Logistics Service Providers or LSP’s are now learning that E-commerce fulfilment is an entirely different animal, and you can’t just apply the same cookie cutter approach like with “traditional” business-to-business, wholesale, or retail Warehousing & Distribution. This realization led some of these traditional Logistics Services Providers decide that E-commerce fulfilment is simply not for them. So, what is so different about E-fulfilment?
Spread thin
E-commerce entrepreneurs tend to expand internationally earlier in their company’s maturity than traditional retailers simply because they have no assets like warehouses and staff to invest in. So, this means the underlying fulfilment of orders and incoming supply of product needs to be setup for international commerce, even if the order volume and revenue is not there yet. Selling and distributing products internationally can be complex, so some companies bring in an outside expert to design, build, and even operate that network for sustained growth and efficiency.
Local heroes and global orchestrators
No matter how big the fulfilment company or how many fulfilment centers they own, E-commerce fulfilment is still very much a domestic business. Operating a multi-country network of logistics centers is often the privilege of traditional global logistics companies that have already built their network over decades. The downside of these conglomerates though is that they’re very inflexible and they care little about smaller E-commerce businesses. Or as we say in the Netherlands: Elephants hug elephants…
So, to operate a flexible, agile, multi-country network of fulfilment centers that your online business can grow into and that can adapt with the company’s growth, you’re better off using an independent orchestrator who has your best interest at heart.
Different flows, same supply chain
Today’s E-commerce companies deal with many sales channels in a much more flexible way than traditional supply chains. This includes sharing inventory across channels, offering different service levels, shifting between off-line and online channels, mixing own controlled fulfilment and Marketplace fulfilment, drop-shipping, assortment differentiation, and pricing. It can certainly be complicated and difficult to succeed with this approach, and it often leaves entrepreneurs heads’ spinning. So, juggling these different strategies requires expertise and experience, especially when simultaneously operating in multiple countries. In order to stay efficient, reaping the benefits of operating multiple flows from one supply chain requires more then just a partner who picks and packs your product; it requires true supply chain organization.
Working 9 to 5?
Logistics companies used to be able to plan their Warehouse activities and deliveries during regular business hours. Not in E-commerce! Consumers and even businesses both order and expect delivery anytime, anywhere. Ordering patterns are more erratic, next day delivery is a must, and consumers will not always be home during business hours. This means Logistics Service Providers have to rethink their operating hours and service levels to become more agile and satisfy their customers. The more diverse the LSP’s customer portfolio, the better they can plan their resources due to economies of scale.
Carrier Management: Diversify or Die
Since order cut off time is one of the three most important criteria to “get the buy-block” in Marketplaces (next to price and reviews), E-commerce companies need fulfilment providers that can offer a late cut-off for next day delivery.
Is same day or even next day delivery always needed? No, but offering your customers multiple delivery options that balance cost and lead time can be an effective way to distinguish sales channels and for fulfilment centers to spread their workload. Success therefore requires a robust carrier management strategy.
Review this!
Let’s be honest, E-commerce buyers are demanding! This is especially true in Business to Consumer channels. Nowadays, a missed delivery, damaged product, lacking customer service, or unnecessary large packaging and waste can almost immediately lead to negative reviews and social media posts that can spread like wildfire. This means customers must perceive the logistics quality as being the cream of the crop to stand out. To do this, you have to of course offer a high standard of service in general, but also be able to respond quickly, effectively, and permanently on service failures or suggestions from customers: an informed customer is a happy customer!
Expert E-commerce logistics providers operate alongside the E-commerce entrepreneur to support them with more than just fulfilment: they offer an all-encompassing customer experience.
Return to sender
Returns are an E-commerce entrepreneur’s worst nightmare. It eats up resources, distorts conversion rates, and basically just burns through your company’s cash. Fulfilment centers should be prepared to receive a large volume of returns and assess quickly whether product can be resold. They also need to determine whether the customer can get his/her refund within the timeframe dictated by law. Consumers return on average between 5% and 20% of their purchases, depending on the type of product (https://www.shopify.com/enterprise/ecommerce-returns ). This is another area where E-commerce customers are different: returns in the traditional retail supply chains are between 2% and 8% (even lower for wholesale). You also need to consider the habits of local demographics. For example, consumers in Southern and Eastern Europe return less of their buys (6-8%) compared to their Western- and Northern European counterparts (11 to 15%), according to Ecommerce news (https://ecommercenews.eu/online-returns-in-europe/ ) .
But the tide is turning. Sellers and a new generation of buyers understand that the high return rate is no longer sustainable from a cost and environmental perspective. More brands are starting to charge for returns (https://www.theindustry.fashion/ecommerce-reached-point-diminishing-returns/ ) or offer economy-type return services. A good example is Return Consolidation, where consumers send their returned product to a local consolidation center, which then decides whether the product should be scrapped, sold as used, or returned to the original fulfilment center in bulk.
So you see, cross border E-commerce fulfilment is a completely different Logistics animal than traditional Warehousing & Distribution, and it requires dedicated attention and expert orchestration to execute it well.
In our daily practice of searching, selecting, and implementing partnerships with local fulfilment centers and global logistics conglomerates on behalf of our customers, we see a clear distinction between fulfilment partners that “get it” and those that don’t. Over time we have built a strong network of experienced fulfilment partners and we’re expanding this network every year. With 1 interface you have access to these specialists by letting Supplime organize and operate your European fulfilment.
Feel free to reach out and let us know if you’re looking to setup one or more fulfilment centers in Europe, or if you just want to re-assess your fulfilment network for future growth. We’re always happy to help. Contact us today at info@supplime.eu
