When you sell on a marketplace like Amazon, you certainly have fulfillment options to consider. If you are looking to use a 3PL for your fulfillment strategy, you don't have to navigate this process alone! Fulfillment by Merchant, or FBM, gives you several options for fulfilling your orders. You can outsource this step of the process to a fulfillment center, giving you more time to focus on product development, sales, and customer service. Learn all about order fulfillment strategies for Fulfillment by Merchant options for Amazon.
What Does Order Fulfillment Mean?
Order fulfillment is an integral part of the process that gets the order out the door to your customer. Fulfillment includes more than just shipping the order. It involves every step of the process from the time the order is placed by a customer to when that order is delivered to their doorstep. For some eCommerce retailers, this is done by people they employ (or by the business owner themself, depending on the size of the company). Brands with a higher order volume may use a third-party logistics company, fulfillment center, or another service provider. It is an important step to keep customers happy and deliver their order as quickly and efficiently as possible, so finding the right order fulfillment process is imperative for any business.
What is Order Fulfillment by Merchant or FBM?
Fulfillment by Merchant, also known as FBM, is a fulfillment method in which the seller is in complete control of the shipping and handling process. This does not necessarily mean they gather the items, pack them into a box, and take them to the post office. This means that rather than sending inventory to Amazon and paying a service fee for Amazon FBA to store and ship items sold on their platform, the seller is solely responsible for this, whether they manage this process in-house or through a fulfillment center of their choice.
In fact, Fulfillment by Merchant is one of the top choices for a newer Amazon seller, even if that is the eCommerce platform that is most often used by the seller. At Rakuten Super Logistics, our seamless eCommerce integration maximizes the selling opportunity Amazon presents so that order management and fulfillment can be quick and easy for your store.
What Is An Order Fulfillment Strategy?
eCommerce sellers have a few different ways to handle order fulfillment, depending on where they sell. With Amazon, there is the Amazon FBA option (Fulfilled by Amazon), as well as the Amazon FBM option (Fulfilled by Merchant). If Amazon sellers choose FBM, or if they sell on a different platform from Amazon, then there are two options left for order fulfillment strategies: fill orders in-house using your own employees or outsource to a third-party logistics provider.
If an eCommerce shop decides to stay in-house with their fulfillment, they need to have customer relationship management software, or a CRM, to track and organize customers and order data. This will help when storing the order’s tracking information and transaction documents so you can have easy access to all this information if you need it later. In-house order fulfillment also will rely on good inventory management, so that you know exactly what you have in stock and where it is located, making the order packing process easier. This means you not only need inventory management software, but a large enough space to store the inventory in an organized way (usually this means shelving, bins, pallets, and other equipment depending on the size of your products). In-house order fulfillment also means you need skilled workers to manage all of these things, which might just be you or it might mean you have to hire a fulfillment team to get the job done.
However, because of all that goes into managing order fulfillment in-house, it is common for many eCommerce retailers to work through a Merchant Fulfilled Network, meaning they outsource their fulfillment. Some or all of the order fulfillment processes can be given to the experts to ensure your customers stay happy. While of course, this includes having to pay additional fees, fulfillment centers can help to store your products in their warehouse for a short term before it is sold. Then they can manage the inventory for you, pack up items as orders come in, and get them out the door quickly. They may also be able to help with other things, like order returns if a customer is unhappy or no longer in need of an item they ordered.
If your orders are not Amazon fulfilled, many fulfillment centers can integrate with your existing FBM seller eCommerce infrastructure, whether that is on Amazon, Shopify, Magento, or another platform. This way, it is easier for them to receive the order once your customer places it, expediting the time it takes to get the order fulfillment started.
3 Main Things to Consider When Choosing a Fulfillment Strategy
Unfortunately, order fulfillment is not one size fits all. That is why there are so many ways to do it! If you are considering whether to use in-house fulfillment strategies or outsource your order fulfillment needs to a fulfillment center, the three biggest things to look at are going to be unique to your business:
- Business size and order volume: If you are a very large business with many different SKUs, that would require you to have a large space available for storage and order fulfillment. You should also consider what your average monthly order volume is right now and what you predict it will be in the coming months.
- Sales channel and technology: Take a look at what your platform and technologies are doing right now (and if you are planning to change or expand anytime in the near future). Ideally, you want to partner with a fulfillment center that can integrate with what you already are using.
- Location: This is more than just about where you’re located – it’s also about where your customers are located. If you have a large international customer base, you want to make sure the fulfillment center can accommodate international orders.
