Supply Chain Performance
Supply Chain Performance

Five questions to ask before starting e-commerce operations

Some brands have especially pivoted their strategy on their leading sales proposition – “try it, return it”.

On May 16, 2022

Many companies are attempting to develop Direct To Consumer (D2C) businesses, either as a standalone strategy, or alongside brick and mortar. Some D2C ventures can become the primary growth platform for certain brands, but creating these new channels will be easier for some, than the others, depending on their history in direct selling or their brand appeal. Here, we look at the burning questions you should be asking yourself, in terms of warehousing and logistics, as you prepare to be agile to move your sales online.

1. How do I organise my fulfilment and warehousing capacities? 

In warehousing, space is money, so you need to consider how to densify your fulfilment processes. This could happen with narrower aisles and AGVs, although it is worth studying whether individual picking is best served by this high investment method. 

Another key consideration is to use the same warehouse to fulfil both ‘outer’ orders to stores, and online orders to individual consumers. This requires the appropriate software to manage the dual flow efficiently and transparently. Through this software, your provider should also be able to advise you, on which products are moving faster or slower, where you might want to run special offers, or for instance, whether an expiry date will roll in, for certain food items.

Dropshipment, where your supplier delivers directly to the customer, offers the advantage of not taking up space in your warehouse. For non-fast moving heavy and bulky items (think billiard tables, double fridges or garden swings), it may be a feasible idea. But, it may also mean that a single basket is split into several deliveries from several sources, resulting in different delivery dates for the customer, and, incidentally, a higher carbon footprint. By subcontracting this fulfilment, you also don’t have as much control over the process, or your own brand image.

2. How fast should my delivery be? 

High-level responsiveness and agility are key differentiators for online shoppers, and for you, this means faster fulfilment and faster delivery. This entails squaring the circle between cost, carbon footprint and resources. You should configure your fulfilment and warehousing processes, to deal with the latest possible cut-off time in the day, so that customers can order late, but still be delivered the requested product, the next day.

In terms of delivery, while the industry standard is inclined towards 24 or 48-hour delivery, some brands are resisting the urge and prefer to put their efforts into other priorities. “Firms placing sustainability among their key selling points, will not necessarily look to shorten delivery times, at all costs,” says Corinne Etienne, Key Account Director at FM Logistic, and a specialist in e-commerce. “Today, many customers will prefer environmental considerations and convenience, over speed.” 

3. How do I charge for delivery? 

The received wisdom is that charging separately for delivery will automatically drive the customer away. This may not be true: the customer is fully aware that they are paying for it, whether it’s in your margin, or on a separate line, on the final invoice they receive. In certain sectors – wine, for example – it is standard to charge for delivery per bottle, or per case. Observe how others do it, but don’t expect this to be a key differentiator.

The most important aspect, however, is to offer free, and convenient returns. Some brands have especially pivoted their strategy on their leading sales proposition – “try it, return it”. “Free returns provide the customer with security in their purchase, because they know that there will be no problem, if they change their mind. But, it also shows that you’re sure enough, about the quality of your product, and that you’re not expecting to have it returned to you,” explains Corinne.

4. How do I manage returns / reverse logistics within warehousing? 

Depending on your product category and consumer behaviour pattern, return rates can be extremely high. The ballpark figures of 30% have been observed in some markets, while in France, an average e-commerce brand can expect up to 9% of returns. But, since returns are expensive to handle, it’s important to find a way of managing them at scale, to reduce the unit costs. “The key goal is to get the returned goods back on sale, as soon as possible, otherwise they have no value,” says Corinne. This implies speeding up delivery returns, and employing people dedicated to reconditioning the articles as part of warehousing, to make them box-fresh again, before returning them to the shelves. This should happen in a specific area of your warehouse, and not on a different site, in order to cut the parcel-to-shelf time.

5. Who can help me do all this? 

Choosing your warehousing and logistics provider is a critical success factor in your move into D2C. Well, contrary to instinct, it may not be with a specialist e-commerce 3PL, that you get the best service. “Multi-client and multi-sector sites will offer the best agility, in dealing with order fulfilment,” says Corinne. “If the facilities manage both store deliveries (outers) and individual e-commerce orders, the seasonality for each channel is different, and resources will be able to move seamlessly between the two.” This prevents the staffing problems, which are frequently observed in the weeks, running up to Christmas, in many e-commerce warehouses.

An experienced partner will also help you devise a proposition, that is different to what people might find in a store. “We have consultants, who advise our clients for co-packing: making product bundles, that are unique, and increase the average spend – for instance, why not include branded glasses and beer mats with craft beer?” suggests Corinne. “A 3PL, like FM Logistic, must be there to simplify the process, in launching an online sales channel, for these big FMCG firms, and take the weight off their shoulders. Ultimately, our goal is to show them that e-commerce is within everyone’s reach.” 

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