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Commerce & Sales Channels

From Amazon to Shopify: Why Multichannel Fulfillment is Key to Solving E-Commerce Complexity

Commerce & Sales Channels
March 27, 2020
11 min read
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Unless your business is brand new, chances are your sales are occurring across more than just a single channel. For instance, today’s leading brands are likely selling directly to consumers across e-commerce marketplaces like Amazon, eBay, and Wayfair, as well as through their own websites via platforms like Shopify or WooCommerce. Targeting this array of channels makes sense because if you truly want broad market exposure, you have to go where your customers are. The challenge? For each new sales channel you add, a new layer of order fulfillment complexity is introduced.

Here is Edward Bear coming downstairs now, bump, bump, bump, on the back of his head, behind Christopher Robin. It is, as far as he knows, the only way of coming downstairs. But sometimes he feels that there really is another way, if only he could stop bumping for a moment and think of it.

A. A. Milne. Winnie the Pooh

I’ll explain my inclusion of the above quote in a moment. But first, let me provide some additional context.

Most Businesses Today Are Selling Their Products Through Multiple Channels

Unless your business is brand new, chances are your sales are occurring across more than just a single channel. For instance, today’s leading brands are likely selling directly to consumers across e-commerce marketplaces like AmazoneBay, and Wayfair, as well as through their own websites via platforms like Shopify or WooCommerce. This is in addition to leveraging wholesalers and distributors to drive sales through brick-and-mortar and retail locations. Targeting this array of channels makes sense because if you truly want broad market exposure, you have to go where your customers are. And if your customers are shopping on numerous websites online as well as in physical stores, it’s important to maintain a presence in each area.  

The challenge?

For each new sales channel you add, a new layer of order fulfillment complexity is introduced.

How a Web of Sales Channels Creates Excess Fulfillment Complexity

Stop for a second and think about how fulfillment complexity increases with the introduction of new sales channels.

As businesses look for new ways to reach their customers, they will likely find themselves delivering orders to other businesses for resale, as well as directly to individual consumers. As a result, the type, size, and volume of orders they must fulfill will vary broadly. For example, businesses that rely on your products for resale might purchase bulk orders of inventory on a monthly or quarterly basis. These orders can very easily consist of hundreds, if not thousands, of individual units. And in order to ship orders of this size on a recurring basis, you’ll need to leverage a freight carrier for LTL and FTL deliveries. But on the opposite end, individual consumers that you service through Amazon’s marketplace or a Shopify site are more likely to purchase single products. This means that in addition to LTL and FTL freight shipments, you’ll also need a carrier that handles small parcel deliveries.

Next, there’s considerations to be had regarding the expectations from customers for fast and affordable delivery.

In the case of B2B relationships, it may be that your partners are willing to wait 3-5 days for their regularly scheduled shipments to arrive. However, there are situations where distributors or retailers might need shipments to arrive much quicker, such as during periods of heavy demand or as a result of unexpected supply chain disruptions. For these reasons, businesses want to have the option of receiving products much faster. In a 2017 UPS study, 60%+ of businesses expected to have at least 2-day delivery available from their suppliers.

The expectations are even higher from individual consumers.

As businesses like Amazon and Walmart roll out same-day and next-day delivery options to customers at large, consumer expectations for quick and cheap fulfillment continue to grow more demanding. Gone are the days where 1-2-day shipping required a hefty price tag. Customers today expect to have 1-2-day delivery, and they expect it to be cheap. And if it isn’t, they’ll find a new product to buy or a new site to purchase from. Data shows this to be true, with ~50% of online cart abandonments resulting from overly expensive or slow delivery offerings.

Of course, these above examples are but a few of the various fulfillment complexities that arise from multichannel sales efforts. There are many others to consider, including the actual process of picking and packing new orders and allocating the appropriate resources to handle fulfillment. There’s also hurdles related to managing any specialized packaging and kitting requirements, maintaining visibility to order data across disparate systems, and finding ample warehouse space to store products for each customer segment. Ultimately, once you take a step back and recognize the operational impact of multichannel sales efforts, it can be overwhelming.

‍A Piecemeal Approach to Fulfillment Ultimately Leads to Inefficiency

Here is Edward Bear coming downstairs now, bump, bump, bump, on the back of his head, behind Christopher Robin. It is, as far as he knows, the only way of coming downstairs. But sometimes he feels that there really is another way, if only he could stop bumping for a moment and think of it.

A. A. Milne. Winnie the Pooh

When thinking about their experiences with warehousing and fulfillment, how many business owners can relate to Edward Bear’s unconventional approach to coming downstairs?

