You’re ready to start an eCommerce business, but do you understand fulfillment? Are you prepared for eCommerce fulfillment or do you need a guide to help?
Ecommerce fulfillment doesn’t have to be difficult. You don’t need to become a logistics expert to make things work for you. Let’s look at a quick guide to eCommerce fulfillment.
What’s involved in Ecommerce Fulfillment?
There are many things included in eCommerce fulfillment. You want to make sure you understand the different elements before you choose the right fulfillment strategy for you. The things involved include:
- Inventory Management
- Storage and Warehousing
- Picking and Packing
- Shipping & Receiving
You will likely choose from one of three fulfillment strategies:
- In-house fulfillment
- Third-Party Logistics or 3PL
All three offer pros and cons. Choosing the right strategy will depend on your needs and your eCommerce business.
Pros and Cons of Different Ecommerce Fulfillment Strategies
With in-house fulfillment, you gain the advantage of lower startup costs, custom packaging, and ease of implementation. This is also the fulfillment strategy with the best control over the entire process.
However, this strategy also makes it very difficult to scale and it’s very time-consuming. You will be limited by the storage space you have, the labor you have, and you won’t get any shipping discounts, most likely.
When you choose drop shipping, you get lower startup costs and a lower cost of inventory. You also gain lower fulfillment costs, an easier way to update your inventory and you only have to pay for what you actually sell.
However, dropshipping doesn’t offer you bulk pricing and comes with the lowest profit margins. You will also have shorter lead times and no control over shipping and handling. Dropshipping will also make you reliant on the supplier and their customer service.
For many eCommerce businesses, third-party logistics offers a great option. It comes with lower operating costs and greater buying power. You can optimize shipping, handling, and returns. This is an easy option to scale and you will also gain industry expertise for your fulfillment.
The only downside to third-party logistics is there are some 3PLs that are not so great. You will also have to give up control over the shipping, returns, and customer service. You will rely on your 3PL, but if they are good, you can be in very good shape with this option.
If you plan to start an eCommerce business and sell supplements or nutrition products, you can go a different route. You can choose a private label manufacturer or a contract manufacturing option to handle everything for you. From product creation to product fulfillment, the right company will take your idea and create a product that will easily go to market.
Before you choose the eCommerce fulfillment option that’s best for you, make sure you understand the advantages and the disadvantages. The right option may not be the same for everybody. Do your research and make sure you set your eCommerce business up for success.