that can manage your inventory right down to the level of individual SKUs enables you to offer a flexible, completely a la carte experience to retailers or end-users alike.
5. Offer Individualized, Curated B2C Ordering
The details of this option would vary with your product line, but the basic idea remains the same. “If you’re doing apparel and shoes and accessories,” Fabregas says, “you could do style packages. You could have a personal stylist working with the customer, assembling a ‘look’ for each person individually, then ordering the look. With tech, you could do the same thing because a lot of people 30 and over still wonder, ‘If I’m getting this phone, do I just want the generic earbuds that go with it, or do I want this, this, and this?'”
Depending on your business’s size and resources, Fabregas suggests you could approach the same level of service at scale by using an AI-driven phone app or web portal. “It’s the next step in cross-selling,” she says.
Choosing Your Partner
Once you’ve settled on an approach to customization that fits your organizational goals and strengths, the next step is to find a 3PL/fulfillment partner with the capabilities to deliver what you need. “Shippers should be wary of any provider who claims that they ‘can do it all,'” Patrick Burnson cautions. As executive editor at industry publications Logistics Management and Supply Chain Management Review, he’s observed a trend away from commodification. “Every year, the 3PL sector becomes more specialized and siloed, with all the major players concentrating on their core competencies.”
It’s a welcome change from Fabregas’s perspective. “I worked in fulfillment before there was an internet,” she recalls, “back when it was all catalog fulfillment or special project fulfillment, so I’ve seen the online fulfillment sphere invent itself. Back in the early days — 2000, 2001, there weren’t as many fulfillment choices, and they couldn’t do the very specific hand-picking and mix-and-match stuff that I needed, so I opened my warehouse and fulfillment center.”
The industry has advanced well past that point. Today, a 3PL partner with a heavy investment in technology and infrastructure can offer that same high level of customization but with more speed and efficiency than most sellers can manage from their resources. It’s simply a question of finding a 3PL specializing in a niche that fits your needs and product line.
Contact us today to arrange a consultation to find out whether Taylored Services can be that partner for you.
References
Inbound Logistics: Customized Supply Chains: Fit to a T
Multichannel Merchant: Automation Making Ecommerce Order Fulfillment More Efficient
