3 Key Points to Consider When You Choose Order Fulfillment Center

Everything starts small, including e-commerce stores. Although your online store is still in its infancy, you may have to take care of most things yourself, including order fulfillment and shipping.

But, as the store grows and the customer base expands, you may need more help to help your business go to the next level when you realize that you can no longer handle everything on your own.

order-fulfillment-center丨ChinaDivision
order-fulfillment-center丨ChinaDivision

What is order fulfillment service?

Order fulfillment service covers the entire process from sales to delivery to customers. Successful order fulfillment depends on third-party logistics to complete the order fulfillment steps of an e-commerce online store, from receiving, processing, packaging, packing, and shipping products to customers.

A good e-commerce order fulfillment strategy is essential for online companies to maintain competitiveness and build customer loyalty.

And, what is order fulfillment center?

The order fulfillment center provides warehousing (storage) and transportation services so that online companies can conduct business without having their warehouse or storage space.

E-commerce sellers can send their inventory directly to a fulfillment center, and then deliver it to customers from there.

Most order fulfillment centers will be integrated with major online shopping platforms (such as Amazon, Shopify, eBay, etc.) to make it easier for sellers to manage inventory and deliver products.

order-fulfillment丨APS-Fulfillment-Inc丨ChinaDivision
order-fulfillment丨APS-Fulfillment-Inc丨ChinaDivision

Why you need order fulfillment center?

One of the most obvious benefits of using a fulfillment center is that you don’t have to do everything yourself. But the benefits go far beyond that. Outsourcing order fulfillment can have a meaningful impact on the growth of your business.

Reduce rental costs

Many third-party logistics service providers offer flexible pricing. This means that as your business develops, they will be able to adjust costs accordingly to your needs. Renting a warehouse yourself involves many potential costs and considerations.

Professional solution

When you use an order fulfillment center, you not only get warehouse space, but you also have the professional services of a team responsible for operating the fulfillment center.

Each 3PL has a team composed of logistics experts and technical support personnel, who will help you all the way. You can easily implement receipt management, inventory management, order processing, and transportation operations.

Optimize customer experience

Although it is basically free for you to do this work yourself, it may actually cost you a lot of money in the long run. Customers want faster shipping time, so in-house fulfillment may cause you to fail to meet these expectations and bring a bad customer experience.

What Inventory Turnover Ratio Is Good?

Let’s start with the most basic definition: What is inventory turnover ratio?

The definition of inventory turnover ratio

Inventory turnover ratio refers to the number of times the company’s inventory is repeatedly used or sold during a specific period, roughly reflecting its ability to manage inventory levels and the frequency of replenishing stock.

Companies generally prefer a higher inventory turnover ratio. The high ratio indicates that your inventory products are selling quickly, which shows that business performance is good.

Inventory-Turnover-Ratio-Orderhive-ChinaDivision
Inventory-Turnover-Ratio-Orderhive-ChinaDivision

What inventory turnover ratio is good?

The apparent answer: as high as possible.

For many e-commerce companies, the ideal inventory turnover rate is about 4 to 6. Of course, different industries have different standards, but a ratio between 4 and 6 usually means that the ratio between your replenishment and sales maintains a good balance.

In other words:

A good inventory turnover rate can let your business:

  • Products will not run out, but usually meet customer requirements
  • Inventory will not be overstocked and become deadstock
  • Improve profitability and reduce inventory holding costs/handling costs

In short, if your company can achieve a good balance between inventory, sales, and costs, then your e-commerce is expected to achieve natural and stable growth.

How to optimize inventory turnover ratio?

  1. Targeted design of marketing activities that meet the cost to increase sales
  2. Comparing with competitors in the industry to develop pricing strategies
  3. Good at growing product portfolio and stimulating customers to place orders
  4. Forecast inventory and plan for inventory purchase
  5. Regularly negotiate the purchase price with the supplier and obtain a preferential purchase price
  6. Develop preferential strategies to encourage customers to book products
  7. Eliminate dead stock as much as possible

Why Do You Need a 3PL Warehouse Management System?

What is 3PL Warehouse Management System?

3PL Warehouse Management Software System (WMS) manages and records almost all physical cargo warehouse operations, including inventory management, shipping, receiving, putaway, picking, packaging, etc.

This software system helps simplify many time-consuming processes for one or more warehouses. Suppose your order volume exceeds the processing capacity of the internal warehouse. In that case, you can outsource these tedious tasks to a third-party logistics company, and they will design a set of suitable warehousing logistics solutions for you.

