D2C order fulfillment is the engine that powers eCommerce and, in an ideal world, your direct fulfillment solution will hum along without much input from you after the initial onboarding. But it may be too easy to get complacent about your fulfillment process. Switching 3PLs is a lot of work, so it’s tempting to overlook minor errors. At some point, however, small fulfillment glitches can add up to big problems for your online store and you might need to look for a different direct fulfillment solution.
Only you can decide whether your order fulfillment provider has become the problem rather than the solution, but here are a few tips to help determine if it’s time to make a move.
Is your fulfillment process a drag on your business?
Fulfillment is a significant supply chain expense, so your task is to keep eCommerce fulfillment costs as low as possible without sacrificing quality. But the price of direct-to-consumer fulfillment services is only one of the costs to consider. Your fulfillment can be a drag on your eCommerce growth, even if your 3PL pick and pack and storage fees are low.
Here are some of the ways that your direct fulfillment solution might be holding you back:
- Shrinkage. Whether your 3PL pays for inventory shrinkage or you foot the bill, lost stock creates supply chain problems that you need to solve. Maintaining your inventory is even more critical today because it’s harder to rely on suppliers and transport to move stock quickly from factory to warehouse.
- Customer complaints. When fulfillment is done well, it’s an invisible process. But when something goes wrong, your customers get angry — and they will blame you. The quality of your direct fulfillment solution reflects on your online store and can drive repeat sales or force you to undertake expensive customer service interventions. Your eCommerce store can’t afford bad reviews caused by fulfillment mistakes that will drive away consumer traffic.
- Uncertainty. Predictability is a rare commodity in the post-COVID eCommerce world, but your 3PL shouldn’t add to the list of unknowns in your supply chain. If you can’t count on service levels, pricing, and quality, it may be time to find a better fulfillment solution.
Three ways a direct fulfillment solution can enhance your supply chain
Superior third-party logistics is the secret sauce that often helps online shops hop on a steep growth trajectory. Here are capabilities that your direct fulfillment solution should have that will benefit your enterprise.
Work with your suppliers to optimize your fulfillment
A top-notch fulfillment provider looks beyond receiving, storage, and order fulfillment to partner with you and help improve your logistics. For example, you might be able to save money and speed up the pick and pack process by packaging products in heavy-duty boxes at the factory. That could allow your 3PL to ship directly to your customers in the manufacturer’s package. Or, if you sell large products, your fulfillment provider can work with you to adjust your packaging to reduce or eliminate dimensional weight charges.
Track every single item in stock with an advanced warehouse management system
Your ideal fulfillment solution should have an excellent warehouse management system and processes that track your inventory as it moves through the fulfillment process. Knowing precisely what you have in stock — with an accurate inventory — is critical to managing your cash flow, so you have the capital you need to expand.
Increase customer happiness with fast and accurate order delivery
Every unboxing experience should be a delight for your customer. That means their parcel includes the right products in the correct quantities and the items arrive in perfect condition. Even an error rate of 5% can slow your growth. Your direct fulfillment solution should pack your products properly for safe delivery and help you set realistic customer expectations.
Four signs that it might be time to switch direct fulfillment solutions
Switching fulfillment companies is a hassle that no eCommerce owner wants to take on if they don’t have to. Onboarding with a new 3PL requires time and money. It makes sense that most online stores will stick with their current direct order fulfillment solutions unless and/or until something goes very wrong.
But you might not want to wait for a major problem that could force you to move warehouses in a rush. Pay attention to the small errors and ask yourself whether your direct-to-customer fulfillment is boosting your business or holding it back. If you want an eCommerce business that goes viral (and you know you do), you can’t build it on a foundation of inferior fulfillment.
These four signs indicate it’s time to level up your order fulfillment.
Your business is getting lost in the warehouse
Before Homestead Brands came to Red Stag Fulfillment, one of the owners had to go in person to the 3PL to find the company’s products. The inventory was in the direct fulfillment warehouse, but the warehouse staff couldn’t find it, so they couldn’t ship the company’s orders.
If your 3PL loses stock between the receiving dock and the warehouse shelves, it could be a sign of poor warehouse management. Or perhaps your products are different from the typical merchandise that the 3PL is set up to handle. If you put small items in a warehouse built to ship heavy boxes (or vice versa), your products can get mishandled or lost.
Customer orders arrive late
Since COVID, consumers may have more tolerance for late deliveries as everyone has learned to live with a system groaning under the weight of extra packages. You don’t have much control over carrier delays. However, your fulfillment process shouldn’t contribute to the problem.
Does your 3PL turn orders around within the time specified in your contract? If orders ship late, they are likely to arrive late. You might want a direct fulfillment solution that offers same-day or next-day order fulfillment to keep your customers happy and your orders moving.
Fulfillment errors drive your return rate
ECommerce returns are unavoidable, but your return rate can significantly affect your profit margin, so it’s essential to keep it as low as possible. It’s a best practice to periodically review your returns to see why people are sending orders back. If fulfillment errors are driving up your return rate, your fulfillment solution isn’t delivering the order accuracy that your business needs.
You’re often pulled in to put out fires in the fulfillment process
When Brenden and Kyle Marquardt brought their business to Red Stag Fulfillment, they sold just one (terrific) product: Lori Wall Beds. Working with a 3PL that could provide set-it-and-forget-about-it direct fulfillment, the brothers had time to expand their business, adding more products and creating Homestead Brands.
You’re the boss. It’s your job to put out fires, but the more time you spend on crises, the less time you have to market, design, and grow. The quality of your direct fulfillment solution is a critical factor in determining how much time you have to work on your business.
Leveraging direct order fulfillment gives you the freedom to work on your business, not for it
If you take an honest look at your direct fulfillment solution and determine that it’s not supporting the health of your business, the next step can be challenging. What if you put in the work to move to a new 3PL and end up with the same fulfillment problems you had with the old one?
Of course, there are no guarantees in life, but your willingness to take the risks that pay off makes you a boss. You can start with Red Stag Fulfillment’s questionnaire, which will help you ask the right questions when interviewing a new 3PL. There are many excellent order fulfillment partners; the key is to find the one that meets your business where it is now and will help you move toward future success.
More about direct order fulfillment:
- Should ECommerce Use A Direct Fulfillment Center?
- How Direct-to-Consumer Fulfillment Can Protect Growth
- 2021 Fulfillment Report Card: How Would You Rate Your 3PL