In the age of omni-channel marketing and multi-channel engagement, understanding the details of channel strategies can make the difference between a brand’s success and total obscurity—especially for DIY or independent brands.  

Channel Strategy by Design

At its core, a channel strategy (or channel distribution strategy) refers to a vendor’s plan to reach its target audience through a mix of different marketing channels, direct and indirect channels. Historically, brands leveraged brick-and-mortar stores, direct mail, and local sales efforts to engage customers. 

However, the digital age introduced a plethora of new avenues such as social media platforms, search engine marketing, and more, resulting in the development of multi-channel and omni-channel strategies. 

Apple‘s success story can be attributed partly to a comprehensive channel marketing strategy, which combines its in-house sales team, independent software vendors, and online platforms to create a seamless customer experience. 

On the flip side, Blockbuster’s failure to adapt to digital channels and clinging to its brick-and-mortar store model led to its downfall. 

Evolving consumer behaviors demand the constant adaptation of these channel strategies. Whether it’s the surge in online shopping or the preference for contactless experiences, marketers need to understand these shifts and respond appropriately, which involves regularly revisiting and revising their chosen channels.

Fundamentally, a good marketing strategy is about delivering the right message to the right people at the right time. A channel strategy enhances this effort by determining the most effective paths (or channels) to deliver these marketing messages.

Effective Channel Strategy Types

Crafting an effective channel strategy requires a deep understanding of one’s target audiences, the resources at hand, and the tools available in the market. 

It involves extensive market research to pinpoint customer preferences and tailor the approach accordingly. With the right strategy, businesses can optimize their marketing budget, achieve more sales, and ensure that their brand messages resonate effectively with existing and potential customers.

Marketing Channel Strategy

Marketing channel strategy involves selecting and leveraging the most appropriate avenues to promote and sell products or services. This could encompass direct marketing efforts, email campaigns, or indirect sales channels like partnering with brand ambassadors.

Advantages: 

• Allows brands to continuously monitor metrics like conversion rates, click-through rates, and engagement levels to ensure they’re capitalizing on the most fruitful channels for their brand.
• Marketing channels allow for a huge scope of different dynamics and allow brands or retailers to target many different projected consumers. 

Example: A success in this realm is social media marketing by brands like Nike, which has effectively used platforms like Instagram to increase brand awareness and drive sales through targeted ad campaigns and the use of “influencers” or celebrities to drive sales.  

An over-reliance on paid advertising without engaging content, however, can lead to wasted marketing resources and minimal engagement.

Retail Channel Strategy

This strategy focuses on reaching consumers directly through brick and mortar retail stores or online retail platforms. It gives businesses more control over customer interactions, brand image, and, most importantly, customer experience.

Advantages: 

• Retail channel strategies allow brands to address logistical concerns like inventory management, especially if they operate both online and offline—which can actually be beneficial long-term. 
• An efficient supply chain ensures that consumers always have access to desired products, creating a seamless shopping experience, whether online or in-store.

Example: A notable success is the seamless blend of online and offline channels by companies like Amazon, which allow for online shopping from a variety of different retailers, with pick-up available at physical locations. 

Wholesale Channel Strategy

Wholesale strategy emphasizes selling products in large quantities to retailers or other businesses (business to business or B2B) rather than directly to consumers. This often involves channel members or channel partners who buy products in bulk.

Advantages:

• A successful wholesale channel strategy allows businesses to foster robust relationships with their distributors. 
• Regular communication, understanding market demands, and offering competitive prices are all components of nurturing these essential business relationships—which can help reduce cost long-term, and lead to higher profit margins. 

Example: Brands like Procter & Gamble have thrived using this strategy by supplying their products to big retail chains worldwide. 

Conversely, businesses that pay attention to their channel partners’ specific needs and terms can find it challenging to maintain a sustainable wholesale relationship, leading to decreased distribution and missed revenue opportunities.

