Customers' demands on e-commerce fulfillment have been increasing for years. Shipping times within 24 hours, smoothly functioning returns management and delivery reliability - young brands have to consider all this and more. In a guest article, Michael Held-Hernandez of Warehousing 1 reveals the five most important questions e-commerce startups should ask themselves.

Especially in the beginning, many e-commerce startups handle fulfillment themselves. If only a few dozen shipments are sent per month, simply packing the packages themselves is a good solution. It saves money and at the same time, fresh founders learn a thing or two about the demands of fulfillment. But with growing success, the number of shipments also increases and at some point the packages pile up. By then, at the latest, a different solution is needed. Expenses for warehouses and e-commerce fulfillment cost retailers an average of 8.3 percent of their sales(Händlerbund, 2018). The decision about the right setup is therefore a strategic one that you should not postpone for too long.

We've collected five questions that fast-growing brands should be asking about their e-commerce fulfillment now:

1. when do I reach my capacity limit?

It makes sense to handle e-commerce fulfillment yourself in the beginning. But your goal is, of course, that a few orders will soon become many. Therefore, you should think early about what capacities you can provide for e-commerce fulfillment. Is an office space in your office enough to function as a small logistics warehouse or should you think bigger? The options are here either operate a fulfillment site itself or outsource to an external service provider. to turn to. On Black Friday and before Christmas, when your products are in high demand, you should also make sure your fulfillment setup has enough headroom to handle capacity spikes.


Infographic: Brands can organize their fulfillment with their own warehouse or an external service provider

2. How do I handle returns?

Returns are a nuisance for young e-commerce startups - and also for more established retailers. On the one hand, they mean additional effort, and on the other, they cost money. Bitkom recently found in a survey that every seventh online order is returned(Bitkom, 2021). Nevertheless, retailers should make the returns process as simple as possible for customers. After all, customer satisfaction and loyalty are significantly influenced by the returns experience(ParcelLabs, 2021). You should make the return policy easy for your customers to understand. Automation will also save you time and improve your inventory management by allowing the system to directly address the status of returns.

3. is it possible to be even more sustainable?

Sustainability has never been so important. Of course, when many think of sustainability in e-commerce, they rightly think of sustainable packaging and labels. But there is also a lot of potential in e-commerce fulfillment for startups to improve a brand's environmental footprint. More efficient processes, shorter delivery routes through decentralized storage or the operation of a CO2-neutral logistics facility are levers that lead to a better carbon footprint in fulfillment for smaller online stores.

4. how much time do i put into my fulfillment?

Founders of an e-commerce startup have to dance at many weddings. Each area of the business requires full attention. Fulfillment is a complicated area for smaller companies, as it requires expertise and eats up a corresponding amount of time. This is where an external service provider can help free your back. Instead of worrying about all the different aspects of fulfillment, you can focus on your core business.

Infographic: Advantages and disadvantages of an external fulfillment service provider

 

5. how much can my fulfillment cost?

This is perhaps the most difficult question in this blog article. E-commerce fulfillment solutions are as varied as the products they ship. Depending on the additional services, prices vary widely. E-commerce startups that handle fulfillment themselves face high investment costs and large capital commitments. These do not apply to external service providers. In general, retailers save 5 to 15 percent by outsourcing their fulfillment - there are even practical fulfillment cost calculators that you can use to work out what your own outsourced fulfillment would cost.

E-commerce fulfillment is an important factor for customer satisfaction in online retailing. That's why it makes sense to regularly scrutinize your own fulfillment setup and put it to the test. In this way, you can ensure that you stand out from the competition not only with your product and your individual packaging, but also with your perfectly functioning fulfillment.

 

 

About the author

Michael Held-Hernandez is PR & Communications Lead at Warehousing1, a Berlin-based logistics startup that is one of Europe's largest warehousing and fulfillment networks with over 850 locations. Warehousing1 helps startups and scaleups find suitable warehouse logistics solutions at any location, manage them digitally and optimize processes.