Creating a high-functioning fulfilment operation for a growing e-commerce business involves tracking and optimizing a lot of moving parts, says Greg Coles, director of operations at The Source.
When should a company make the jump to become a dedicated fulfilment facility? Volume and SKU count should be the main criteria, Coles says. “If you’re in a business that doesn’t have a peak period, that’s probably going to be at a later stage in your growth.”
Moving from a back-office fulfilment process to a full-fledged warehouse after a spike in sales and order volume entails examining every step of your process. “Start to envision what you’re going to be as your business continues to grow and grow and grow,” he says. “Look for bottlenecks, make sure that every single part is scalable, and for the parts that aren’t scalable look for ways that you can improve them.”
Among the variables that businesses should consider when making the jump to a full-fledged warehouse: just how many products they sell and how often. “SKU count is a big part, and volume is a big part of that. Looking at space you have and how your business spikes during peak periods.”
Keep an eye on the calendar
For companies that do face those special event sales spikes, Coles is sympathetic. “I think the biggest challenge for a lot of businesses is suddenly taking that highway from three lanes to sixteen lanes overnight, if you’re affected by things like Black Friday or Boxing Day.” The same can be said for other peak periods such as Valentine’s Day, Mother’s Day or Cyber Monday.
Retailers should keep in mind that consumers don’t care about a business’ peak season challenges. “Years ago, they were willing to cut [retailers] some slack. That is not the case anymore. They don’t care that it is the busiest day of the year, they want it just as fast as they get it any other time of the year.” E-commerce giants have set the standard when it comes to shipping speeds and customer expectations with subscription services, promising deliveries as quickly as within an hour in certain North American cities,and other companies are scrambling to match it, regardless of the time of year.
Customers increasingly demand ease of return when shopping, and online returns are on the rise for e-commerce retailers. This trend is less demanding on established companies, but can be taxing for a virtual retailer or a business with just a few brick-and-mortar locations, he says. Returns are rising in part because retailers have responded to customer demands to make the process of returning products easier. It has also bred rising numbers of “serial returners” who over-order with the intention of returning the items, according to a study from Barclaycard.