Consumer Direct Channel Strategy

Definition: The Consumer Direct Channel Strategy prioritizes reaching the target audience directly, eliminating the need for intermediaries (e.g., channel partners) in either distribution channel strategy or marketing channel strategy. 

This typically gives brands more control over the marketing messages, customer journey, and overall brand experience.

Advantages:

• Direct feedback from consumers
• More control over pricing and brand image
• Enhanced customer experience

Example: Brands like Warby Parker and Casper have thrived using a direct-to-consumer model, revolutionizing the eyewear and mattress industries. On the downside, companies that switch to a direct model without adequate infrastructure or understanding of their target market can alienate their existing channels. 

Franchising Channel Strategy

Franchising involves allowing entrepreneurs to run independent businesses using a larger company’s branding, products, and services. This strategy accelerates business expansion without needing the parent company to manage each outlet directly.

Advantages:

• Rapid expansion possibilities
• Reduced financial risk for the parent company
• Localized management leading to more tailored customer experiences

Example: McDonald’s is a prime success story in franchising, with thousands of franchises worldwide, while maintaining a consistent brand image. 

However, not all ventures succeed. For instance, RadioShack’s over-reliance on franchising without offering significant value to the franchisees led to dwindling numbers and eventual bankruptcy.

Business (B2B) Partnership Strategy

This approach involves forming strategic alliances or partnerships with other businesses to expand reach, share resources, or co-create value for mutual benefit.

Advantages:

• Shared risks and costs
• Access to new markets or audiences
• Pooling of resources and expertise

Example: The collaboration between Spotify and Starbucks, wherein Starbucks integrates Spotify’s music streaming into its stores and app, showcases a win-win B2B partnership. However, partnerships without clear objectives or uneven value distribution, like the short-lived alliance between HP and Oracle, can be missed opportunities. 

Network Channel Strategy

Leveraging a network of interconnected businesses, individuals, or resources, this strategy focuses on collaborative efforts to reach common business objectives, often relying on the strength and reach of the network members.

Advantages:

• Greater reach and influence
• Mutual growth opportunities
• Shared marketing efforts and resources

Example: Etsy‘s success can be attributed to its network channel strategy, creating a platform where individual crafters benefit from the collective reach of the platform. A platform such as Etsy allows for further market reach than otherwise possible for an independent brand with little resources. 

However, some networks, like the early days of content networks that became breeding grounds for low-quality articles, can dilute brand value and trust without proper governance or quality control—a sort of “free-for-all.”

Resell Channel Strategy

The Resell Channel Strategy involves businesses buying products from manufacturers or wholesalers and selling them to end-users or other businesses. Businesses with strong marketing and distribution capabilities often adopt this approach but don’t produce their goods.

Advantages:

• Access to established products without production costs
• Leverage existing brand recognition and trust
• Flexibility in pricing and promotions

Example: Best Buy is a stellar example, as it resells electronics from various manufacturers, providing customers a one-stop-shop experience. Conversely, Circuit City’s inability to adapt its re-sell strategy to changing consumer preferences and the digital revolution led to its steady decline in the 2000s.

Digital Channel Strategy

This strategy emphasizes using digital channels, such as search engine marketing, social media platforms, and email marketing, to reach potential and current customers. It harnesses online platforms to engage, inform, and convert target audiences.

Advantages:

• Global reach with localized targeting options
• Cost-effective with measurable ROI
• Immediate feedback and real-time adjustments

Example: Airbnb‘s social media marketing and search engine optimization transformed it from a small startup to a dominant global powerhouse—that changed the landscape of the rental market. On the other hand, the failure of Blockbuster can be attributed to its slow adaptation to the digital realm, allowing Netflix to dominate the video streaming and rental space.

Multi-Channel Strategy and Omni-Channel Strategy

Multi Channel Strategy involves brands interacting with their target customers across multiple platforms, whether it’s through brick and mortar stores, digital channels, or direct mail. The aim is to increase brand awareness by being present in as many places as possible, catering to varying customer preferences and occupying a larger visual space.

