Today’s guest post is from Michael Koploy, Analyst at Software Advice.
E-commerce is one of the fastest growing retail segments, and its growth is only expected to escalate over the next 5 years. Sucharita Mulpuru, Analyst at Forrester Research, projects that online shopping is expected to increase 45 percent over the next 5 years, reaching $327 billion by 2016.
While companies like Amazon and Zappos will benefit from the increasing number of consumers that would prefer to shop online, this also opens the door to small business owners that want to move their operation online or entrepreneurs that are looking to get their foot into the e-commerce door.
For those opening an online storefront for the first time, it’s important to think of your e-commerce business like a traditional retail store. You’ll have to bring customers to your online storefront through great marketing campaigns, build an excellent website to convert visitors, and build a rapport with excellent customer service, if needed. Unlike brick-and-mortar retail, however, is the need for excellent order fulfillment. Sloppily fulfilling orders can lead to errantly shipped packages or damaged goods that turn first-time shoppers into last-time customers.
To become excellent at fulfillment, it’s important to understand your current capabilities and weaknesses and invest in technologies that can help you scale the operation while still maintaining accuracy. Here’s how you can do that.
Benchmark Fulfillment Metrics
As you can only improve what you can measure, it’s important to benchmark your current fulfillment capabilities. Rather than trying to analyze a long list of metrics, however, you should focus on the numbers that matter most to your offering. For example, if same-day or next-day shipping is something you promise your customers, you should measure your order turnaround time (the time between when an order is placed and when it is finally shipped).
If your turnaround time is too high, you can dive deeper into your operations and try to understand what is slowing your team down. One way to increase your efficiency is to invest in inventory technology.
Invest in Technology that Can Improve Weaknesses
Any technology investment should be tied directly to a weakness in your operation. Keeping with the same scenario as above, you may find that your slow order turnaround time is due to the fact that you aren’t notified quickly enough about new orders. This is one reason to invest in a shopping cart solution with great notification functionality.
Similarly, if you find yourself regularly having to explain to customers that their purchase is unexpectedly out of stock, you may want to invest in a more robust barcoding and inventory management solution. But as you invest in technology and your operation grows, you’ll need to hire more employees to keep order fulfillment running smoothly.
Hire Employees for Specific Fulfillment Tasks
Rather than managing a pool of fulfillment employees that as a group handle order tracking, picking, packing, shipping and customer service, you should assign each employee to one or a few tasks to specialize in. Not only does this provide a clear responsibility for each employee, but allows them to find nuanced ways to improve their specific role within the fulfillment operation.
It’s important to lean on individuals and ask them to speak-up about ways to improve the fulfillment process. Encourage them to share their thoughts on safety, process improvement, and to notify you when they’ve reached maximum capacity.
Outsource if Fulfillment is Stifling Growth
At the end of day, managing the entire fulfillment-side of your business may be stifling your company’s growth. If your time, employees and capital would be better spent on running the other aspects of your e-commerce business, you should consider outsourcing fulfillment to third parties that specialize in e-commerce logistics.
For example, if you have high-margin merchandise that is difficult to fulfill, you could employ the services of a drop shipper. This individual will actually stock your merchandise and fulfill orders as they come in, asking for a cut of the sale. While this may bring margins down, it will allow you to spend your time and capital on other parts of the business.
Michael Koploy is an Analyst for SoftwareAdvice.com. His research is focused on trends in retail, supply chain and business intelligence technologies. For more information, he can be reached at email@example.com.