There’s no one-size-fits-all solution when it comes to fulfillment and logistics operations, especially for omnichannel brands. Ensuring that your omnichannel fulfillment strategy makes sense for your current and growing business is critical, but how do you know what that strategy should involve? Should you keep operations in-house, outsource completely, or take a hybrid approach? The answers to these questions are unique to your company and the goods you sell.
To get a clearer idea of what goes into determining the right logistics strategy for omnichannel marketers, we spoke with Jon Bonny, VP of Sales here at Motivational Fulfillment & Logistics Services. Here are some of the top considerations Jon recommends.
Customers’ delivery expectations have evolved in recent years, something Jon referred to as the “Amazon effect.” Online shoppers expect fast delivery times and low-cost or free shipping—especially during the pandemic, when many turned to online shopping over in-person. While customers still have high expectations for delivery time and cost, this has shifted some since the pandemic’s end, with many valuing cost efficiencies over speed.
Balancing these two elements is something all brands must do, and the “right” balance may be industry or company specific. For companies with a lower number of SKUs but high volume (such as medical devices), it may make sense to have multiple warehouses situated around the country for fast delivery. On the other hand, companies with a high number of SKUs with lower individual volumes (apparel, crafts, etc.) may find this method to be cost-prohibitive. Consider your goods’ average cost and your delivery fees as a percentage of that.
Success starts with setting realistic expectations, both internally and externally.
In the fulfillment world, there are many types of locations, including where your goods are manufactured, where your goods are stored, and where you’re shipping to. Each of these impacts your fulfillment strategy.
Where your goods are manufactured determines what their likely route to the U.S. will be. In turn, that impacts the ports you will deliver to—and the cost to do so. For instance, if your goods are manufactured in Asia, West Coast ports will be the most cost and time efficient option; if your goods are manufactured in Europe, East Coast ports may make more sense.
The port(s) your goods are delivered to determines which warehouse locations are viable, what other costs you may incur (such as drayage or pallet delivery), and how much time it will take to get them there.
Finally, consider where your customers and target market are located. What are your delivery time goals, and how does this balance with cost for you and your customers?
“If you’ve got an omnichannel brand, you want to look at the percentage of dollars going into retail versus direct to consumer,” Bonny says. Retailers will buy the goods in the United States “FOB Warehouse,” meaning they’ll pay for the freight from the warehouse to their network. In that case, choosing the most direct port and warehouse location makes the most sense from both a cost and a time perspective.
Your product’s specific characteristics will inform your fulfillment strategy.
“It’s all about the cubic movements, and the size of the goods is very important,” Bonny says. Multiple nodes might also be a good idea in that case, since parcel carriers are generally not gentle with packages. Packaging is also extremely important, and Jon recommends following the parcel carriers’ specifications “plus some” to ensure that it travels safely to its final destination.
Consider also any special handling or storage requirements. This will impact your fulfillment needs, options, and costs.
Some products benefit from additional services. For example, many consumer electronics brands opt to have their fulfillment partner carry out tasks such as product rework and refurbishment. Some brands employ their fulfillment partner to handle kitting and packaging for special promotional bundles or curated product offerings. For brands selling into retailers, using a 3PL with the knowledge of their vendor compliance guides helps across the board, and especially if the 3PL can manage the added services of display design and assembly, and ticketing and labeling.
What are your current and projected monthly order volumes? This will determine the scale of your fulfillment operations and the need for adaptability as your business grows.
There’s no one-size-fits-all formula for getting the timing right on when to outsource fulfillment. Variables like projected growth rate, space requirements, special handling/storage needs, and your company’s capacity to manage fulfillment all impact the decision to outsource or take a hybrid approach.
When fulfillment is becoming too complex or difficult for you to effectively manage in-house, it may be time to consider partnering with a fulfillment company. If you’re spending too much time and energy fulfilling orders versus building on your core business, it’s worth looking for a 3PL.
Bonny explains, "As your business grows, so will your fulfillment needs. Don't be afraid to adapt your strategy. The right fulfillment partner can help you scale efficiently, taking the burden off your in-house team."
It’s really about where you want to spend your resources—on learning the ins and outs of omnichannel fulfillment and logistics, or on developing and refining your product.
Consider how you would like to handle returns and exchanges (if applicable) for your goods. Ensure your omnichannel logistics provider can meet your expectations around the following:
For companies that want to expedite the customer return/exchange process, companies providing reverse logistics solutions can help bridge the gap, checking that the product is in the box and intact and issuing a refund before the product arrives at the warehouse.
Technology is critical at each stage of the fulfillment process, whether you’re managing orders, inventory, or shipping processes. Consider what systems and software you work with. Is your tech flexible and able to scale alongside your growing business? Working with a 3PL means you’ll integrate with their tech. Be familiar with what you currently use for:
If you’re working with an omnichannel logistics provider, ensure that it is familiar and can integrate with existing systems you use, such as Shopify. Also be sure to understand what kind of reporting their tech can offer, and how quickly and cost effectively updates can be made to accommodate your business needs.
As you set out to determine the right logistics strategy for your company, the big question is this: What do you want your fulfillment strategy to empower your business to achieve? Use the answer to that as a guiding light as you consider the specifics of your strategy.
And remember to take advantage of the resources at hand! Many 3PLs, Motivational included, offer free consultations and warehouse tours. Whether or not you ultimately choose to go with one 3PL over another, this can be a great opportunity to talk with experts in the field about your company’s specific needs, ask questions, and find out what solutions are available—no strings attached.
Ready to talk? So are we. Reach out to us today.