Today, optimised logistics is the backbone of every online shop. With increasing growth, shipping costs are also increasing. Sooner or later, every shop operator will have to decide whether they want to outsource fulfillment or set up a solution themselves. We have the answers to the most important questions that will help you with your decision and your search for a partner.
Inhalt
What is fulfillment?
Fulfillment is a logistics term that summarises all the processes that take place in the background during order processing. A fulfillment process specifically includes the following process steps:
- Incoming goods
- storage
- Order processing (pick & pack)
- dispatch
- Returns processing
- Customer service
- Analysis and reporting
Good fulfillment providers can relieve online retailers in all of these areas and set up individual logistics processes for them. For you, this means more time for your core business.
What do fulfillment providers offer?
E-commerce fulfillment service providers are companies that specialise in efficient warehousing, packing and shipping, as well as returns processing. As a foundation for this, they also have extensive IT knowledge and can therefore set up interfaces to shops and digitally map process steps.
Fulfillment providers are therefore experts in IT and logistics and usually have modern facilities and systems for the best possible process efficiency. They also have a broad network of various pallet and parcel shipping service providers, enabling them to provide the optimal carrier solution tailored to the product range and the desired shipping time. This also makes next-day delivery offers to end customers possible.
Why is professional fulfillment important in e-commerce?
If you want to be successful in online retail today, you have to offer your customers an all-round excellent shopping experience. This is no easy task, as the demands of online customers in terms of shop usability and delivery times are constantly increasing. Players such as Amazon, Zalando and Galaxus in Switzerland have long since set the standards with their services that customers expect from smaller shops today.
Free whitepaper: Get our study on the post-purchase experience benchmarks in Switzerland and the UK now.
A key aspect of this is the post-purchase experience – the customer experience after the purchase. This includes processes such as professional, fast and reliable order processing as well as a returns option and fast refunds.
Successful online shops need an interesting product range, targeted marketing, good customer service and reliable logistics processes. And the last area in particular will inevitably tie up more and more resources with increasing success and sales. Unprepared, large order volumes can present shop operators with a huge challenge.
Setting up your own logistics takes time, knowledge, infrastructure and personnel. Long-term planning is the key to success. The infrastructure should be expandable, the staff available and the processes scalable. Logistics that are not optimised can lead to an increased error rate, which in turn affects the shop’s reputation.
«With a fulfillment partner, shops benefit from efficient and customer-friendly processes and scalable storage space right from the start. This can have a positive impact on the customer experience and gives shop operators long-term planning security. In addition, there is no need to recruit staff, which frees up a lot of time for the core business and saves on recruitment and labour costs at the same time.»
Peter Egger, VP Growth
What are the advantages of fulfillment outsourcing?
In e-commerce, customer satisfaction is the key to success. Fulfillment partners understand this principle and offer services that help you to improve the customer experience in a targeted manner. This not only makes you more competitive, you can also save money depending on the situation. These are the key benefits of a partnership:
- Time savings: By eliminating logistical tasks, you can concentrate fully on your core business. By having more time for your product range and marketing, you can continue to develop your shop without any worries.
- Shipping offer: Thanks to a large carrier network, a fulfillment partner gives you the opportunity to offer your customers various delivery options such as next-day, 48-hour or sustainable shipping. With a partner, you also benefit from more favourable shipping conditions and comprehensive order status updates.
- Staff planning: The search for logistics staff is very time-consuming. Seasonal peaks such as Cyber Weeks or Christmas sales usually require additional staff. A fulfillment centre has everything it needs to ensure reliable processing even with a large number of orders.
- Infrastructure: Flexibility in the warehouse is also a major advantage. Fulfillment partners often offer scalable storage space that can be adapted to a growing product range. This allows you to plan your product catalogue more freely without having to worry about available space.
- Expansion: A service provider can also help you expand across borders. For example, if you sell in a country with a customs border, a local warehouse can save you a lot of customs costs. You can also take local trends into account and build up specific product ranges.
Reading tip: Find out how the German jewellery retailer Julie & Grace successfully entered the Swiss market with a local fulfillment solution.
- Overview: A fulfillment offer also includes a dashboard for your inventory. This means you have a digital overview of your stock, orders and their status at all times.
- Returns: In addition to fast shipping, fulfillment partners can also handle returns processing. In these cases, the service provider ensures that returns are processed quickly and stored again ready for dispatch. This means your goods are ready for resale more quickly and your customers benefit from a faster refund. On request, some service providers can also recondition your returned items so that they are as good as new.
«With a fulfillment outsourcing partner, you get three main things: time, space and freedom. Ultimately, these can be the very factors that help your shop achieve long-term success and scale.»
Peter Egger, VP Growth
When is it worth looking for a fulfillment partner?
There is a point in time for every online shop when it can make sense to consider outsourcing fulfillment. It is not always possible to say exactly when this is. However, there are clear signs that signal the right time:
- Order quantities: In most cases, a fulfillment solution is only worthwhile above a certain order volume per month. It’s worth doing fulfillment yourself in the early stages. You will also build up valuable experience. From around 100 orders per month, the cost/effort ratio is in an area where outsourcing can be worthwhile.
- Storage space: Scarce storage resources alone are no reason to outsource fulfillment. However, if you are running out of space, you should consider your forecast. If your shop continues to grow rapidly, a fulfillment provider can offer you the flexibility you need to hit the ground running. With a scalable warehouse, you can expand your range without any worries.
- Returns rate: If your shop has a lot of returns, it may be worth outsourcing fulfillment earlier. This is because returns mean double the work. Service providers can then take over the outbound and inbound process for you.
Reading tip: We show you which measures you can take to reduce your returns rate.