Advantages-of-3PL-Warehouse-Management-SystemMecalux丨ChinaDivision
Advantages-of-3PL-Warehouse-Management-SystemMecalux丨ChinaDivision

Benefits of Using 3PL Warehouse Management System

Inventory Control: 3PL WMS can collect the receiving, movement of the entire fulfillment center inventory through a barcode scanner. All SKU inbound and outbound data can be tracked and confirm inventory products’ location in real-time, improving inventory accuracy.

Realtime Inventory Tracking: Professional 3PL will provide partner companies with inventory management visibility data. Shippers can easily know the progress by accessing reports and tracking real-time inventory remotely online.

Nowadays, many warehouse management solutions can be seamlessly integrated with enterprise resource planning or corporate accounting rights and health solutions, allowing customers to adjust their current and future development needs.

Due to these functions’ convenience, the original time-consuming tasks such as manually generating management reports are eliminated.

Advanced 3PL Billing System: Billing is a very important part of the 3PL warehouse management system. When a 3PL provider provides this service to multiple customers, this process requires a comprehensive 3PL system to support. An accurate billing system will significantly reduce billing time while improving other functions.

Order fulfillment automation: 3PL providers are order fulfillment experts. They have adopted many advanced systems and equipment to support order fulfillment to save customers time and operating costs. Integrated WMS aims to simplify the order fulfillment process and make these tedious tasks simple and easy.

In Conclusion

With the explosive growth of 3PL warehouse and inventory management software, the emerging 3PL management software is expected to bring higher efficiency, thoughtful design, and advanced services to provide customers with the best solutions.

Third-party logistics companies will provide many benefits for your supply chain, and you can save time and resources while maintaining efficiency and customer satisfaction. If you haven’t considered adopting a 3PL warehouse management system solution, now is the time!

Why do you need to outsource order fulfillment?

The fierce competition in e-commerce means that you need to spend most of your time promoting business development. Therefore, you can outsource order fulfillment work to a professional third-party logistics company to handle it.

Cut down operating cost

Cooperating with 3PL can reduce infrastructure and logistics costs. You can avoid the trouble of renting warehouses, equipment, packaging products, maintenance, etc. by outsourcing order fulfillment. Order fulfillment service providers develop appropriate strategies and predictable costs so that you can better control operating costs.

Optimize business development

If small businesses or suppliers waste too much energy to cope with all day-to-day operations, they will miss the opportunity to develop new customers.

Delivering all operations after the customer places an order to a professional outsourcer will help you spend more time and energy on expanding your business.

outsource-order-fulfillment丨CommerceBloom丨ChinaDivision
outsource-order-fulfillment丨CommerceBloom丨ChinaDivision

Increase flexibility

One of the most important reasons for outsourcing order fulfillment is to increase the flexibility of processing orders. 

If your warehouse does not have enough staff and space, the enormous daily order processing will bring an extensive load to your company’s system. For the sustainability of your business and to provide customers with a good customer experience, one of the best ways is to hand over the processing of these orders to a professional company.

Enhance the ability to respond to the market environment

The COVID-19 outbreak this year has severely disrupted the supply chain, which means that transportation costs have risen. To reduce the impact, one of the best ways is to outsource order fulfillment, so that your company can avoid the impact of rent, wages, and other expenses. Reducing overhead costs can help companies survive in a severe economic environment.

Timely delivery

The introduction of Amazon’s “two-day delivery” clause has intensified the time competition for e-commerce companies to deliver products to customers. You must pay attention to the delivery terms described on your website and deliver products on time. Strive to transform customers who purchase once into lifetime users.

How to choose a fulfillment company?

What is a fulfillment company?

Fulfillment company usually refer to the organization that provides companies with services such as order receipts, packaging, and transportation. The functions and scope of order fulfillment are now more complex and efficient than ever before.

A technologically advanced fulfillment center can manage and simplify the fulfillment process through order fulfillment software or systems.

Outsourcing the management of the order fulfillment process to a professional fulfillment company allows companies to focus more on order growth instead of internal warehouses, inventory management, transportation, and returns.

fulfillment-company丨3plcenter丨ChinaDivision
fulfillment-company丨3plcenter丨ChinaDivision

What kind of factors should you consider when you choose a fulfillment company?

1. Delivery speed

Now Amazon Prime has set a new two-day delivery rule, which means that consumers expect faster shipping speeds than ever before.

