Key Considerations for Effective E-Commerce Fulfilment

Written by Lai Chee Long, DLSM

by Lai Chee Long, DLSM

As a consumer, we at least encounter one of such incidents as receiving the wrong item, delayed missing shipment, damaged or defective items, etc. If customer service is difficult to reach, refund or replace are delayed, it is unlikely to have satisfaction and trust by consumers again because of the unfortunate incident that happens to them. But on the other side, like an e-commerce business owner, dealing with returned goods or reversed logistics can be irritating and frustrating. But if these complaints left unresolved, it could overwhelm e-commerce businesses.

The infographic below shows an e-commerce fulfillment process.

Understanding E-Commerce Fulfilment

E-commerce fulfillment is defined as the steps taken from receiving, storage, pick and pack, finally ship out to end customer. However, fulfillment can be done by three different types of methods depending on the scale of business that the seller is running.

Drop shipping is a fulfillment method whereby the customer’s order fulfills directly from the manufacturer or wholesaler. Basically, this fulfillment method, the seller does not keep, store inventory or purchase goods upfront. Instead, the seller will only pay for the goods after the order made by customers. However, using a robust inventory management system is crucial as it will allow sellers and suppliers to have prompt sharing of information.

3PL (Third Party Logistics) is an e-commerce fulfillment services provider. E-commerce business owners usually outsource to 3PL service providers when their business expands to a larger scale or overseas. Because 3PL can provide various services such as warehousing, order fulfillment, transportation and many more. Most 3PL have the technologies and knowledge on how to handle this type of business as their profession. A 3PL also can provide small start-ups e-commerce the flexibility to start small yet scaling up when needed.

Self-fulfillment however, from manage inventory to packing even ship out of customer order in-house by e-commerce seller themselves. This fulfilment method are used by many startups at the beginning of their e-commerce business as the scale of their business might not large but still able to manage on their own.

Picking Strategies

Picking is the process of selecting inventory from storage that to be included in a customer’s order. It is the first thing that happens after the order is placed by the customer and received by the warehouse. After picking, the order is packed – this involves gathering all items from an order and preparing them for shipment to the customer. Below are few picking strategies that can be consider.

Discrete Order Picking – This picking method is best for small business with low order counts. The picker picks all items for an order at a time by goes to each location and pick each individual item for that order before going back and starting a new order.

Zone Picking – Multiple pickers are each assigned a different area of the warehouse to pick from. The picker that is assigned to each zone is responsible for picking all the items that located in the assigned zone for each order.

Batch Picking – this picking method can also be referred to multi-order or consolidated picking. Picker to compile a batch of orders by SKU, one SKU at a time. SKU picked will split later before packing process according to quantity of each order. Orders which require the same SKU are combined into single pick task so that the location is visited once rather than one time per trip. Travelling time is reduced when there are multiple orders with the same SKU.

Cluster Picking – Each order gets a dedicated box(es) that is usually put on a cart to keep items from different orders separated while picking. This approach prevent picker to go to same location again and allow items to be sorted by the end of picking process.

Wave Picking – A method that is executed multiple times per day (or shift) and balances more factors than products overlap. Typically, orders are picked one by one without route optimization. Combined orders can be done automatically by WMS/ERP by group according to delivery date, type of orders, customer location, etc.

Designing a Maximum Efficiency Warehouse

The best way to optimize picking process is to design your warehouse for maximum efficiency. This warehousing layout design may depend on how large the warehouse is and how many orders will receive, a significant amount of time that could be wasted walking from one location to another just to fill each order. Here are some tips to keep in mind:

• Place your top-selling products closest to your packing stations.
• Store items that are often sold together in neighbouring storage zones.
• Arrange your inventory from top-selling to low-selling.

Slotting is another storage strategy might consider while designing warehouse layout. This is the process of determining where items should be stored in the picking area based on both its popularity and proximity near to the starting point of picking to reduce travel time. In addition to storing popular items near the picking area, warehouse personnel also want to store items at a height where pickers don’t have to bend down or reach up.

