An integral and imperative part of an online business process, product fulfillment helps a product to reach into the hands of an end-customer. A fundamental process involved in product fulfillment includes steps of receiving goods from the manufacturer and then processing and delivering them to a customer.
The answer to the question of what is a product fulfillment lies with its process. The process starts from a buyer’s addition of the product to an eCommerce site’s shopping cart and ends with him receiving the product ordered. An additional step of product fulfillment is returning back the product to manufacture if it is found to be damaged and faulty by a receiving customer.
During an entire cycle of product fulfillment, a package goes through the steps of:
1. Receiving inventory shipments
2. Inventory storage at warehouse
3. Order processing between marketplace and inventories.
4. Shipping and delivery to an end-customer
5. Processing of returns
What is product fulfillment ?
Product fulfillment is an expensive and complex process where an ordered package travels across different hands in various geographies before reaching its final destination. A brand or product manufacturer employs different methods to ensure successful product fulfillment. He can either facilitate fulfillment either through inhouse arrangement or can hire a third-party logistics company or 3PL. On the basis of facilitation, types of product fulfillment have been divided into four primary categories.
Types of Product Fulfillment
In-House Order Fulfillment: Under this process manufacture, supplier or a brand station inhouse department or employees to carry out the order fulfillment process. The employees manage the entire processes onsite including steps like storing and shipping the products at a location under the company’s jurisdiction. The process is primarily utilized by the companies that wish to have a complete control over their supply chain from end-to-end. The startups with certain cost constraints prefer in-house fulfillment instead of an outsourcing agency.
Outsourced Order Fulfillment: This type of outsourcing services are employed by a company when it has not enough capital to invest in warehouse facilities. They, therefore, hire a third-party logistics (3PL) or order fulfillment companies. A 3PL company carries out all the tasks including shipping, storing and order/refund on behalf of its client company. The 3PL’s company employees, hence, look after the entire process including from receiving inventory from manufacturers to delivering it to the end customer. The 3PL party offers its own product fulfillment warehouse facility to manage inventory of a client’s package. They mostly work as a product fulfillment house.
Dropshipping: A process similar to outsourcing fulfillment services to a third party vendor with the exception of having an inventory to manage. In the process, a retailer doesn’t keep products into his stock that he sells. He instead buys it from a third party supplier. The supplier could be a manufacturer of the product itself or a manufacturer’s supplier. The manufacturer or supplier ships the product straight to customers for what he receives information from a retailer. It is mostly used for eCommerce product fulfillment. A retailer is only required to pay for the bill for product fulfillment. Dropshipping is mostly used by e-commerce and startup retailers.
Hybrid Fulfillment: The hybrid fulfillment is the shipping option used by a company that is not concentrated upon a single fulfillment facility. Instead, it is a mashup of the preferred logistics option selected by a seller. Under the process of hybrid fulfillment, for example, a company can choose in house shipping for custom items and dropshipping services for non-custom items. Or a company can prefer a shipping option where drop shipping of items can be used for the product and services that are too expensive in price. Hybrid fulfillment on the other side is a better shipping option for a company on the expansion spree and looking for rapid expansion. They just do not cater to national product fulfillment but at the same time are imperative to worldwide product fulfillment.
How important is fulfillment for a company’s business?
The consumer behavior that is more inclined on the behalf of customers towards two-day or even the next-day shipping has prompted sellers towards better fulfillment services. Therefore, every seller looks for fulfillment services capable of delivering on the very next day. But at the same time, it is imperative for the fulfillment services to be fast enough that shipments are not being delayed and reach the destinations on time.
It has emerged as a leading statistic after a thorough search that consumers are least willing to purchase from a seller that offers delayed services. A better fulfillment strategy merely is not good enough only for better delivery services by a seller but at the same it presents the following advantages to a business.