As businesses look to address fulfillment across each of their order channels, they often adopt a piecemeal approach. That is, they may leverage Amazon’s FBA solution for marketplace fulfillment, use a 3PL provider for wholesale and retail distribution, and potentially even fulfill orders in-house for sales that come through their company website. Given that different sales channels are introduced at different stages during a company’s growth, it’s easy to adopt a unique fulfillment process for each one. Even for businesses that recognize the drawbacks of their fulfillment structure as it’s put in place, it might be that they’re forced to make decisions quickly and don’t have time to evaluate all their options. Rapid growth or evolving market conditions might have driven them to be reactive, rather than proactive. But over time, the complexity caused by these disparate sets of fulfillment workflows can significantly hinder productivity and create excess costs, a lack of operational visibility, and overly manual processes. Bump, bump, bump.

Eventually, businesses that are managing fulfillment through multiple providers or systems will reach a stage where further growth and expansion is impossible to support without adopting a more streamlined model. As additional SKUs are added to your product catalogue and as order volumes increase, the complex web of warehousing and storage options will result in excessive overhead, the use of multiple inventory management systems will make it difficult to understand the complete nature of customer demand and seasonality, and employees will waste valuable time keeping up with orders across each siloed fulfillment function.

But then, if these disparate fulfillment workflows aren’t the answer, then what is? Are there really providers that can manage the full scope of my warehousing, fulfillment, and distribution needs, across all my sales channels, in a cost-effective and efficient manner?

The answer is yes. And the solution lies in multichannel fulfillment.

‍Three Ways That Multichannel Fulfillment Helps Streamline E-Commerce Sales Efforts

For businesses that find themselves beleaguered by the complexity that arises from executing fulfillment through a range of different processes, multichannel fulfillment solutions could provide a vital remedy. Today, there are a select number of fulfillment providers that provide flexible distribution options for businesses of all sizes. These outsourced providers can manage everything from warehousing and inventory management, through to order fulfillment and delivery. And, they cover deliveries to both wholesale and direct-to-consumer channels across virtually any transit mode, including LTL and FTL options. By leveraging these providers, businesses can unlock valuable efficiencies that help save costs, improve speed-to-delivery, and increase the accuracy of sales and order data. For further insight, the below list offers a quick overview of how multichannel fulfillment providers can be advantageous.

  • Save costs by eliminating excess providers and warehouse space. If your business has deployed numerous fulfillment workflows, such as Amazon FBA and an in-house process, then you might have inventory stored in facilities owned by different parties. In the long run, this leads to excess costs, especially if these providers require long-term contracts and do not directly match your expenses to the amount of storage space you use. By transitioning to a multichannel fulfillment provider, you can store all of your inventory in facilities owned by a single operator, which eliminates redundancy, cuts down on the number of contracts you must adhere to, and provides you with more opportunities to save on warehousing and storage costs. And because many multichannel providers offer pay-as-you-go warehouse space, the costs of storage are tied to the exact amount of space that you use. Finally, by enabling your multichannel provider to fulfill orders through services like Amazon SFP, you can continue to maintain the high standards of quality your customers expect across each of your sales channels.
  • Increase visibility by channeling customer and order data through a single solution. By funneling  orders across all of your e-commerce marketplaces and platforms through a single solution, businesses can drastically increase their control over sales and order data. Whereas businesses would traditionally have had to pull data related to each of their order fulfillment workflows, standardize the presentation, and then aggregate the analyses in order to understand the complete picture of customer demand and seasonality, using a single provider for fulfillment means that all of this data is already being captured in a single system. In practice, this system would include a technology component that integrates with each of your e-commerce and wholesale order channels so that sales data flows seamlessly into one platform. This ultimately provides a single source of truth for order data and enables businesses to quickly gather accurate insights related to demand for specific products, during specific seasons, or across specific sales and order channels.
  • Maximize efficiency by fulfilling orders of all sizes and types with one service. Because multichannel fulfillment providers can store all of your products in their own facilities and fulfill orders of any size, type, or quantity, the level of efficiency they offer can prove massively advantageous. Regardless of whether you’re selling to businesses or consumers or require custom kitting and packaging workflows, multichannel fulfillment providers can accommodate your needs. They possess the equipment and personnel to manage bulk orders or single packages, the carrier options to support LTL, FTL, or small parcel delivery, the warehouse network to store products wherever they are needed, and the technology required to give you visibility and control over the entire process. Resultantly, the complexity of managing fulfillment is simplified down to just a single relationship with a single provider. No more disparate relationships or siloed functions – every new order is managed by the same partner, and the time spent by your business managing fulfillment is significantly reduced.

Final Thoughts: Multichannel Fulfillment is Worth a Closer Look

As businesses find themselves expanding the number of sales channels they use to reach customers, either through e-commerce sites like Amazon and Shopify or through retail and wholesale channels, they may find themselves adopting a piecemeal approach to fulfillment. But as the complexity that arises from these siloed functions grows more immense, there are significant benefits to be gained from solutions that offer a centralized approach to fulfillment. One that doesn’t require numerous contracts or relationships and that can provide a single source of truth for understanding order and sales data across the entire organization. The answer is multichannel fulfillment.

For businesses interested in learning more about how multichannel fulfillment works and how it can benefit their business, we encourage you to contact our experts at Ware2Go for more information.

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