So, if your company’s current order volume is considerable but the order delivery speed is far behind, then your customer churn rate will gradually increase. When your company can no longer optimize the order fulfillment process, you can try to cooperate with an order fulfillment company.

Excellent and professional fulfillment companies have effective management systems and order fulfillment software, enabling them to deliver quickly.

2. The location of the distribution warehouse

The most important point of order processing outsourcing is to examine the location of the distribution warehouse of the partner company.

To meet customers’ expectations of delivering products in a short time and improve their user experience, it makes sense to choose an order fulfillment center close to the customer. For your international business, you need to confirm whether the other party provides global delivery services before cooperating with them.

To reduce the additional burden on your business and devote more time to increasing order volume, you need to study the order fulfillment system and software used by the fulfillment companies you cooperate with. Different fulfillment companies vary order fulfillment software, and you need to ensure that their software is easy to implement and can seamlessly integrate with the business platform applications you are using.

How-to-choose-a-fulfillment-company丨Atlantic-Marine-Services丨ChinaDivision
How-to-choose-a-fulfillment-company丨Atlantic-Marine-Services丨ChinaDivision

3. Transparency

The transparency of order fulfillment is also an essential part of your corporate image. Survey data shows that 88% of consumers want to track their products in real-time. 69% of consumers said that if the merchant fails to deliver the product within the promised delivery date, they will not shop again in the future.

Therefore, when you choose an order fulfillment partner, you need to know whether it can meet the delivery time limit you require.

4.Return management

Due to the fast and convenient free return and exchange policy, about one-third of online orders are canceled orders. Some returns are uncontrollable (the customer doesn’t like the product at all). A reputable fulfillment company will manage the product well and minimize returns.

5.Cost

Your cooperation with a third-party logistics provider involves some initial costs, but in the long run, you will save labor, logistics costs, storage costs, etc. Besides, you also need to make sure that the fulfillment center you cooperate with can provide you with the best deal.

Since you have to pay for delivery services (your products are always moving after all), the delivery center should not charge you for long-term storage.

Due to the shipping volume of the shipping center, the distribution center can also get a larger discount from the operator than any single e-commerce retailer, so you want to make sure they can pass on some of the savings to you. These reduced costs often allow e-commerce retailers to compete with industry giants by offering free or reduced-price transportation.

Why Is a Warehouse Management System So Important?

Warehouse Management System (WMS) is the cornerstone of logistics system. WMS constitutes the internal system of a logistics company and can be highly configured to control and manage storage, distribution, and other aspects. A powerful WMS is needed for an organization to conduct effective and productive operations, including inventory balance, material management, delivery process, and review.

If you lack an effective warehouse management system, it is impossible to obtain a well-functioning logistics system. Effective WMS involves using a set of customized solutions to achieve a smooth workflow, not just data or storage processing.

Warehouse-Management-System丨DataConsult丨ChinaDivision
Warehouse-Management-System丨DataConsult丨ChinaDivision

The Importance of the Warehouse Management System

  1. Inventory accuracy

For inventory management, one of the challenges most companies face is how to maintain inventory accuracy. Inventory management systems can help you manage inventory better, faster, and easier. You can reduce the order cycle time and improve the number of orders WMS will help you adjust inventory levels by using real-time tracking of inventory changes. You can better understand the products in the warehouse and you can better track any changes required. Respond quickly to customer needs and inquiries, and can provide customers with a better customer experience.

  1. Centralized warehouse location

The warehouse management system saves a lot of time and cost by obtaining a centralized storage location. WMS overcomes the production gap based on the real-time inventory situation, so as to easily carry out storage, transportation, and distribution. You can even quickly find suppliers and target markets, so you can continuously move in and out of goods to ensure the continuity of the company’s logistics system.

  1. Improve product quality

WMS’s effective inventory quality and management will improve your production quality. You can keep up-to-date with vendors and suppliers, and better track the shelf life of raw materials or products. So you are now easier to deal with defective products and guarantee the high quality of the products.

By improving product quality, you can not only ensure high-quality service but also improve order processing. An efficient warehouse management system can improve production quality, and WMS’s control over the production speed, efficiency, and quality of products will give you great confidence in promoting the company’s products.

  1. Formulate marketing strategy for shopping season

You can take full advantage of festivals or other shopping seasons to expand your business. Since the production process can be tracked through real-time information, you can also analyze and track customer consumption behavior. WMS can better help deal with customer problems and reduce the risk of customer complaints and negative reviews.

