Whether you are getting started with e-commerce or negotiating a product distribution deal, logistics and fulfillment will determine your business success. A smooth and efficient fulfillment process is crucial for customer satisfaction, inventory management, and your bottom line. This factor applies to B2B and B2C e-commerce operations because of the “Amazon Effect” that has set a very high bar for delivery.
The Amazon Effect refers to the two-day shipping promise the e-commerce giant made to Amazon Prime customers in 2005. Two decades later, wholesale and retail customers demand this type of ultra-efficient fulfillment, which you can accomplish with the proper fulfillment warehousing partner. With this in mind, let’s consider the factors you should consider when choosing a third-party logistics (3PL) warehouse to outsource your fulfillment processes.
Determine Your Place in the Supply Chain
Your initial game plan should focus on your primary sales channels. Are you a B2C seller with proprietary websites or selling on established marketplaces like Amazon and eBay? If you are a B2B seller, do you need wholesale fulfillment with bulk orders that require palletization? Look for warehouses that handle product characteristics such as shelf life, special packaging, and compliance.
Think Like a Real Estate Agent
The Amazon Effect is like real estate in that it strongly relies on strategic location. Just like the right location can make or break a property’s value, the strategic placement of your fulfillment warehouse is crucial for e-commerce success. You want a centrally located 3PL partner that can reduce shipping distances, thus cutting down on shipping costs and enabling faster deliveries for an optimal customer experience.
Warehouse Management Systems (WMS)
Look for Tier 1 solutions that allow you to track and control the flow of your products within the warehouse. Tier 1 WMS solutions are designed for complex organizations with sophisticated warehousing needs. Even if your retail or wholesale stock is not substantially large, you still want the Tier 1 advantage of real-time inventory visibility. This is crucial for accurate inventory management, preventing you from running out of stock unexpectedly. With proper barcoding, a Tier 1 WMS functions like a GPS for all your products.
Specific E-Commerce Services
Value-added services are as important as warehouse locations. If you are a B2C retailer, look for 3PL solutions to pick and pack your products for shipping with the packaging your business requires. Products may need repackaging for various reasons, so you want to inquire about relabeling. Kitting involves assembling multiple items into a single package or kit for promotional bundles, subscription boxes, or sets. Cross-docking is a wholesaling strategy that consists in receiving products and immediately shipping them without going on the shelves, similar to dropshipping but on a larger scale.
Costs and Scalability
Naturally, you must consider all storage and special services fees, but don’t focus only on the lowest price. Consider the overall value and the potential return on investment. They will save you money in the long run if you get superior service and efficiency. If you aim for growth, you need a partner to grow with you. Consider your future sales projections and choose a warehouse with capacity and flexibility.