Advantages:

• Reach a wider target audience across different platforms
• Ability to cater to diverse customer preferences and habits

Example: Nike has excelled using a Multi-Channel Strategy, selling its products in physical stores, through their own and third-party online platforms, and even via social media campaigns. However, a notable failure can be seen in Toys “R” Us. The toy retailer needed help to keep up with its online competition, relying heavily on its brick-and-mortar stores.

Conversely, an Omni-Channel Strategy refers to the seamless integration of user experiences across all platforms. Instead of isolated channels, every touchpoint a customer interacts with is interconnected.

Advantages:

• Provides a consistent and unified customer experience across all channels
• Boosts customer loyalty as they can transition smoothly between platforms

Example: Sephora is a good representative example. Whether customers shop in-store, on the app, or online, their preferences, rewards, and cart are consistently updated and accessible. An example of poorly executed strategy was seen by J.C. Penney, which faced challenges in creating a cohesive shopping experience across channels, leading to customer dissatisfaction.

The main difference is while multi-channel aims to be everywhere the customer is, omni-channel ensures every interaction is interconnected, creating a singular, unified customer journey.

Tips to Design a Channel Strategy

Designing the “right” channel strategy can dramatically impact the success of your business model. Effective strategy ensures that a business reaches its target customers or target audience—and can meet overarching business objectives.

Determine the Product

Understanding the product inside out is essential. Determining the nature of the product and its audience will shape which channels best serve its marketing and how it will resonate with existing or potential customers.

Find Your Target Audience

Recognizing your target audience is the cornerstone of any channel strategy. By understanding their preferences, habits, and the demographic, businesses can optimize marketing efforts and channel choices to engage them effectively.

Reach Your Target Audience

Actually reaching your target audience will then require a mix of the right marketing channels, with tailored messages, and good timing. Leveraging market research and tools like search engine marketing or SEO (search engine optimization) can ensure your marketing efforts connect with the intended audience(s) and lead to increased brand awareness.

Consumer or User Experience

Prioritizing the consumer experience is a number one priority; a seamless, positive interaction can turn potential customers into brand ambassadors, without the need for third-party marketing. From the initial touchpoint, via social media platforms or retail stores, to the after-sales service, every interaction should aim to enhance the customer’s experience and satisfaction.

Your Company Goals

Aligning channel strategy with company goals ensures that resources, such as the marketing budget or in-house sales team, are effectively utilized. Whether the aim is specifically to acquire new customers, retain existing clients, or increase sales, the chosen channel strategy should always propel the business towards achieving these objectives.

Other Channel Strategy Tools

Beyond traditional means, tools like digital analytics, customer relationship management (CRM) systems, and AI-driven insights are becoming more pivotal in shaping a robust channel strategy. 

These tools provide businesses with data-driven insights, enabling them to make better informed decisions, optimize marketing efforts, and quite simply, engage customers more effectively.

FAQs

Here are some of the most frequently asked questions about channel strategy to further your understanding.

What is a channel strategy example?

An example of a distribution channel strategy is a brand utilizing online digital channels—like social media campaigns, and offline channels—such as brick and mortar stores, to reach customers or audiences.

What are the types of channel strategies?

Types include: marketing channel strategy, retail, wholesale, consumer direct, franchising, B2B partnership, network, resell, and digital channel strategies.

What are the elements of a channel strategy?

Key elements encompass product determination, target audience identification, methods to reach and engage customers, and tools to optimize consumer experience and brand awareness.

Conclusion on Channel Strategies and Their Significant Role

Understanding and implementing effective distribution channel strategies is fundamental in reaching your target audience and connecting with them. Businesses can significantly optimize the customer journey for better retention, meet business objectives, and ensure a successful marketing campaign—all by optimizing various marketing channels. 

As industries evolve, so too should one’s own channel strategy to continue effectively meeting the diverse needs of potential and current customers.

