[Guest Blog] Fulfillment Strategies for Your Multichannel Business
A multichannel e-commerce strategy is a must-have for every online seller. While it’s great for diversifying your income streams and reaching more customers, multichannel e-commerce comes with several key challenges — the biggest being fulfillment.
To be a successful multichannel seller, you must meet the unique fulfillment standards and expectations of each marketplace.
Complying with the different standards of each marketplace and coordinating warehouses, shipping, tracking and inventory updates can be a headache. But excelling in multichannel fulfillment can also be a key advantage in helping you win the buy box and grow your sales across different marketplaces.
To master fulfillment techniques, sellers must adopt a strategy that works best for their individual businesses. You should ask six critical questions when evaluating a fulfillment option:
- Pricing — Do I know exactly what I’m paying to fulfill and store each item?
- Fast Shipping Tags — Can I get my listings on Amazon Prime or eBay Guaranteed Delivery through this fulfillment method, and what would be the coverage in the US?
- Setup Time — How long does it take to start fulfilling orders with this method?
- Channels Supported — Can I use this fulfillment option across all my channels?
- Branding — Can I ship orders in branded boxes or at least in brand-neutral packaging?
- Warehouse Selection — Can I select which warehouse my items sit in?
In this article, we’ll look at four popular multichannel fulfillment options, including third-party logistics (3PL) providers, self-fulfillment (DIY), Fulfillment by Amazon (FBA), and Deliverr. We’ll evaluate them against the six-point model outlined above.
Here’s a quick overview of each:
Traditional 3PL: Customized but costly
A traditional 3PL will handle your item storage, shipping, tracking and delivery for multichannel orders.
- Control over branding. You can ship items with branded packaging or inserts. All you need to do is provide them with the needed materials.
- Custom processes and procedures. 3PLs can build custom processes centered around your business, including special returns processing or reserving specific shelf space for your items.
- Warehouse selection. You can select their closest warehouse location to send items to, as long as there’s space available.
- Pricing is expensive and confusing. At a minimum, you’ll face the following fees: receiving (hourly rate), pick/pack (per unit), order handling (per unit), shipping (dependent on carrier, zone and method, per order), work order (hourly rate), account subscription fee (monthly). It may take months to determine if you’re making or losing money on the items you’re fulfilling.
- Slow setup time. Contract negotiation ca take several weeks, followed by a lengthy onboarding time. You’re looking at five to eight weeks until orders actually start getting fulfilled.
- Lack of basic integrations. If the 3PL you’re considering doesn’t have integrations into major marketplaces, shopping carts or listing tools, you’ll either have to pay them to build that integration or build a custom integration yourself, costing additional time and money.
- Lack of speed. With a 3PL, your items will typically sit in a single warehouse, so geographical coverage on fast shipping programs like eBay Guaranteed Delivery (eGD) and Amazon Prime will be severely limited, resulting in loss of revenue.
DIY: Complete control, but harder to coordinate
Do-it-yourself fulfillment gives you control over the entire fulfillment process, but your processes must be organized and optimized since you’ll be responsible for all late deliveries and mistakes.
- Control of branding. You get control of your own branding, deciding what packaging and inserts to use.
- Quick setup. You can get up and running any time. Services like ShipStation make it really easy to kickstart your in-house fulfillment.
- Partial access to fast shipping tags. It’s a quick way to get started and test fast shipping programs like Amazon Prime and eBay Guaranteed Delivery to see if there’s a sales lift for your items.
- Capital intensive. Usually DIY works up to 20-30 orders per day, depending on your capacity. It can be really hard to handle spikes in demand if your items get on daily deal promotions with Amazon or eBay, where hundreds of orders can arrive within a span of a few hours. DIY can quickly become a major time sink and draw your attention away from other critical areas like listing optimization or product sourcing.
- Pricing is unclear. It can be very difficult to get a read on your entire cost structure. You’ll have to deeply analyze your property costs, employee costs, shipping fees, etc. And as with 3PLs, it can take months before you know if you’re making or losing money on your items.
- Limited coverage on fast shipping tags. Your items will most likely sit in just a single location, so while you can get access to fast shipping tags like Prime and Guaranteed Delivery, your coverage will be severely limited. We estimate that Prime or eBay Guaranteed Delivery coverage will sit below 30% with just a single location, meaning that only 30% of Amazon or eBay buyers will see your fast shipping tag.
Fulfillment by Amazon (FBA): Convenient and effective
FBA is a groundbreaking fulfillment chain maintained by Amazon. Amazon takes care of storage, shipping, tracking and delivery with a vast network of resources that allows it to cut shipping times at a great price.
- Simple, affordable pricing for Amazon orders. For Amazon orders, its all-inclusive, fixed-rate pricing is easy to understand and leads the market in affordability.
- Prime eligibility. Items in FBA automatically become eligible for Amazon Prime (with over 95% Prime coverage), helping you improve your search rank and win the Amazon Buy Box.
- Fast setup. All you need is an Amazon account, and you’re ready to go!
- Scales with you. It seamlessly scales with your business, whether you’re fulfilling one order or 1,000 orders per day.
- Non-Amazon orders cost more. For non-Amazon orders, prices are generally more expensive.
- Prime only. Integration with other fast shipping programs, like eBay Guaranteed Delivery, is not optimal. This will continue as other marketplaces enable their fast shipping programs for 3P sellers.
- Disallowed by Walmart and Jet.com. Walmart and Jet have instituted a “No FBA” policy, preventing sellers from using FBA to fulfill their Walmart and Jet orders.
- Warehouse selection. Warehouse selection is determined by Amazon, and your items may sit in more than 30 different locations. This distribution option has its advantages, but can create sales tax nexus issues that could increase the burden for sales tax compliance.
Deliverr: Fast and affordable fulfillment for your multichannel business
Deliverr is an industry-leading fulfillment service for your eBay, Walmart, Jet and Shopify stores.
- Clear, simple pricing. Take a look at our cost calculator to see how our rates compare with other fulfillment options. You should know immediately if you’re making or losing money with Deliverr.
- Access to eBay Guaranteed Delivery. Similar to the seamless integration Fulfillment by Amazon has with Prime, items in the Deliverr network automatically become eligible for eBay Guaranteed Delivery with over 95% coverage.
- Quick and easy set up. We’re pre-integrated with ChannelAdvisor, so creating an account only takes minutes.
- Scales with your business. Don’t worry about spikes in demand — Deliverr scales with your business.
- Handle all of your channels. By shipping out all orders in brand-neutral packaging, Deliverr works with any channel, including Walmart, eBay, and Jet.
- Custom branding. While we provide brand-neutral packaging free of charge, we don’t offer you the ability to ship items in a custom branded box or include marketing inserts.
- Warehouse selection. To offer such competitive two- and three-day rates, Deliverr must determine warehouse selection. That being said, it’s rare for an item to sit in more than five locations with us.
Although multichannel fulfillment adds complexity to your business, it’s a hurdle you can overcome and presents significant benefits if executed correctly. There is no one magic solution, but becoming educated about each option will help you evaluate the best path forward you can take for your business.
About the author
This is a guest post from Michael Krakaris, co-founder at Deliverr. Deliverr is a leading fulfillment solution for your eBay, Walmart and Shopify businesses, providing clear, simple pricing, access to fast shipping tags like eBay Guaranteed Delivery, and easy onboarding in under two minutes. Learn more at Deliverr.com.