- Expansion. If you want to enter a new market, working with a service provider is worthwhile in most cases. International shipments are much more expensive individually and customs declarations are complex and time-consuming. With a warehouse solution in the destination country, you not only avoid individual customs clearance, you also reach your local customers faster.
- Marketplaces: Being represented on marketplaces is a must in today’s e-commerce. However, marketplaces have strict service level agreements (SLAs) with regard to shipping and returns processes. If marketplaces are an important sales channel for you, working with a service provider could pay off for you. Some fulfillment partners specialise in marketplace SLAs and can provide you with a worry-free connection.
- Customers: If you are operating in a highly competitive market, excellent services such as long order times, express deliveries and free returns are all the more important. If you don’t have the expertise or time to set up your own logistics and fulfil other points from above, you should consider outsourcing.
Are fulfillment providers also worthwhile for small companies?
Effective fulfillment is extremely important for small online shops. Peter Egger also confirms this: ‘There are now standardised fulfillment solutions for smaller shops that allow them to benefit from fast processes and optimised prices. In addition, the more favourable parcel prices offered by various shipping providers are also attractive for small shops. On the whole, a fulfillment partner can therefore also be the more cost-effective option. Stability, cost efficiency and time savings can ultimately provide the necessary stability and help the shop to grow further. And here is another advantage: providers with scalable solutions simply grow with the business. Fulfillment providers can therefore also be advantageous for smaller shops.’
Well thought-out warehousing, targeted inventory monitoring and cooperation with a reliable shipping service provider can be sufficient in the initial phase of smaller shops. However, working with a service provider can also be worthwhile, as Peter Egger explains: ‘Reliable and professional shipping builds customer confidence, increases customer satisfaction and can lead to positive recommendations. Efficient processes can also reduce costs and error rates and improve the entire supply chain.’
Reading tip: Find out how the start-up shop Meistermesser got off to a flying start with fulfillment outsourcing.
What are the selection criteria for a fulfillment partner?
There are many criteria that can be used to select a fulfillment partner. You should therefore inform yourself well about the products, services and prices of the individual providers before signing a contract.
Before you start your search, you should ask yourself a few questions: What exactly do I want to outsource now? What else do I want to outsource in the next few years? Which services do I need exactly? What is my budget?
You can change your provider at a later date, but this can be very expensive under certain circumstances. Choosing wisely can save you a lot of trouble. You should therefore pay attention to the following points:
- Capacity: Does the provider have the necessary storage capacity and human resources to take on your product range and order volume?
- Flexibility: Does the service provider offer scalable storage space and expandable services? A service provider should also be able to cover your future needs.
- Integrations: Does the provider have an interface to your shop system or does it have the expertise to programme a new interface?
- Reliability: How long has the provider been on the market and what kind of customer base can they boast? A provider with many years of experience and well-known customers in its portfolio often has more reliable processes.
We have you covered: Smart and digital fulfillment solutions for small and large shops.
«Experience is one of the most important factors when selecting fulfillment partners. A provider with many years of experience and good references in their portfolio will also tend to offer you better conditions.»
Peter Egger, VP Growth
- Industry: Does the provider have experience in dealing with your product range? Not all providers are equally specialised in all sectors.
- Communication: How is the communication with the provider and do I have a personal contact person for my concerns? Good communication is key to success on both sides
- Equipment: How well is the provider technically equipped? Failure protection and data protection are important points for a secure supply chain.
- Automation: To what extent is the provider automated? Automation enables even more efficient processes with a lower error rate.
- Conditions: What conditions regarding shipping time, shipping discounts and tracking services does the provider offer? Are there also additional services that can be booked (later) (e.g. storage according to minimum shelf life, returns processing, customs services for expansion, etc.)?
- Costs: How is the price made up? What are the basic costs, the integration costs and the variable costs that depend on your order volume?
- Liability: Also clarify who is responsible if errors occur in the process or if goods are damaged or lost.
What will a fulfillment service provider cost me?
The question of fulfillment costs from third-party providers cannot be answered in general terms, as there are many variables involved in the calculation.
It is best to contact the service provider directly. The following components will affect your parcel price:
- Warehousing
- Number of SKUs
- Service level grade
- Order volume
- Postage costs
- Pick & pack charges (process costs)
- Packaging costs
- Add-ons such as
- Inserts
- Individualised cardboard packaging
- Storage after best-before date
- Storage of fragile items
- Detailed returns processing
Please also note that some providers charge a minimum service fee for variable costs. This means that you pay at least the processing costs for 200 orders per month, for example – even if you don’t have that many orders.
MS Direct klärt deinen Bedarf detailliert ab und unterbreitet dir ein massgeschneidertes und unverbindliches Angebot. Mit unserem Preiskalkulator kannst du dir schon mal eine erste Preiseinschätzung holen.
Conclusion
Sooner or later, every successful online shop operator will have to ask themselves whether they want to set up their own logistics or outsource this part of the business. While in-house logistics processes give you more control, with an external provider you benefit from highly efficient processes from day one. And, it can even be cheaper.
Fulfillment providers offer online shops the security they need to concentrate fully on their core business and further develop their business. At the same time, online shops with professional fulfillment processes can offer their customers a good service and thus improve their brand reputation. Working with a fulfillment partner can therefore prove to be very profitable. When outsourcing, it is important to get the timing right.
About MS Direct
With over 45 years of experience, the MS Direct team supports you in building efficient fulfillment value chains and connecting to new markets with a customs border in Europe. True to our motto ‘Every order is a fulfilled promise’, the satisfaction of your customers is also our top priority. That’s why we rely on fulfillment solutions that are tailored to your needs and can be easily scaled. With one of the most popular shop systems, you can also be up and running with us in just a few days. Let’s get started together.