But what exactly is a fulfillment center? How do they support eCommerce operations? And how are they different from traditional warehouses? In this comprehensive guide, we’ll explore the ins and outs of fulfillment centers, discuss their unique challenges, and help you determine if utilizing one could be the right decision for your business.

Key Takeaways

• Fulfillment centers are third-party service providers that process and ship products directly to customers after managing the seller’s inventory and storing it.
• These facilities utilize the advanced technology to efficiently handle pick, pack, and ship processes while providing real-time inventory management, reducing operating and delivery costs, and saving physical space for sellers.
• While there are challenges associated with managing a fulfillment center, such as inventory management issues or order accuracy concerns, utilizing one can improve business operations and customer satisfaction.

What Is a Fulfillment Center?

A fulfillment center is a third-party service provider that processes and ships products directly to customers after managing the seller’s inventory and storing it.

How Fulfillment Centers Work

Fulfillment centers play a crucial role in the space of e-commerce by streamlining the process of getting products from sellers to customers. Here’s how they work: when an online shopper places an order, it is automatically sent to the fulfillment center, where items are picked from storage shelves by warehouse staff or robots.

Speed and efficiency are important components of a successful fulfillment center operation. By employing cutting-edge technology such as warehouse management systems (WMS) and barcode scanning tools, these facilities can quickly locate specific inventory items and track them throughout the entire pick, pack, and ship process.

Real-time data enables continuous monitoring of stock levels, ensuring that orders can be fulfilled promptly while avoiding overstocking or running out of essential products.

How Fulfillment Centers Support ECommerce

Fulfillment centers support eCommerce by handling the pick, pack, and shipping of customer orders, providing real-time inventory management, reducing operating and delivery costs, and saving physical space for sellers.

Handle Pick, Pack, and Ship

One of the primary ways that fulfillment services support eCommerce businesses is by expertly handling the pick, pack, and ship processes. This involves a streamlined system wherein warehouse employees called pickers locate products from inventory shelves, gather them based on customer orders, and package each item securely for shipping.

This process expedites the order fulfillment process and increases overall efficiency in logistics management. Ultimately this leads to improved customer satisfaction as they receive their orders promptly and in pristine condition.

Provide Inventory Management in Real-Time

One of the significant advantages that fulfillment centers offer to eCommerce businesses is real-time inventory management. By utilizing advanced warehouse management systems, these centers can effectively track and monitor stock levels, ensuring optimal product availability for customers.

For example, Amazon operates over 175 fulfillment centers worldwide, employing various innovative inventory control techniques such as product tracking and logistics optimization.

As a result, they can efficiently manage their vast supply chain and deliver products quickly to customers globally with reduced shipping times. 

Similarly, other eCommerce businesses that partner with fulfillment centers benefit from improved shipping efficiency and accurate inventory data at their fingertips.

Reduced Operating and Delivery Costs

Fulfillment centers play a crucial role in helping e-commerce businesses reduce operating and delivery costs. By outsourcing order fulfillment to a third party, sellers can avoid investing in costly warehouses and infrastructure while reducing labor-related expenses.

Additionally, centralized inventory management allows for more efficient space utilization, which means lower monthly rental fees and better return on investment. 

Other cost-saving benefits of using fulfillment service providers include reduced shipping and handling costs through negotiated rates with carriers, as well as last-mile delivery optimization strategies that improve the speed and accuracy of package deliveries.

Save Space

Fulfillment centers are a great way to save physical space for eCommerce companies. With the ability to outsource warehousing and shipping, online sellers no longer need to worry about maintaining expensive warehouses or storing inventory in-house.

By utilizing a fulfillment center, businesses can reduce their operational footprint while accessing additional services like inventory management and order tracking. Fulfillment centers also offer scalable solutions that allow businesses to expand without incurring additional overhead costs associated with owning and operating their warehouse facilities.

Fulfillment Center Challenges

Managing inventory, warehouse space utilization, order accuracy, and speed of order processing are just a few of the challenges of operating a successful fulfillment center.

