With the holidays rapidly approaching and 2020 quickly moving into the rearview, retail outlets nationwide are implementing the lessons they’ve learned this year and using them to predict potential e-commerce challenges and capitalize on year-end shopping opportunities.
E-Commerce Success Lies in These Processes
In a recent webinar with Thom Campbell, the Chief Strategy Officer at Capacity LLC., DiCentral covered the current state of e-commerce fulfillment and the e-commerce logistics challenges your organization should be prepared for. To avoid the most pressing e-commerce challenges anticipated to arise this season and continue into the next, Campbell recommends doubling-down on the following areas:
- Customer Experience
- Inventory Planning & Management
- Shipping Prices & Services
- Retailer Dropship Compliance
These are areas that your e-commerce logistics divisions have undoubtedly invested considerable time into already, so your job at this point is to iterate and optimize. This means regularly testing your omnichannel processes (infrastructure, speed, integrations, etc.), fine-tuning your inventory management setup (and automating as many parts of it as possible), and developing better ways to integrate with small parcel shipping carriers.
As always, you want to prioritize visibility, real-time data, and convenience for internal users, partners, and customers alike. And with online holiday spending expected to surpass $189 billion this year (a 33% YoY increase), you can’t afford to deliver anything less than the best customer experience possible. When it comes down to it, then, the most practical e-commerce questions you should expect to face in the near future regard e-commerce logistics and how you can manage it in a way that’s sustainable for your company and convenient for your customers.
When To Work With an E-Commerce 3PL
According to Campbell, “If you are focused on your product and your customer, and you don't want to focus on your operation at scale, you’re going to want to look at third parties who you can partner with.” Thankfully, partnering with an e-commerce 3PL is becoming easier and more accessible (see the graph below).
Companies are gradually transitioning toward e-commerce 3PL fulfillment/outsourcing, due, in part to the following benefits:
- Improved shopping cart integrations
- Better EDI retailer compliance
- Lower shipping costs and faster delivery times
- Easier returns and exchanges
- Real-time order tracking
- Automated inventory management
As we accelerate beyond the holiday season, your organization should continue to fine-tune its e-commerce logistic processes. Online shopping has shown incremental growth in 2020, culminating in even higher growth numbers in December (as reported by Forbes and predicted by Forrester and Deloitte), making it more critical for organizations to identify the e-commerce challenges in the upcoming year.
“I think now more than ever,” Campbell said, “it’s important to have that we’re very intentional about crafting a consumer experience because people are missing it. Whether we know it or not, the customer experience is a big part of who we are as a country. And it's been a big part of how brands have communicated their value proposition to the consumer.”
When to Handle E-Commerce Logistics In-House
E-commerce logistics is a core tenant of a successful omnichannel retail strategy. The most important thing you need to do when assessing whether to keep e-commerce logistics in-house is whether you have the capabilities required to meet your goals. For example, suppose you have a particular number of orders that you know you’ll be shipping every month. In that case, you need to make sure your company’s logistics capabilities can handle those orders.
Some of the most significant benefits of keeping e-commerce logistics in-house include having complete, precise control over the fulfillment process (i.e., the storing, packing, and shipping of products) and providing a more hands-on customer service experience.
In an article on Digiday.com, the co-founder and CEO of online fashion brand Lulus said that “bringing fulfillment facilities in-house was a better move for the company, as owning the end-to-end customer experience put Lulus team on the frontlines of anything that could go wrong, like delayed delivery times, as well as customer behavior it needs to take note of, like high return rates.”
Campbell specified that keeping logistics in-house is the better option for companies that must fulfill an extensive collection of SKUs, as outsourcing that to a third-party can get very expensive very quickly. One of the more common e-commerce logistics challenges comes when companies outsource when dealing with a low margin, inexpensive product.
Blending both approaches is not uncommon, although doing so requires bandwidth to keep track of what both outlets are doing, so make sure your team has the bandwidth to handle the two sides of that strategy before launching it.
There are plenty of e-commerce questions, challenges, and trends to address. As long as your company keeps its focus on providing the best experience for consumers—regardless of whether that means keeping e-commerce logistics in-house or working with a 3PL—you will come out of this stronger, more resilient, and better equipped for the future than ever before.
Want to hear more from Thom Campbell about the state of e-commerce logistics and fulfillment, including more insights into how to craft an e-commerce strategy for the future? Watch the webinar today!