Managing returns

Returns can be annoying, but successful manufacturers and virtual merchants are embracing them because it’s critical to give consumers options. The retail landscape is a battle of low pricing and convenience, and easy returns are a key part of that.

When the returns process quick and easy, customer will you maintain your customer’s trust. Have a system in place that can handle your returns accurately, cost-effectively, and keep your customer experience at the top of the game.
Returns, not simply a nuance for shippers. Unfortunately, consumers are far less likely to complete an online purchase if return policies are non-existent or too expensive, and many consumers will simply forgo purchasing your products if it can be obtained with a returns’ guarantee from another eCommerce solution. In other words, shippers need to be prepared to take on the costs of free return shipping, assistance when printing shipping labels, and processing returns as they come in.

Growth potential

It is important to consider expansion especially when online business is expanding, possibly internationally. Seller may outsource partial or all operation to a 3PL fulfilment company. Choosing a suitable 3PL fulfilment company should be the priority as they have services that can save both times and increase efficiency. Fulfilment companies are not all cut from the same cloth. Seller’s product and business may require more than some providers can currently offer or might never need the bells and whistles that others can provide. More than upfront cost analysis, it is imperative to match the current and future needs of your product with a fulfilment centre that can journey with your business and communicate effectively along the way.

Seasonality of the Business

Not all e-commerce sales are created equal and not all of them have a solid grasp on the seasonality of their businesses. Therefore, it is worthy to consider the Retail Wholesale Holiday Surge that comes at different time than the Direct Consumer Holiday Surge.For example, in Singapore, a Distribution Centre handling wholesale orders may be busiest from September through January as it strives to get products out to the stores in advance of the holiday shopping seasons like Chinese New Year.

Meanwhile, the warehouse managing Business-to-Consumer (B2C) orders may have its biggest labour needs only during selected months like December’s Christmas season. If a business has both operations under one roof, the temp labour may be easily carried through both periods if the timing is right. Thus, when one understands the seasonality, it can save the hassle of re-hiring and re-training workers to better leverage the common labour pool.

Conclusion

These are some of the strategies to achieve better efficiencies. Of course, these are by no means the only ones. Business owner should experiment the most efficient methods and options for their businesses. They also should continue to evaluate their chosen methods on regular basis because new tools and techniques come up regularly which can help in improving their operations.


References

AjeetKhurana. (2019). “Understanding E-Commerce Third-Party Logistics – 3PL”. Retrieved from https://www.thebalancesmb.com/3pl-ecommerce-logistics-1141740, accessed 12/12/2019.

CatalinZorzini. (2019). “Ecommerce Fulfillment (December 2019): The Best Order Fulfilment Companies”. Retrieved from https://ecommerce-platforms.com/articles/ecommerce-fulfillment-best-order-fulfilment-companies, accessed 12/12/2019

Doreen Teng, PDLM. (2019). “Integrating Key Logistic Practices for Effective Digital Commerce Health”. Retrieved from SIPMM: https://sipmm.edu.sg/integrating-key-logistics-practices-effective-digital-commerce-health/, accessed 14/12/2019.

Jonathan Goh Seng Kim, DLSM. (2018). “Key Strategies to Improve Warehouse Space Efficiency”. Retrieved from SIPMM: https://sipmm.edu.sg/key-strategies-improve-warehouse-space-efficiency/, accessed 14/12/2019.

Kristina Lopienski. (2019). “How to Fulfill Orders Yourself & What Challenges to Look Out For”. Retrieved from https://www.shipbob.com/blog/self-fulfillment/, accessed 13/12/2019.

About the Author Lai Chee Long has substantive experiences in the field of warehousing and logistics management. He has been a warehouse leader for ten years and is a member of the Singapore Institute of Purchasing and Materials Management (SIPMM). Chee Long completed the Diploma in Logistics and Supply Management (DLSM) on December 2019 at SIPMM Institute.

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