Managing Inventory

Inventory management is a crucial aspect of any fulfillment center’s operations. It involves the tracking and monitoring of products from the time they arrive at the warehouse to their eventual delivery to customers.

With real-time inventory tracking, fulfillment centers can easily manage incoming and outgoing shipments from vendors with greater precision. This allows them to fulfill orders while maintaining optimal levels of stock on hand.

Poor organization and communication with suppliers can lead to difficulties in locating inventory and fulfilling orders, leading to unhappy customers.

Warehouse Space Utilization

Warehouse space utilization is a critical aspect of any fulfillment provider operation. Maximizing the available space is crucial for managing inventory and ensuring efficient order processing.

There are various challenges associated with warehouse space utilization, including stock rotation, capacity planning, and storage solutions.

One effective solution to address these challenges involves focusing on the age of inventory and liquidating excess stock that has been sitting in the warehouse for too long.

This approach helps ensure that only valuable products are kept in storage, freeing up additional space for new items and maintaining an optimum level of inventory turnover.

Overall, the most successful fulfillment centers prioritize efficient warehouse space utilization as they understand its impact on speed and productivity during order fulfillment processes.

Order Accuracy

Order accuracy plays a crucial role in successful ecommerce order fulfillment. It refers to the percentage of orders fulfilled without errors, including incorrect items or quantities shipped.

A strong fulfillment center should have accurate systems and processes in place to ensure order accuracy is maintained at all times.

Challenges can arise when there are issues with inventory management, poor organization in the warehouse, or delayed communication with suppliers. Such problems can lead to difficulties locating inventory and ultimately impact order accuracy.

Speed of Order Processing

One of the most significant challenges faced by fulfillment centers is meeting the demand for quick order processing. In today’s fast-paced eCommerce environment, customers expect their orders to be processed and shipped quickly.

Any delays can result in customer dissatisfaction, negative reviews, and lost business.

Fulfillment centers aim to meet demanding timelines by implementing tools such as conveyor belts, barcode scanners, automated storage systems, and other technologies that help workers execute tasks swiftly.

These advances enable faster picking of items from storage or shelving units—resulting in expedited shipping times.

Labor Management

Effective labor management is critical for running a successful and efficient fulfillment center—this involves everything from scheduling team member shifts to managing employee safety and well-being.

Labor allocation and shift planning are crucial for ensuring there are enough workers on hand to handle order fulfillment, inventory control, warehouse logistics, and all other operations.

To optimize labor management in a fulfillment center, it’s important to constantly review staffing levels and adjust as necessary based on demand fluctuations. 

Utilizing software solutions can also streamline labor management processes by automating workforce scheduling, identifying bottlenecks in operations, and improving overall efficiency.

Technological Integration

In today’s world of eCommerce companies, technological integration is essential for the smooth operation of a fulfillment center. With automated systems and robotics technology, businesses can manage inventory control, optimize supply chain management, and enhance order fulfillment efficiency.

One example of successful technology integration comes from Amazon’s Robotics AI organization. It has developed machines that pick items off shelves using machine vision to recognize objects and then use robotic arms to retrieve them.

These advancements have helped reduce delivery times significantly while improving accuracy levels in order processing.

Regulatory Compliance

Fulfillment centers face a myriad of regulatory compliance challenges. Compliance regulations for occupational health and safety, warehousing safety, and industry standards are crucial for maintaining quality services.

Fulfillment operations should adhere to international shipping regulations to avoid delays or legal issues with customs authorities.

Ensuring regulatory compliance is met within fulfillment centers requires proactive measures such as employee training programs on safety guidelines, and documentation management systems that track inventory movement and transactions to minimize errors leading to order inaccuracies while also providing transparency throughout the supply chain process.

Limited Control

One of the major challenges that eCommerce merchants face when using a fulfillment provider is limited control. While outsourcing warehousing and shipping can save merchants time and money, it also means relinquishing some control over the supply chain.