Therefore, you can take advantage of increased growth to increase operations without paying additional fees. This means you will get new opportunities to reach higher sales. By having the right warehouse management system, you can now sell more products and increase profits, which means a high return on investment.

  1. Risk Management

In response to changes in demand and supply and to minimize losses, WMS highlights its importance. You can deal with risks through changes in product demand changes, and you can also bring sales decisions by considering sudden increases or decreases in product market prices.

You can improve your purchasing decision while replenishing suitable inventory. Therefore, you can check inventory at any time to better meet the needs of delivered products. Logistics warehousing also provides you with additional storage space to meet future needs.

An effective WMS ensures improved inventory control and management, which means you can ensure the safety of your goods and avoid product deterioration, theft, or accidents.

However, you must choose an effective software solution, and you must also consider the key functions of warehouse and logistics.

Four Key Factors to Design a Successful Ecommerce Order Fulfillment Strategy

Designing a successful eCommerce order fulfillment strategy can be tricky because this task requires consideration of various factors in the process. You need to understand all aspects of the supply chain and provide your customers with an excellent experience after careful planning and optimization.

Here are some tips to help you design an eCommerce order fulfillment strategy to help you deliver products on time while improving customer satisfaction.

How to Design a Successful Ecommerce Order Fulfillment Strategy?

Track inventory regularly

When a customer finds that the ordered product is out of stock and not delivered in time, they may never shop in your store again, or vent their anger on social media. These consequences may not only lead to an increase in customer churn but also have a terrible impact on your brand.

Therefore, to avoid these incidents to the greatest extent, your best strategy is to simplify your order fulfillment process and deliver products to customers as quickly as possible. You need to focus on inventory and build an inventory management system. This system can help you get real-time fulfillment cycles, so you always know when products are out of stock or unavailable.

Ecommerce-Order-Fulfillment-Strategy丨A-Better-Lemonade-Stand丨ChinaDivision
Ecommerce-Order-Fulfillment-Strategy丨A-Better-Lemonade-Stand丨ChinaDivision

Product Kitting

Product Kitting helps reduce the processing time and cost of order fulfillment. Product Kitting refers to the process of grouping, packaging, and supplying different but related items as a unit.

Product Kitting can increase productivity and reduce labor costs by storing products in separate kits. Besides, you can reduce inventory and improve cash flow.

Automated warehouse

Adopting an intelligent warehouse system can help you manage inventory, warehouse organization, and logistics using data-driven technology.

You can automate the warehouse by choosing to use technologies including RFID identification, the Internet of Things, and easy tracking of the inside of the IoT.

Using a warehouse management system can reduce human errors in order processing.

Transparent supply chain

Supply chain visibility is the focus of your strategy. Supply chain visibility can give you a deeper understanding of each process and improve the underperforming parts.

For example, if you track picking activities in a warehouse and find that manual picking increases time costs, you can move it to an automated process.

Therefore, you must keep track of your supply chain and collect data.

How to Conduct Dropshipping Competitor Research?

To make your dropshipping business stand out in the market and get more quotes, one of the important things you need to do is to investigate your competitors. Your competitor company may inspire you to optimize your dropshipping business and help you develop a stronger marketing plan for your own shipping business.

Please select five competitors in your market for analysis, including one or two major players (such as Amazon or Walmart).

Dropshipping丨Admitad Academy丨ChinaDivision

Some methods of conducting dropshipping competitor research are:

Google search. Google search results will list your top five competitors. Starting with the keywords in a simple search, the top ten in search results will show who your top competitors are and how they promote their products. If you have a specific country or region to focus on, you can use third-party tools such as Ahrefs or SEMRush to find keyword data.

Use competitor spying tools, such as SameWeb and Alexa. Such online tools are great for finding (and tracking) the online activities of competitors. Tools can obtain a competitor’s website information such as social media profiles, popular traffic sources, number of visitors, etc.

Browse social media. Search for Facebook ads in your niche and see the top brands on the market. See how the company communicates with customers, the way its feeds are designed, how much engagement they get—you can even follow their feeds and never miss any opportunities. Use this information to find ways to differentiate your business and improve your social media marketing strategy.

Subscribe to email lists of competitors. Want updates from competitors to be sent directly to your inbox? Sign up for their email list and learn about their marketing strategy. You can also learn more about promotions and transactions to attract customers to buy.

