For the average online retailer, the cost to fulfill an order is 70% of their average order value. Customers expect their items shipped with increasing speeds. As COVID-19 changes the world, it seems more and more like most purchases going forward will require some level of fulfillment – whether from an in-store or warehouse team. The margins for error when it comes to fulfillment are razor-thin these days.
1. Implement Zone Skipping.
Zone skipping is the method of distributing inventory to multiple warehouse locations to speed shipping times and lower costs, making it a key part of free shipping strategies. For example, if you have warehouses across the United States and a customer from San Francisco places an order, you’d ship the products from your California warehouse, rather than a New York warehouse.
While zone skipping can ultimately save on shipping costs, Jake Rheude, VP of Marketing at Red Stag Fulfillment cautions,
“Zone skipping means being strategic about where you store inventory. It costs more upfront to pay for storage and fulfillment in multiple locations, [even though it] saves more in the long run by minimizing shipping cost.”
For companies who only experience demand peaks once a year (like the holiday season) and find that operating multiple fulfillment centers is usually too expensive, it may be practical to use popup fulfillment centers to achieve zone skipping during demand peaks.
2. Set a delay period in order processing.
Setting a delay period of one to three hours between when orders are placed and when they are then shipped out is an easy way to reduce fraudulent orders and chargebacks.
Calloway Cook, President of Illuminate Labs, says,
“Most eCommerce businesses that outsource their fulfillment, like ours, default to shipping orders ASAP after orders are placed because we want to improve customer experience. But it’s worth delaying orders just an hour to ensure that they’re legitimate.”
Illuminate Labs has found that since the implementation of their hour-long delay they have not shipped a single fraudulent order.
In addition to setting a delay, Shopify stores should consider using a tool like Mesa, which can automatically detect and cancel fraudulent orders.
3. Provide customers with self-service options.
Customers really love knowing where their order is. Our data shows that on average, customers look at their package’s tracking page 3.5 times per order.
If they don’t have access to self-service tracking, customers tend to call or email your customer service team for updates, clogging your team’s flow. In fact, GetElastic estimates that during the holiday season as much as 80% of all service tickets are for customers wondering where their order is.
Cut out all that work from your fulfillment process by proving your customers with self-service package tracking. A service like Tracktor provides customers a transparent, real-time view of where their package is at all times right on your store site. Tracktor is also proven to eliminate 100% of “where’s my order” tickets in customers under age 50.
4. Shorten your process flow.
“The most time-consuming aspect in the fulfillment process is that most amateur systems contain unnecessary steps that prolong the entire process. The added procedures also increase the chances of making errors, which might lead to the delivery of the wrong item or delayed shipment,” says Jared Ebrahimoff, Founder & COO of Lavari Jewelers.
By removing even minute steps from a process, you can end up saving quite a bit of time.
As a bit of anecdotal evidence, the store that I worked at during college used to receive fulfillment requests from corporate daily. During the holiday season, we could receive upwards of 70 item requests in a day. The process steps originally were:
- Print item request from POS
- Find item
- Wrap it in tissue paper
- Type the customer’s address and our address on the shipping label
- Print shipping label
- Package item
- Place package in mail bin
- Repeat for all other items
When we had multiple items, we did the steps for each item at the same time. However, even for me, by far the fastest typer and packager in the store, it would take at least five minutes to fulfill each order. Simple math tells you that for 70 orders, the better part of a holiday shift would be spent in the back office filling these orders.
We eventually stopped wrapping the items in tissue before we packaged them and FedEx added the ability to autofill our address so we cut the typing in half. These two simple process changes resulted in saving about a minute per item. It doesn’t seem like much, but it did mean that the next post-Cyber Monday Tuesday, I actually only spent half my shift filling orders, rather than nearly all of it.
5. Invest in software for repetitive decisions.
There are a lot of different software tools created to manage or help with the fulfillment process. There are warehouse management systems (WMS) and order management systems (OMS), for instance. WMS helps map routes for your warehouse staff towards the item for delivery, while OMS helps pick the most economical logistics provider to ship the item.
There are also software tools designed to manage or assist with the process workflow, like Mesa. Jared Ebrahimoff has found this type of software to be extremely useful.
As a jeweler, Lavari’s works with many different types of raw materials that they’ve carefully organized for their manufacturing team. For a long time, the team had to know the organizational placements by heart, which Ebrahimoff points out is prone to error. If they couldn’t remember the placement, they needed to look through an alphabetized list.
Ebrahimoff ended up hiring an engineer to custom design a software solution that automatically provides materials and their locations with each order. Ebrahimoff says that just this simple change has quickened the manufacturing process by up to 32% and reduced human error to 0%. He says,
“Software is indeed our best investment so far for process workflow optimization.”
Mesa users have seen similar results from implementing our software to optimize their workflows. PatchPanel, for instance, saves 40 hours a week ($37,400 CAD a year) by using Mesa to organize their custom orders into a spreadsheet for their manufacturing team.
Optimizing the fulfillment process is an on-going struggle for even the biggest powerhouses in the eCommerce world. These five tips are proven to make a difference in your bottom line, so they’re a great place to start.