Outsourcing your e-commerce order - fulfillment system
By Elise Chow
Contents
Some connections are missing
You'd better focus on satisfying customers
Why e-commerce companies should outsource
Choosing a partner
A winning partnership
Ask any three people to define e-commerce, and you'll probably end up with three disparate answers.
The problem is that companies are using e-commerce to define varying degrees of involvement in e-business. Some companies think they're conducting e-commerce because they have e-mail. Others believe that the mere presence of a Web site constitutes an e-commerce approach.
The fact is that companies truly engaged in e-commerce are using sophisticated Internet technologies to unify all their business procedures - internal and external.
E-commerce must encompass a customer-centric approach when implementing a back-end order fulfillment system. It's not enough to be an order-taker: True e-merchants must provide pre- and postsale customer support integrated with automated order-fulfillment and returns-management.
Some connections are missing
According to Forrester Research, 85 percent of companies with e-commerce sites have no automated, real-time connection with any business applications. What's more, a study from Jupiter Communications shows that 42 of the Web sites they surveyed never responded to customer inquiries, took more than five days to reply or didn't offer e-mail responses to reported problems. It's logical to surmise that the level of online customer service isn't keeping pace with the growth of e-business and Internet use. What that means is that the key to success in e-business isn't a technology-centric approach, but a customer-centric one.
Businesses must resolve these issues:
- Are customers being recognized when they show up on the virtual doorstep?
- Is the quality of service the same for the Web customer as for the pedestrian customer?
With about 64 million adults using the Internet, e-commerce spending is expected to top $3 trillion by 2003. All major market-research firms agree that the demand for order-fulfillment solutions will reshape the e-commerce landscape as so-called e-tailers strive to provide a timely and accurate fulfillment capability that is integrated with quality presale and postsale customer service.
Back to top
You'd better focus on satisfying customers
Because the Internet is expanding at a tremendous rate and e-commerce businesses are experiencing extraordinary increases in online shopping, it's critical to ensure consumers have a satisfying online experience. Ramifications of poor customer service can be detrimental in a global retail marketplace where competition is just the click of a mouse away.
E-commerce must encompass a customer-centric approach when implementing a back-end order fulfillment system.
Indeed, many Internet enterprises have looked to outsourcing fulfillment and customer-service operations as a strategic imperative to help drive business objectives.
A successful working relationship with a third party allows businesses to focus on core competencies, such as marketing services, optimizing productivity, increasing revenue and controlling costs.
Back to top
Why e-commerce companies should outsource
According to a new report from Forrester Research, Mastering Commerce Logistics, demand for order-fulfillment solutions will evolve as logistics suppliers turn to serving the small-package, individual-oriented needs of commerce-site operators. As online sales move past the experimental phase, several factors will combine to put new pressures on order-fulfillment systems. These include an expanded selection of products sold online; the need to move a large volume of small parcels; and rising customer expectations.
If you're doing, or considering, e-commerce, ask yourself these questions:
Forrester also advises that most midsized e-merchants (average of 1,000 orders per day) should outsource fulfillment to gain economies of scale. Outsourcers, for instance, can share warehouse space and resources among online merchants, allowing orders to be fulfilled for less than 10 percent of revenue. Sophisticated order-fulfillment companies such as Fulfillment Plus, which is based in Waltham, Massachusetts, can integrate a merchant's inventory and planning systems, allowing the merchant to retain control of the service experience.
From start-up companies to established businesses venturing onto the Web, e-merchants are realizing that outsourcing online fulfillment requirements is critical to staying competitive.
Back to top
Choosing a partner
Retailers find that it relatively easy to distribute products in bulk through a wholesale, retailer or distribution channel, compared to e-commerce distribution. But , difficulties can emerge when a company has many individual products that require consumer-to-home distribution, inventory control and customer support.