Order Fulfillment Process Steps
There are three main steps in the order fulfillment process: receiving, processing, and shipping. For an order to be successfully filled, each step has to be achieved accurately. No matter if an eCommerce shop fills orders in-house or uses a fulfillment center, these three steps need to be done correctly.
Depending if the order fulfillment strategy is in-house or outsourced, the first step might look a little different. For in-house fulfillment, receiving simply means getting the product from wherever it is manufactured to the warehouse or storage area. For fulfillment centers, receiving happens when the fulfillment center receives your products at their warehouse. The fulfillment center would input the data into their inventory management system, cross-checking the goods with what you said you were going to send. A fulfillment center has a system in place to ensure proper receiving, which helps the rest of the process run smoothly. Receiving also includes organizing the inventory to where it needs to go on the shelves, bins, or pallets to make for efficient picking.
Next up, processing happens after a customer places an order on your website, marketplace, or other eCommerce platform. A packing slip will be generated, either in print form or a digital alert on the fulfillment employee’s tablet or other device. The order picker goes to the designated areas where the products are located and gathers the items that the customer purchased, ensuring they are collecting the right size, color, or variation of the item the customer wanted. After all the items have been gathered, they are packaged into the correct size and shape box or mailer to best protect the items during shipping.
Once packed, sealed, and labeled, the box or mailer is taken to the shipping area for the appropriate carrier to collect. Any applicable tracking information is input into the order management software, so you can be aware of it and provide it to your customer (sometimes this is done automatically, depending on the systems and processes you have in place).
What to Ask 3PLs for Fulfillment by Merchant
What works for your friend's eCommerce store or even your competitor’s store may not work for you. That is why it is so important to do your research, interview 3PLs, and find a fulfillment center that can really become a partner in making your customers happy. Here are the most important things to ask any fulfillment center you are considering working with, so you can get all the information you need to make the best decision for your business.
1. Where are they located?
Compare this to where you are located and where most of your customers are located. Choosing a fulfillment center located near the majority of your customer base can help with lowering shipping costs and transit times.
2. What shipping options do they have?
If you need international shipping, two-day shipping options, or specific carriers, then finding a fulfillment center that can cater to these unique needs will help keep your customers happy and your business running smoothly.
3. Can they integrate with your existing technology?
If your orders are sold on Amazon, Shopify, or another platform, then you need to find a fulfillment center that can connect seamlessly with your existing technology.
4. How much inventory can you send at any given time?
The terms of your agreement with a fulfillment center will allot you a certain amount of space in their warehouse. The more products you have to store and sell, the more space it will take up in your area of their warehouse. Be aware of any storage restrictions, particularly during the holiday season.
5. Do they handle returns?
Some fulfillment centers can handle return, while some cannot. It's important to ask what kinds of returns they can handle and what the process and turnaround is. This will help you communicate with your customers what to expect when returning an item.
6. What if someone needs to make a change to an order?
There are times a customer needs to add or remove an item or change the size or quantity, so knowing whether the order fulfillment process can accommodate those changes is important. Ask whether this is possible or if changes can only be made in the first hour (or another specific timeframe). Again, this will help you set expectations for your customers.
7. How will you be able to contact customer service for help?
If you have a problem getting inventory to your fulfillment center or there is a problem filling an order, there needs to be a quick and easy way to communicate. Find out what the standard hours are for support and if there is a phone number or email address that is consistently monitored.
8. What are their service contracts like?
Figuring out what types of order fulfillment services you need might take time and your needs might change as your business grows. If there is some flexibility in the option to add or change inventory amounts, shipping options, or other aspects of your contract, that can help you with future needs.
9. What are the fulfillment fees?
Similar to the contract, knowing what the fees include can help you plan for the fulfillment center costs. You may have a fee to get started, as well as storage fees, receiving fees, fulfillment fees, and additional fees throughout the year. Be sure to understand what is included and what might cost you a little extra.
Outsource Your Fulfillment By Merchant Strategy
An order fulfillment strategy is not meant to complicate your life. In fact, when you choose a strategy that gives you benefits like time, energy, and cost savings, it can simplify your life! Selecting Fulfillment by Merchant when setting up your seller account just means that you’ll handle the order fulfillment. You can fill orders while getting those benefits by partnering with a fulfillment center like Rakuten Super Logistics. You will get the benefits of tools, technologies, systems, processes, and people who are skilled and ready to help tackle all your order fulfillment needs. Get a quote today to see how we can help simplify your order fulfillment and your business.
Rakuten Super Logistics is a leading eCommerce order fulfillment company that provides the scalability, flexibility, and cost savings retailers demand.
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