There is an age-old mantra: "If you want something done right, you have to do it yourself."
When it comes to eCommerce self-fulfillment, though, many merchants struggle with this notion. The question they have is simple to ask, yet a difficult one to answer: Can I do it myself?
The inherent challenges of any eCommerce fulfillment strategy make how to best manage it a variable proposition. One size absolutely does not fit all and what works well for one brand might be disastrous for another.
Fortunately, when it comes to the options available to merchants, they abound. Companies may self-fulfill, outsource eCommerce order fulfillment completely, or create a hybrid situation uniquely suited to their wants and needs.
We'll discuss here the distinct advantages and disadvantages of each model. We'll also explain the ways SkuNexus provides a management software solution to complement whichever route you take. Our goal is to provide you the necessary insights to make a decision.
The eCommerce retail startup scenario often goes something like this. In a nutshell, a founder has an idea, develops a business plan, and thinks of a company name and branding. He or she then builds a website, establishes sales channels, and bravely enters the market. With no orders to process, little thought is given to fulfillment.
Inventory may very well be stored in a spare bedroom. The kitchen counter will double as a packing station. Customer orders trickle in and exhilaration ensues.
Parcels are meticulously prepared. Shipping management entails someone driving them down to the post office.
If even a modest level of success is achieved, this version of self-fulfillment quickly becomes unsustainable.
For an established retailer, however, entering eCommerce is vastly different. It’s both a total shakeup as well as the necessary next move into the new frontier. Time-tested ways of fulfillment operations must either be altered, augmented, or dispensed with altogether.
While experienced merchants may need to go back to the proverbial drawing board, they are not at a steep disadvantage. This group can be extremely well-suited for self-fulfillment. They need only to combine their established brands and plentiful resources with a powerful order management system (OMS).
Let’s examine the pros and cons of eCommerce self-fulfillment. Then, let's consider elements that make established business entities prime candidates to do it themselves.
Taking into account these factors, it is easy to see why self-fulfillment becomes difficult for a bootstrapped startup. However, the multiple resources they possess make it a perfectly viable endeavor for an established retailer.
The key component that ties all these attributes together is management software/automation and the control and accuracy that it provides. Many long-standing retail brands have attempted eCommerce self-fulfillment. They have run into problems due to an abundance of manual processes and/or outdated/misaligned software.
Some of the features eCommerce fulfillment software can offer include:
This does not mean that less-established eCommerce retailers should not consider or attempt self-fulfillment. SkuNexus, for example, has design flexibility which allows it to expand capacity and scale along with your business. SkuNexus is architected to seamlessly fit into your existing operations, whether you're adding one simple product or an entire complex warehouse.
Some eCommerce merchants choose to act as middlemen and carry zero inventory in some or all products. For these companies, dropshipping is the order fulfillment method.
When a dropshipper receives an order, it purchases the item(s) from an outside vendor. That vendor is then responsible for fulfillment in the dropshipper’s name. A critical element to the model is this: items are being sold out of someone else’s inventory.
This model has both real advantages and certain drawbacks.
On the upside:
On the downside:
As in other eCommerce fulfillment models, optimized software management can give significant help to a merchant engaged in dropshipping. The SkuNexus solution includes a Vendor Management System (VMS) which performs a range of functions, including:
In the relatively short history of eCommerce, the companies collectively known as 3PLs have truly come of age. The 3PL Logistics industry was largely born out of U.S. government deregulation of the commercial trucking industry in the 1980s. Since then, it has grown significantly, fueled in no small part by the online shopping revolution.
3PL inventory management now plays a massive role in eCommerce fulfillment and is useful for a range of retailers. 3PL logistics expertise allows clients to confidently outsource fulfillment and focus on the rest of the responsibilities involved with running their business.
Other advantages to using a 3PL warehouse include:
Such convenience comes at a price, of course. 3PL warehouses can provide support in several areas, but they are not without disadvantages.
The astonishing growth of the 3PL industry speaks to the advantages outweighing the disadvantages for many companies. However, not every function is outsourced to these service providers. A merchant’s order management system will still play a large role in the 3PL relationship. The order management software will continue to route orders, receive tracking information, and/or manage vendors/generate POs for inventory restocks.
FBA provides the same services as a standard 3PL, but with some added wrinkles that give it a considerable edge.
Considering Amazon’s eCommerce dominance, the usefulness of these marketing elements to drive a brand’s revenues cannot be overstated. However, multiple caveats must also be considered.
Despite these concerns, data shows that nearly 70% of Amazon’s listing merchants use FBA to handle their order fulfillment.
Regardless of fulfillment type, the right order fulfillment software system is critical to optimizing operations. It can also maximize accuracy and facilitate clear communication across an ever-growing number of channels.
SkuNexus is designed for maximum flexibility and customization, and to eliminate manual fulfillment/provide automation at every stage of the process. This makes it a potent weapon in the self-fulfillment arsenal. Brands who desire inventory management software that can integrate with their highly-specialized systems and grow alongside them should seriously consider SkuNexus.
For merchants who wish to dropship, use 3PLs or FBA, in any combination, SkuNexus can also be extremely valuable. Its order management, inventory management and vendor management systems will help optimize all remaining in-house warehouse fulfillment-functions. It will also provide vendor management solutions for your wide range of business partners.
To learn more about SkuNexus and how it can help you meet your fulfillment goals, please subscribe to our blog or book a demo today!