Merchants may have limited visibility into their inventory levels, order processing times, and shipping costs. Additionally, they are relying on a third-party service provider to accurately handle their orders and deliver them on time to customers.

This lack of control can be daunting for some sellers who prefer to manage all aspects of their business in-house.

Questionable Service

One of the main challenges of utilizing a fulfillment center is dealing with questionable service. While most providers aim for top-notch service, some may not live up to expectations due to mismanagement or lack of resources.

Late deliveries, inaccurate orders, and lost packages are just a few examples that can leave customers dissatisfied and damage your business’s reputation. Limited visibility into the fulfillment process can also make it challenging to address issues as they arise.

Ensuring open communication with your chosen provider is essential in combating questionable service. Establishing clear expectations upfront regarding order accuracy, turnaround times, and pricing can help avoid misunderstandings down the line.

Regularly reviewing performance data and addressing concerns promptly allows for transparency in meeting both parties’ needs consistently.

Limited Visibility

One of the challenges that businesses face when using a fulfillment provider is limited visibility. When you ship your products to a fulfillment center, you lose direct control over the order fulfillment process.

This can lead to concerns about visibility and transparency, especially if communication between the business and fulfillment provider is not clear.

It is important for businesses utilizing a fulfillment provider service to establish trust with their providers through regular communication, monitoring performance metrics such as accuracy rates, and ensuring compliance with regulatory requirements.

Additionally, some third-party logistics providers offer additional services like comprehensive inventory management systems or real-time tracking data dashboards that provide greater visibility into the supply chain process.

How Is a Fulfillment Center Different From a Warehouse?

A fulfillment center differs from a warehouse in that it offers a wide range of services, including inventory management, order processing, and shipping logistics.

Functionality

When it comes to understanding the difference between a warehouse and a fulfillment center, functionality is key. While warehouses are primarily used for storing inventory, fulfillment centers have multiple jobs beyond mere storage.

In addition to inventory management, they also focus on processing and shipping orders directly to customers.

This means that the processes and operations within a fulfillment provider tend to be more complex than those in a typical warehouse. For example, employees at a fulfillment center may be responsible not only for picking items off shelves but also packaging them up securely for shipment.

Additionally, tracking systems must be put in place to ensure orders arrive at their destinations on time and intact.

Product Movement

A fulfillment center is not just a regular warehouse. It has unique capabilities that allow for smooth product movement, which means getting orders to customers quickly and efficiently.

Fulfillment services use cutting-edge technology to track inventory, manage orders, and optimize routes so that products can be moved seamlessly throughout the facility. 

This includes using automated conveyor belts, robotics software systems for order picking accuracy and speed, and real-time data analysis to monitor stock levels accurately.

Operations

Fulfillment centers and warehouses both deal with inventory management, but their operations differ significantly.

One of the benefits of a fulfillment center’s operation is real-time updates ensured by integrated software that automatically tracks inventory levels. This means customer orders can be fulfilled quickly without any risk of stockouts.

Goals

Fulfillment services and warehouses have different goals. While a warehouse is designed to store goods for an extended period, the primary goal of a fulfillment center is to fulfill orders quickly and efficiently.

Fulfillment centers utilize advanced technology and streamlined processes to pick, pack, and ship products accurately in real time.

For example, suppose an online retailer has high order volume during peak sales periods such as Black Friday or Cyber Monday. In that case, using a fulfillment center can help them manage their inventory levels better while ensuring customers receive their orders promptly.

Cost Implications

Fulfillment services tend to be more expensive than warehouses due to their specialized focus on order-processing tasks. This cost often includes fees for storing, picking, packing, and shipping items for an eCommerce business.

For example, by utilizing a fulfillment center’s real-time inventory management system, businesses can avoid overstocking and reduce storage costs while still ensuring that they have the right products available at all times.

