Get Your Fill of Global Fulfillment
This is part of an ongoing series of conversations with an eCommerce amateur (who shall remain nameless) and one of DFO’s most knowledgeable (and patient) pros.
Today, Pascal Rossol (P) takes us through the X’s and O’s of global fulfillment.
Q: I take for granted how the stuff I order online gets to my door. Can you describe, at a high-level, what the process of order fulfillment looks like?
P: The full picture is slightly more complicated than what we see as buyers (i.e. clicking BUY! and then receiving a package a few days later).
There are three stages; prep-work, delivery, and after-care. Prep-work focuses on what’s required prior to shipping an order to a consumer. This includes the transit of goods from manufacturers to packaging facilities, warehouses or even warehouse networks for higher volume merchants.
Delivery includes the pick-and-pack process at a fulfillment facility. A warehouse worker or machine picks the goods up in the warehouse and packs the actual order, labels it, puts it in a bag and ensures a courier picks it up. That courier is responsible for ensuring the package reaches its destination.
After-care includes reshipments for damaged or defective items and returns for undesired products. This is often an automated process, but on occasion involves a personal touch via live chats, emails or call centers.
Q: How is this different when fulfilling on a global scale (versus, for example, just in the United States)?
P: Scale is the key word here. When you’re fulfilling at that level, it requires multiple partners in multiple countries. To make it even more complicated, each partner has their own culture, language, and hyper-local laws regulating the import of goods. Warehouse management technology can help in these scenarios, but in our experience, the systems vary drastically; one may have different API capabilities, which add yet another layer of complexity.
Q: How important is location?
P: It’s critical. In my mind, there are two key takeaways regarding location and fulfillment.
The first is to be as close as possible to consumers. There’s a ton of competition in this space, so being close to your end consumer means the speedy delivery of goods (which means happy customers, and happy customers are returning customers).
The second is to understand that customers appreciate products that are packed and shipped from a facility near to them. For example, U.S. facilities often ensure customers the products they’re receiving have met certain import quality standards. Whether this is true or not is irrelevant; the gain in perceived value is what’s most beneficial.
Q: This all seems like a delicate dance. What systems and processes does DFO have in place to ensure accuracy and synchronicity?
P: We rely heavily on our proprietary CRM and routing logic technology to process orders. There are multiple layers in our decision tree when it comes to order routing because we’re dealing with a multitude of warehouses across the globe.
For example, Do I want to group or split shipments? Do any of my warehouses get priority over another, or do I rely on the routing engine to pick the best warehouse for me?
In the United States and Canada, for example, we rely on a zip code-based routing engine that matches the consumer’s shipping address with the closest warehouse holding inventory. This creates a win-win scenario; we pay less for shipping and the consumer gets their order faster. We also ensure customers are provided with tracking numbers when an order is dispatched from the warehouse; this ensures transparency.
Q: Are there certain times of year where volume is higher? How do we handle that?
P: Q4 and Q1 are higher volume quarters. Aside from inventory preparations, we try to diversify and rely on partners who can confidently handle the order volume we bring and love order fulfillment technology as much as we do.
For anyone thinking about fulfilling directly from China or Hong Kong, be mindful of local holidays such as Chinese National Day, Lunar New Year, and Christmas. These can lead to massive delays caused by understaffed couriers or booked planes. Local fulfillment usually avoids these issues.
Q: Is it best to own your own warehouses or partner with established companies?
P: I don’t think there’s a right or wrong answer here; different business models require different skill sets. Owning a warehouse is a serious and ongoing responsibility that includes the need for extra staff and creates additional overhead. It also requires that you have right people in place to run warehouses effectively and efficiently.
Many business owners want to focus only on their business – not on warehousing and staff issues. Those who need to take ownership of every detail – shipping and fulfilling included – will find owning and operating their own facility empowering. It lowers costs (if run properly) and allows for much greater customization.
Q: As a merchant/advertiser, what characteristics should I look for in a facility?
P: In any order, the team, facility, rates, and order volume. If any of these aren’t up to your standard, don’t sign and work with them.
I’d recommend looking around and touring facilities. Talking to team leads, local managers and staff can uncover valuable insights into how a company is run. Any reputable third-party logistics company (3PLs) will give you a tour of their facilities.
Regarding rates, find the right balance for the order volume you bring to the table. Understand that you won’t get the best rates at 50 orders per day, but 500 orders per day means you have some leverage.
I also highly recommend looking at the fine print on how a 3PL charges and what they charge for. These facilities tend to make their rates difficult to compare to a competitor’s. Be mindful of “pick charges” for individual items that make up your package – these can add up! Model out average costs for the pick-and-pack process prior to signing any agreements.
Q: What are the top-3 international “watch outs!” that merchants/advertisers should look for?
P: First, know your costs. Compare international fulfillment costs versus what’s available locally.
Second, visit the facility prior to signing a deal and walk away if you’re skeptical. There are good partners everywhere. Think of this like a long-term relationship; you need to go on a few dates before committing.
Third, familiarize yourself with the rules and regulations of the geography. This means there are less surprises down the road.
Q: What kind of processes can be used to enhance customer experience?
P: Use a provider to help you and your customers track packages via API. Customers will appreciate not having to navigate third-rate websites to understand where their package is.
Also, seamless returns – or defining the ease of returns – is worth exploring in any market. This is as simple as a local return address close to the consumer (which lowers return shipping costs), or as complicated as an automated, free returns process with printed return labels.
Again, it depends on what kind of experience you want to provide for your customers and how valuable your brand is.
Vice President, Client Success Pascal.email@example.com