Many Internet enterprises have looked to outsourcing fulfillment and customer-service operations as a strategic imperative to help drive business objectives. A successful working relationship with a third party allows businesses to focus on core competencies, such as marketing services, optimizing productivity, increasing revenue and controlling costs.
E-commerce merchants considering outsourcing order-fulfillment systems should consider the following:
- A company that is dedicated to protecting the merchant's brand name. Launching and sustaining successful e-commerce initiatives by establishing tightly integrated, exceptional fulfillment and customer-service capabilities is crucial. Equally important is the process of enhancing the customer's buying experience and ensuring the brand is properly represented.
- An outsource partner that understands e-commerce market opportunities and provides a complete back-end solution. Select a vendor that provides a full spectrum of management, order-processing, fulfillment, distribution and information-system services, and make sure the vendor offers reliable back-end technology.
- A management team with broad experience. The people involved should have experience in inventory management, logistics, information systems and customer service.
- The ability to effectively and efficiently move goods. Make sure the third party can anticipate needs of current and future consumers, and can fulfill those needs.
Since many small and middle-market e-merchants lack sufficient volume to build a cost-effective infrastructure, they can team with an outsource partner who offers a cost-efficient, accurate and timely fulfillment process coupled with quality postsale customer service. This helps to ensure that cybershoppers' expectations of convenience, on-time delivery, status updates, personalization and exceptional service will be met or exceeded.
Back to top
A winning partnership
Boston-based New Basics is an example of an e-merchant that has experienced great success by outsourcing its fulfillment system. As an innovator of personal beauty-care products, New Basics harbored plans to distribute products through retail channels and via the Web. The company needed a partner who could support wholesale shipments to retail stores, as well as single orders directly to customers. New Basics also needed to provide a single point of contact for customer questions and concerns. As a start-up company focused on marketing and manufacturing, New Basics didn't want to develop in-house fulfillment and customer-service operations.
Since many small and middle-market e-merchants lack sufficient volume to build a cost-effective infrastructure, they can team with an outsource partner who offers a cost-efficient, accurate and timely fulfillment process coupled with quality postsale customer service.
New Basics partnered with a leading fulfillment and customer-service provider to outsource its back-end processes. The companies worked together to develop a plan that would integrate and manage a customized fulfillment and customer-support program. The program included integrating the e-commerce sales engine with the vendor, overseeing the training of customer-service representatives on the features and benefits of New Basics new product lines, and having the vendor provide phone and e-mail sales and postsales support.
"After analyzing the process we realized we saved an enormous amount of time and money by eliminating our need to develop fulfillment and customer service functions in-house," Dina Chu, president and chief executive officer of New Basics, said. "The most important part for us was that the order fulfillment vendor was able to maintain our brand image by providing exceptional customer service, allowing us to focus on marketing and developing next-generation products."
An outsourcing partner should have a management team with broad experience. The people involved should have experience in inventory management, logistics, information systems and customer service.
Such comprehensive fulfillment solutions are dramatically improving the e-commerce universe. As in the case of New Basics, customer-centric e-commerce is within reach of small and midsized companies.
As businesses learn more about the benefits of outsourcing order fulfillment, a growing number of e-commerce retailers will discover that it can be the most efficient and effective way to satisfy, and retain, customers.
Before companies reach their goal of becoming leading online retailers, they must first address their back-end capabilities. The ones that don't embrace this all-encompassing e-business philosophy will likely be e-liminated from the marketplace.
Elise Chow is President and Founder of Waltham, Massachusetts, based Fulfillment PLUS Inc. The company is a back-end infrastructure-service company that provides a fully integrated suite of customer services, fulfillment and logistics offerings to companies that do business on the Internet. You can reach Ms. Chow by emailing her at echow@fulfillmentplus.com or calling 877-337-7587.
Edited by Michael Lear-Olimpi, Managing Editor, Logistics Online. Reach him at mlear-olimpi@verticalnet.com.
Source: Fulfillment PLUS Inc.
Back to top