The advantages of product fulfillment for companies as follow:-
1. It lowers the cost of shipping.
2. Minimizes the operational costs of businesses.
3. Make it possible for a business to expand.
4. Develops customers globally.
5. Offers improved customer services.
6. Help a business to concentrate and focus on marketing and selling as well.
Hindrances to Properly Streamlined Product Fulfillment Processes
The key to a successful order fulfillment process is winning over the complex challenges posed by demand, inventory management, and logistics planning during a shipment delivery. The most common problems that prevent successful implementation of order fulfillment include the following pointers.
Inventory Management: The most prominent problem faced by a seller compiling with order fulfillment is being out of the stock situation. It is the most prominent reason that leads a consumer to run away from a marketplace. The sellers having the capacity to maintain the maximum inventory are more successful in delivering their shipment in time. They can even achieve this goal even through product fulfillment software.
Demand Assessment: The adverse situation of scarcity of goods at the stocks is their overabundance. The manufacturer should also have knowledge about the demand for its products in the market. This avoids the situation of overstocking. The demand assessment by a seller can be estimated through the marketing tools inclusive of advertising and promotion.
Refined Logistics Strategy: However, merely, improvising the sales will not let you enjoy the fruits of success unless you will have a properly streamlined shipping process. A business, therefore, is required to set a process to deliver products to a seller in time and good conditions.
Supply Chain Execution: There are many situations when a business faces a situation of running out of stocks despite the best planning and strategies. This mostly occurs in a situation of a sudden spike in the demand. The inventories should be fulfilled as soon as possible.
Solutions to Streamline the Fulfillment Challenges
As it is evident from the discussion till now that the orderly fulfillment services are key for a timely delivery of a shipment. The objective of a package reaching a destination in time can be achieved by following the steps mentioned below.
a.) Selection of the Most Favorable Fulfillment Model
A seller, first of all, should focus upon the fulfillment solution fitting most appropriately to a seller’s business needs and requirements. The fulfillment services selected by you should accommodate your business model and be flexible enough to handle customer location and sales channels. Product fulfillment services should be smart enough to adjust with your business model to a larger extent.
b.) Backed with Data to Develop Business Strategies
A product fulfillment system is incomplete unless it is not backed with an appropriate data strategy. The fulfillment system should be robust enough to process and act accordingly with the data in real-time. It should be capable enough to offer you proper inventory visibility and must be strong enough to make accurate demand predictions.
c.) Should Communicate Clearly and Effectively
The opted solution should be powerful enough to offer a clear visibility of data. With the help of supply chain visibility, the clear business and marketing goals can be estimated and set. The business ROI can be better estimated and launched.
Advantages of Product Fulfillment Services
Finally, after the appropriate order fulfillment solution selection and its implementation, it is the time to judge the benefit offered by it to a business. A business reaps the following advantages post fulfillment implementation.
Huge Saving on Warehouse Costs: eCommerce integration of a holistic product fulfillment services enable a business to save a huge amount of money otherwise wasted upon storage cost. It is something that most warehouses, mostly, charge exorbitantly from sellers in return of services. With cloud-based product fulfillment services, a seller can save handsomely on the price of software, equipment and others. A business can run operations from the comfort of his home.
Huge Saving on Shipping Costs: No doubt there are many components that are included in the selling of goods and services to a client. The shipping includes the variables like package type, shipping destination as well as business volumes too. A professional fulfillment product service will guide you through the entire shipping process thus saving a valuable chunk of money for a seller.
Shorten Time Cycles: There is no better way to save money than to save time. It is rightly said that time is money. A proper streamlined fulfillment process saves your time otherwise wasted upon mundane tasks like correcting data. Now, you are more focused and can concentrate over other important tasks like product development, sales & marketing and business strategy.
Enhance Efficiency: There is nothing better for a business than improved efficiency. A customized and flexible product fulfillment solution helps a business to improve business efficiency towards the achievement of desired business goals. The promotional product fulfillment is another way where supply chain companies do an advert for their products.
It is clear that manifestation of streamlined business processes is not concentrated towards a single area, however, it has a very far-reaching impact over different aspects of business development and expansion. Therefore, the selection of product fulfillment companies should be the most appropriate and suitable one.
If you have a concern regarding product fulfillment then call us: +1 423 896 1025