Organize your research materials in spreadsheets and keep them updated so that you can easily refer to them when making decisions for your store. For example, if you want to use email marketing to promote your business, you can check the form material to see what strategies your competitors are using.

Simple Guidance For You In Order Fulfillment Cost

Different 3PL order fulfillment costs are different. When you decide to use 3PL services, you may encounter some expenses and knowledge you need to know before signing the agreement.

3PL-Order-Fulfillment-Costs丨Tenaxx-Logistics丨ChinaDivision
3PL-Order-Fulfillment-Costs丨Tenaxx-Logistics丨ChinaDivision

Startup costs

When you decide to start with 3PL, you may encounter startup costs. This fee is used to run e-commerce services and is a worthy investment project because it helps reduce confusion when using various services.

Inventory receiving costs

A 3PL will first receive your inventory, and then begin processing and fulfilling your online store orders. Inventory receipt means that the specific conditions of inbound and outbound logistics will be taken over by 3PL. Different 3PL own different charging methods, such as per-unit, per-pallet, flat rates, or per hour.

Inventory storage costs

When your goods need to use the 3PL order fulfillment center to store inventory, you will need to pay for storage space. Storage fees range from per SKU or per unit storage to a fixed fee (for each box, shelf, or pallet used).

Order pick and pack costs

Some 3PL models include Order pick and pack costs. After the customer places an order, the fulfillment process starts picking or use the picklist to collect each ordered item from its designated storage location. Many fulfillment providers offer to charge on a per-pick basis, which means you pay for each item included in the order.

Packaging costs

Your product packaging represents your brand image. Some 3PLs will charge for packaging materials as a separate order item, while other 3PLs include them in their fulfillment services.

Kitting costs

Some 3PLs provide kits and assembly services. Kitting refers to any unique way of assembling, arranging, or packaging items before shipping. Common applications for kitting include assembling multiple SKUs during packaging or preparing inventory in a specific way. Because this service is designed for each customer, the supporting fees may vary.

Shipping costs

The last section is e-commerce shipping costs: the amount charged by 3PL to transport orders from its fulfillment center to the customer’s doorstep. Many 3PLs will work with major transportation companies to enable them to provide volume discounts to customers. Transportation costs take into account many factors, including transportation efficiency, transportation area, and product size and weight.

Challenges in Dropshipping Business

Dropshipping business is undoubtedly one of the most outstanding things brought about by the Internet and our new lifestyle. This new business model allows start-ups to run e-commerce with little resources. Here, we will discuss the seven most common challenges related to dropshipping business and how to overcome them:

Find a reliable supplier

The first major challenge most companies face in dropshipping is to find reliable suppliers. There are many manufacturers and sourcing agencies that can be your suppliers, but you need to maintain a detailed relationship with them on the same page.

You can easily find suppliers in almost any niche market of your choice. There are many resources to help you search. Make sure that the supplier you choose can meet your needs. Consider factors such as supplier fees, minimum orders, professional industry knowledge, and scalability.

Dropshipping-problems丨ChinaBrands丨ChinaDivision
Dropshipping-problems丨ChinaBrands丨ChinaDivision

out of stock

When you start your dropshipping business, you will discover that the warehouse may be out of stock. It is one of the most common problems, and it is more common in certain product hot seasons. If you work with a very large manufacturer and order fulfilment company, you may not experience a shortage. If a product is out of stock, you must notify the customer as soon as possible, even if you find another supplier. It is recommended to cooperate with multiple suppliers.

Delay in order processing

When customers buy items from your website, they expect their order to be processed as quickly as possible. Most customers don’t understand that, in most cases, the process of processing orders is not completely under your control.

In some cases, orders that have already been placed with manufacturers will be delayed. When customers wait for the tracking code, this delay may create some tension with them. Don’t let it linger. If you haven’t received any news from the supplier within 24 hours after placing the order, please contact them to solve the problem. When these situations occur, you will at least know why the order has not been processed and how long you have to wait. Pass information to customers to appease them.

Ship to the wrong address

As embarrassing as it sounds, some orders have been shipped to the wrong or non-existent address. This is another major challenge you may face as an e-commerce entrepreneur. The best way to solve this problem is to carefully check each order address sent to the supplier.

Product return

This is something you can’t escape in e-commerce. In most cases, this is never your fault, because third parties are always involved in direct shipping. You cannot make all the rules here. Suppliers handle returns in different ways, so you must find a way to communicate clearly with customers. Your return policy is clearly stated on your website. Make all necessary efforts to make your order fulfilment proceed smoothly.