Order Fulfillment

While warehouses can facilitate order fulfillment to some extent, it is not their primary function. In a warehouse, orders are typically processed in bulk or larger quantities for distribution to retailers or other facilities. The picking, packing, and shipping of individual customer orders may not be as optimized or streamlined as in a dedicated fulfillment center.

Fulfillment services are designed specifically for order fulfillment. They are equipped with specialized technologies and processes to efficiently handle individual customer orders. Fulfillment services focus on quickly locating products, picking items from shelves, packing them into appropriate packaging, and ensuring prompt shipping and delivery. They prioritize speed, accuracy, and customer contentment in order processing.

Do You Need a Fulfillment Center?

If you’re an ecommerce merchant looking to optimize your shipping and fulfillment process, a fulfillment center could be the solution for you. Fulfillment centers can handle everything from warehousing and inventory management to picking, packing, and shipping orders on behalf of your business.

One key advantage of using a fulfillment center is reduced operating costs. Because these centers operate at scale and are highly efficient in their operations, they can often negotiate better rates with carriers like USPS or FedEx – savings that are then passed along to merchants who use their services.

Of course, whether or not your business needs a fulfillment center will depend largely on factors like the volume of product orders you receive each month, how much available storage space you have within your facilities (if any), and how important fast and reliable shipping is as part of your customer experience strategy.

Final Thoughts

In conclusion, fulfillment centers are crucial in the ecommerce fulfillment services industry as they help businesses manage inventory and streamline shipping processes. These third-party service providers handle every step of order fulfillment from picking to delivery, allowing businesses to focus on growth and expansion.

While there are certainly challenges associated with any goal involving the supply chain, the benefits far outweigh any limitations in utilizing e-commerce fulfillment services.

THE CUSTOMER

Bon Bon Bon, a 10-year-old artisan chocolate company with stores in Michigan and an ecommerce arm, creates bonbons with clever flavor combinations and eye-catching designs.

THE PROVIDER

Evans Distribution Systems is a full-service third-party logistics provider that offers warehousing, fulfillment, value-added, transportation, and staffing solutions.

From its start in the back room of a diner about a decade ago, Detroit-based Bon Bon Bon, which offers “the goodest goodies and sweetest sweets,” now operates a manufactory and four brick-and-mortar locations, has a presence at local markets, and ships across the United States and internationally.

Yet even as Bon Bon Bon has grown, its internal shipping department remained small—no more than a handful of employees. So, Bon Bon Bon partnered with Evans Distribution Systems, a third-party logistics (3PL) provider, also based in Michigan.

“We never would have been able to offer shipping solutions at the level of expertise that Evans has been able to,” says Alessandra Rodriguez, head of marketing for Bon Bon Bon.

A Life of Chocolate

At 19 years old, Alexandra Clark, Bon Bon Bon’s founder and head chocolatier, decided to dedicate her life to chocolate. With $32,000 she received from a taxi accident—it occurred as she was leaving a chocolate show—she opened a chocolate shop near Bon Bon Bon’s current manufactory.

Initially, the shop was open only on Saturday. Fast forward to 2024, and the company has multiple locations and is in action seven days a week, with operations significantly ramping up between Thanksgiving and Valentines Day.

Before Bon Bon Bon connected with Evans, a “small and mighty team of employees,” according to Rodriguez, filled and packaged online orders, among other responsibilities.

Along with the challenges of managing the growing volume of orders were the challenges of the chocolate itself, which is perishable and requires a temperature-controlled environment. What’s more, each order can be customized, including with a handwritten note and a choice of packaging tape designs.

Finding a Partner

In 2023, Bon Bon Bon began its partnership with Evans Distribution Systems. The team at Bon Bon Bon knew of Evans in part from its work with vegan cosmetics and skincare brand, The Lip Bar (TLB), whose flagship store is also in Detroit.

A 90-year-old company, Evans operates more than three million square feet of warehousing space in Michigan. Bon Bon Bon uses Evans’ fulfillment, shipping, logistics, warehousing, and product storage services.

