What is Fulfilment and Why Does it Kill So Many Shops?
Fulfilment is big news in the retail industry right now, and its prevalence is growing greater by the day. But what is it, and how is it changing the face of retail?
Fulfilment, quite simply, is the process of fulfilling a retailer’s online orders. It’s a task that some businesses are able to manage themselves, however there’s no denying the fact that it can be arduous. For many companies, managing fulfilment in-house can be a step too far.
Often, companies will seek help with their fulfilment requirements from an external partner. This is what’s known as third-party fulfilment.
But what is third-party fulfilment?
Third-party fulfilment is when an external company takes over the collection, packaging and shipping of a retailer’s products. It’s a term you’ll often find associated with e-commerce businesses, and it offers an end-to-end solution for a vast range of retail companies.
The success of third-party fulfilment as a concept is unsurprising. It offers entrepreneurs, small startups and growing businesses the chance to really boost their capabilities, paving the way for growth, without any of the hassle that’s usually associated with expanding a retail business.
With third-party fulfilment, companies no longer have to worry about how to get their goods to their customers. It’s all done for them. Collection, packing, shipping and returns are taken care of, leaving businesses free to concentrate on the issues that really matter to them.
Some fulfilment companies offer warehouse space in addition to shipping services. This option isn’t without its problems, however. Using third-party fulfilment companies as a storage solution inevitably means that companies lose direct control over their stock. This can be problematic in cases such as boutique stores that need a physical presence to boost their brand recognition.
Third-party fulfilment is particularly useful when a business starts to grow, orders take off and it’s no longer possible to manage everything in-house. For small businesses, third-party fulfilment can be a lifeline.
There are several different types of third-party fulfilment, which have been created to address a range of business needs. Let’s take a look at some of the most common ones in more detail.
Collect, Pack and Ship
A vast number of businesses lack the time and manpower required to manage fulfilment in-house. If this is the case, they often turn to third-party fulfilment companies in order to ensure that customers receive their goods in time, rather than face turning down sales.
In the ‘collect, pack and ship’ fulfilment model, a third-party company will collect goods, package them and prepare them for shipping. The same fulfilment company will then take responsibility for shipping the item to the customer, keeping the business owner updated every step of the way.
This model is widely used in e-commerce businesses. It offers small businesses and entrepreneurs the chance to take a real step up the ladder, enabling them to grow rapidly, without the need for huge capital investment. Entrepreneurs can then spend more time working on the business itself, as they no longer have to worry about the logistics of managing customers’ orders, or expanding globally.
Small boutiques also find this model particularly beneficial, as it enables such businesses to avoid having to manage two locations: a shopfront and a location for stock. With this method of fulfilment, businesses can manage online sales and physical sales from their store, organising collections and serving customers simultaneously. Small businesses also have far greater control over their stock when running fulfilment in this way.
If fulfilment is becoming a hassle and you’re looking for a way to manage your customers orders more efficiently, we can help. We can manage the whole process for you, from collection to packing and shipping. You won’t have to worry about a thing. Get in touch to learn more about third-party fulfilment from Weengs.
Fulfilment and Warehousing
Many business owners dream of stocking a huge collection of products in their online stores, but they lack the storage space required to do so. If a business doesn’t have the opportunity to rent a warehouse and staff it appropriately, third-party fulfilment is a great option.
This type of fulfilment enables business owners to keep stock in a centralised warehouse, and send orders to that warehouse to be shipped. It can be used ad hoc during particularly busy seasons, or throughout the year as the main method of storing products.
This is a particularly convenient option for small business owners who lack the budget required for warehouse storage, as well as brands who have few physical stores. Many companies selling via online marketplaces such as Amazon or Etsy opt for fulfilment and warehousing solutions. However, this style of fulfilment isn’t without its negatives. One of the main drawbacks here is the fact that omnichannel retailers require stock in two locations: within a store and in a warehouse. In addition, retailers managing fulfilment in this way inevitably lose a great deal of control over their stock. For this reason, many boutique owners tend to opt for the ‘collect, pack and ship’ model instead.
If your business is rapidly expanding and you need to be able to ship products all over the world, global fulfilment is ideal.
Many global fulfilment companies have the capacity to ship products anywhere you wish, either via their own fulfilment centres or through use of existing postal services. The fulfilment provider will also take care of all the necessary paperwork, keep customers updated on the progress of their orders, and managing returns if required.
Looking after global shipping yourself can be a troublesome, time-consuming task, but with global fulfilment on your side, it gets a whole lot easier.
What does all this mean for shops?
When you look at what third-party fulfilment can do, it’s easy to see why online companies are enjoying such huge success as a result of these systems. However, the inevitable effect of this expansion in online retail companies is the fact that high street shops are seeing far fewer customers through their doors, and fewer sales as a result.
The fact is, almost everything you can think of can now be purchased online. With fulfilment giants on the scene, it’s difficult for individual shops to compete. Online fulfilment is, therefore, one of the top causes of high street shops closing their doors.
For some shops, this emphasis on online shopping has meant a change to the way they do business, rather than a complete shutdown. For instance, some high street chains have opted to focus more on their online offering, ensuring that they can provide the online service that today’s consumers are crying out for.
In a report by the BBC, Paul Martin, head of UK retail at KPMG, said: “With the overall market not growing, it is all about market share, and 20% of that market is held by online players. If you don’t have the right online offering, again, you will struggle.”
It’s not just third-party fulfilment itself that’s bad news for shops, either. Many of the biggest third-party fulfilment companies are also pioneering incredible new technology, which is rapidly expanding their potential, enabling them to get more products to more customers, far more quickly than ever before.
Take Amazon, for example. Recently we’ve heard all sorts of incredible things from this titan of e-commerce, from robots moving shelves around their warehouses, to deliveries being completed by drones.
There have even been rumours of drones scanning homes in order to gather data on products the homeowners might require, which could lead to the most targeted marketing campaigns we’ve ever seen before.
Voice-activated tech placed in consumer’s homes is another one to look out for – these gadgets can suggest things to buy, and they’re smart too. They can tell you what to wear, what to watch on TV, and which products you’re running low on.
It all sounds very exciting, if a little spooky. Now, more than ever, shop owners are looking over their shoulders, waiting for the next innovation from the world of e-commerce fulfilment. Those that utilise this new technology to provide the best possible experience for their customers will flourish as a result. Those that don’t, however, risk falling victim to the power of fulfilment.
If you’re thinking about utilising fulfilment systems for your own business, take a look at our range of e-commerce options. Weengs provides real-time integration with your store. That means we can offer seamless, automated online order fulfilment at the touch of a button. Our system is easily integrated with a huge range of e-commerce platforms, and set up couldn’t be simpler. To find out more, get in touch with our team today. We can’t wait to show you what we can do.