Surging traffic levels and soaring order volumes are a good thing, right? Every online store wants to sell more products in theory. In practice, however, handling an influx of orders and trying to scale DTC fulfillment isn’t easy if you’re still processing orders by hand.
Taking your time with these orders isn’t an option. Customer expectations have risen as a result of Amazon and Walmart slashing delivery times, writes Matt Leonard, an Associate Editor at Supply Chain Dive. Smaller brands have their work cut out to keep pace. “Keeping up with this requires a network of inventory close to the customers who are making the orders, which can begin to get expensive,” he says.
Customers won’t wait, either. They’ll go elsewhere if you can’t get products to them fast enough.
More orders can mean more problems for smaller DTC brands still doing fulfillment by hand. You have two options: scale your own fulfillment or partner with an expert.
The Problem With Scaling Your Own Fulfillment
One of the biggest draws of the DTC model is that your brand isn’t reliant on other companies to create or sell products. As such, it can be tempting to own the shipping model, too.
Scaling your own fulfillment comes at a high cost. For starters, there’s the time you need to invest in building a functional fulfillment model. Most brands don’t have it to spare, writes the team at GlobalTranz. “There aren’t enough hours in the day to become an expert on the complexities of logistics while still creating new products, expanding markets and growing your company.”
Then there are the additional and often hidden costs that come with scaling your own solution. These include:
- Heavy investment in software.
- Hidden warehouse fees.
- Uncompetitive shipping fees.
In the same way DTC brands outsource the creation of their online store to all-in-one eCommerce platforms, they should also outsource their eCommerce fulfillment.
Outsourcing fulfillment is essential for growth, writes Verma Media Founder AJ Agrawal. There’s only so long that you can continue to pack orders yourself. If you want to scale, having someone handle everything for you is “mandatory” according to Agrawal.
Here’s how Business as a Service providers can help.
BaaS Fulfillment Offers Greater Flexibility
While you could secure your own warehouses to cope with rising demand, there are several good reasons you shouldn’t, says eCommerceCEO.com Co-Founder Darren DeMatas. “Most warehouses come with long-term contracts and high upfront fees for a space that may end up being too big or too small as the year goes,” he writes. Order volumes can be incredibly inconsistent, too. Just because you are experiencing high demand now doesn’t mean you will in six months. You could end up paying for space you don’t need or suddenly find yourself needing even more.
As well as scalable storage space, many BaaS fulfillment partners have warehouses across the country. Brands lose control when they are tied to a single warehouse, writes the team at Rakuten Super Logistics. You’re relying on a handful of local shipping companies to deliver all of your products if you do. Two-day shipping to the rest of the country is also going to be all but impossible unless you pay more for expedited delivery. Leverage a BaaS provider’s network of warehouses, however, and you’ll be able to ship from the warehouse nearest to the customer.
Outsourcing means you don’t have to worry about scaling your staffing needs, either. “Interviewing, hiring, and managing an operations workforce is a full-time job, one you may not have the bandwidth, budget, or acumen for,” says Peter Sobotta, Founder and CEO of ReturnLogic. A BaaS partner takes on all the risks and associated costs related to employment such as healthcare, holidays and absences.
BaaS Lets You Leverage Existing Knowledge and Relationships
Shipping products is expensive, and even an influx of orders may not mean you qualify for discounts with national carriers. By partnering with a fulfillment provider, you can use their existing network to make sure you always get the best deal — regardless of how much you ship.
Fulfillment providers can negotiate much better rates with carriers than you could on your own, writes the team at ShipMonk.
You’ll also have access to a vast network of carriers, according to the team at Floship. If one carrier can’t handle your order volume, there are plenty more to choose from.
Fulfillment providers can also use their expert knowledge to save you money outside of carrier costs. “The partner will streamline logistics and establish the most cost-effective plan that can reduce the costs associated with performing specific functions,” writes Rachel Go at Deliverr. “Some of the new changes may include better inventory management and transport optimization.”
If a surge in orders corresponds to peak shipping times, like the holidays, the strong relationships that fulfillment partners have with carriers can really pay dividends, says the team at Byrd. When carriers can be selective about who they work with and how much they charge, you want to partner with providers that know them best.
BaaS Software Means Fewer Hold Ups
Software is just as important for a scalable fulfillment process as warehousing and logistics, says Kais Khadhraoui, CEO and Founder at Fulfillment Bridge. Your fulfillment solution must be able to integrate with your eCommerce store so that processes can be automated as much as possible.
“Solid eCommerce and eCommerce fulfillment services lets you send product orders automatically from your eCommerce platform to your eCommerce fulfillment service for shipment, without any additional input from you or your staff,” explains IPsoft Senior Writer Juan Martinez. Communication should also be ongoing, so both you and your customers are aware of the order status in real time.
When your fulfillment process is automated, it doesn’t matter how many orders you get at once. The process isn’t slowed as it is when you have to enter everything manually.
Fulfillment partners will already have software solutions in place to track the supply chain, optimize routes and manage costs, writes the team at marketing support services company MAI. So while you could build your own tech stack, it’s much faster and cheaper to use your fulfillment partner’s existing system.
BaaS Can Handle Additional Returns, Too
When you get an influx of orders, you don’t just have to worry about getting products out the door. You also need to think about how you’ll deal with increased returns.
Returns are a big issue with the DTC model, writes retail industry analyst Steve Dennis. Rates regularly pass 30%, a statistic made worse by the fact that so many brands offer free shipping. Having a streamlined and highly visible returns process is essential if you want to protect your bottom line from unnecessary fees.
Reverse logistics is much more complicated than forward logistics, explains Adam Robinson, Co-Founder and President of Cicero and Director of Product Marketing at Turvo. Products can get lost or damaged; predicting the products most likely to be returned is tricky; and getting products back into inventory is time-consuming.
These challenges can be overcome by partnering with logistics experts who provide greater visibility into the returns process and can reduce costs. “Specifically, the benefits of utilizing the expertise of a 3PL for reverse logistics process management produces greater controls over inspecting, recovering, testing and disposing of returned products.” he says.
Many BaaS providers will use software to automate the returns process as much as possible. This comes with several benefits, says marketing consultant Ruthie Bowles. It makes the returns process shorter, gives consumers and brands clear visibility on the status of returns, and means fewer people are needed to run the process.
Outsourcing fulfillment saves time, reduces costs and means brands don’t have to worry whether their own operation is fit for the future. Whether orders are growing steadily or you expect them to suddenly spike, outsourcing fulfillment is almost always the right way to scale your eCommerce shipping operations.