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Operations Strategy: A Recipe For Fulfillment Success

Operations Strategy: A Recipe for Fulfillment Success

It’s the same recipe for operations strategy success that we keep hearing about in the eCommerce world. Customers click and expect their items to arrive in the nick of time – and this pace is accelerating to same-day delivery with Amazon leading the charge. What’s more, shoppers only pull out their wallets when they score free or dirt-cheap shipping rates – or when they have omni-channel options to tap into, such as buy in-store and ship to home, and buy online pick up in-store, to name a few. In fact, approximately 50% of internet users have used buy online, pick up in-store options in 2017 – up from 35% in 2015.

So, what’s a retailer to do? How can you satisfy the quick-shipping shoppers and create a cost-effective operations strategy for distribution? How can you use fulfillment to foster brand loyalty?

Fulfill their Impatience

Retailers must perfect the shopping journey by delivering value across all touchpoints, and by offering multiple fulfillment options. Free AND fast delivery consistently wins more business.

To meet basic expectations, you need to get products to customers within a two-day delivery cycle, and have well-oiled omni-channel options. A bonus: shoppers who expect free shipping are more likely to tolerate a three-day delivery window – but if you exceed that, you underservice your shoppers. 

It’s all about balance – and a well-located distribution center or split shipping if you have multiple inventory piles. Build your capacity to ship same-day. Consider what your freight experience needs to be from a primary location. Leverage ship-from-store capabilities to shorten your delivery distance and time and better leverage your total inventory picture. These options lower shipping rates and provide more flexible options to use free shipping as a promotion.

Approximately 57% of digital business and channel strategy professionals now offer or plan to offer their customers omni-channel fulfillment services to diversify delivery options (Forrester Research). This creates return shoppers, too, as 49% of US online shoppers say they would purchase from a retailer again after having a good experience in the past (Forrester Research). There is a continuous push for brands to leverage other channels outside of direct channels. But in order to tap into store fulfillment, you have to be set up to succeed – meaning, retailers will have to be very strong operationally both in the warehouse and in the store to do the job right.

Can’t Do It In-House? No Problem

Fulfillment is the key puzzle piece that bridges online and offline channels – but it doesn’t have to be a puzzle. It can be a big beast to tame and expensive to scale, so retailers will need to take a step back and see a big picture of their business model. Can they support in-house fulfillment and omni-channel initiatives? Do they have the infrastructure, the ability, and expertise to plan and scale for peak times?  Can this be one of the business’ core competencies (because, yes – it will need to be)?

Most of the time, if a brand is mid- to small-size, it’s not cost-effective to take operations in-house. Outsourcing would typically be your best bet. Retailers can leave the hassle – and extremely specific business acumen – to the pros, cutting costs on core competencies while taking advantage of freight pooling, tried-and-true efficient processes, scalability, and so much more.

Stand Out

You may be able to meet your customers’ expectations, but how do you exceed them – and keep bringing them back for more? Personalization is one of the most disruptive things out there for commerce. No, it’s not a new concept, but it hasn’t stopped evolving since it hit the scene. There are endless possibilities to try – monogramming, engraving, customizing colors, build-to-stock products, and so much more. In fact, nearly 35% of shoppers say they’d love to change features to build a custom product (AYM Market Research).

You need WOW factor. When shoppers open their boxes, it’s a second moment of truth. They don’t want an ordinary box with an air pillow shoved inside – but they’ll take note if the experience is thoughtful and unique. Think of hand-wrapping with a retailer’s branded tissue paper, a bounce-back coupon for first-time shoppers, or free samples in a similar product category. A flexible warehouse management system that can integrate into different technologies and capabilities such as an engraving machine, or a quick-pick cart system that will push orders out of the door faster.

4 tips to kickstart your operations strategy success:

  • Look at your big picture. Would a large-scale, in-house operations practice be suitable, or do your revenue and demand streams not require such heavy lifting? Would outsourcing be more financially realistic?
  • Remember what the shopper wants, and fulfill that. Do they expect a shipment to arrive on a specific, predetermined date, or are they buying now with the hopes of receiving the package immediately? Leverage different solutions to fit your shoppers’ needs.
  • Ask yourself, does omni-channel make sense for your organization? Omni-channel is here to stay. More and more, shoppers would prefer to buy online and pick up in-store, or hope to receive a package in a shorter timeframe. More options means catering to your shoppers, and shoppers like to have it their way.
  • Figure out your WOW factor. There are so many ways to shake things up in the game of personalization. Engrave your girlfriend’s name onto her favorite lipstick for Christmas, include a personal message in a gifted package, customize your next pair of running shoes with green laces and gold soles. Think outside (and inside) of the box, sellers.

Zach Thomann

With extensive experience in 3PL, end-to-end, and omni-channel commerce solutions, Zach Thomann leads the PFS Operations practice as EVP and GM. He’s held multiple VP and GM roles within our business, and continues to innovate our processes and capabilities.