Evans’ handling of these functions enables Bon Bon Bon to focus on its core competency—making great chocolate—as well as increasing sales and expanding to other markets, says Leslie Delekta, director of customer solutions with Evans.

Evans direct-ships online and corporate orders. To ensure a temperature-controlled environment, Evans has located a refrigerated container within its warehouse. The 3PL is able to add staff to the Bon Bon Bon account to manage the holiday increase in sales. As volume tapers off, Evans can shift those employees to other clients.

Bon Bon Bon and Evans are electronically connected through Shopify, which transmits most orders to Evans; currently, corporate and other large orders are handled separately. Once Evans receives the order within its warehouse management system (WMS), employees kit the product and place it into custom boxes, says Rich Huziak, senior operations manager with Evans.

When developing customized solutions for Evans’ clients, verbal explanations typically go only so far, Huziak says. To gain a thorough understanding of Bon Bon Bon’s operations, the Evans team toured its manufacturing facility and stores. Evans then built a solution that considered the processes already in place.

For instance, when Bon Bon Bon delivers inventory to Evans, it’s in trays of single bon bons. These are recorded in the Evans WMS. Evans developed a kitting process so employees know which chocolates to pull for each order.

Customized Fulfillment

Evans helps manage Bon Bon Bon’s fulfillment process, which is challenging because the chocolate is perishable and requires a temperature-controlled environment. The 3PL also helps with additional labor when orders rise dramatically between Thanksgiving and Valentine’s Day.

Many packages are finished with colorful wrapping tape; customers can choose from several designs. They also can request a handwritten note to accompany their orders. The WMS lets Evans employees know which packages will include these embellishments, as well the card, message, and tape to include. The employee who packs the box also initials and dates it before sending it on its way.

Depending on the destination and time of year, the order may be packed in ice. “It’s a very custom experience,” Delekta says.

Handing responsibility for packing customers’ orders and creating handwritten notes means entrusting another company to accurately represent the Bon Bon Bon brand. “It’s a big thing,” Rodriguez says.

When Bon Bon Bon receives very large orders—say, from corporate clients—it currently emails the information to Evans. This allows Bon Bon Bon to designate specific products for these customized orders.

Evans receives Bon Bon Bon inventory anywhere from several times each week, to almost daily during the busiest season. Because Bon Bon Bon’s products are perishable and custom-made, it’s not feasible to stockpile inventory in advance.

Getting up and running with the Evans team was fairly rapid, Rodriguez says. The longest piece of the puzzle was redesigning the website and creating new stock-keeping units. “It was almost as though we created a new store,” Rodriguez says.

The benefit? Setting up a new website and new SKUs from the beginning of the partnership minimized the need for Bon Bon Bon to retroactively adjust any information.

Once the new website was complete, testing took a couple of months. The teams mapped out multiple scenarios so everyone could be prepared for any type of order.

For instance, team members needed to learn what an order would look like, operationally, if it included multiples of one item, plus an item from another category or a gift card.

Similarly, if a customer ordered a box of bonbons with one tape design and another box with a different tape design, Bon Bon Bon and Evans needed to understand how the person packing the order would know which design went with which box. “We were able to work together on that,” Rodriguez says. “It was a collaborative effort.”

The Evans team needed to make sure the processes were functional, while also taking care that Bon Bon Bon’s website would be customer-friendly and provide a strong user experience. Through their combined efforts, the companies ultimately improved both the customer experience and internal operations.

More Efficient Order Processing

For example, orders can be filled more quickly than was possible previously, even with Bon Bon Bon’s dedicated internal team. One reason is Evans’ technology, which offers a step-by-step guide for processing orders. The systems in place for the fulfillment and packing teams make it easy for them to work efficiently, as they don’t have to figure out how best to process each order before they begin filling them.

This is key, as the faster rate at which orders are filled means customers have a longer time to enjoy their handmade bon bons, Rodriguez says.

The speedier processes are especially valuable with larger orders. Previously, handling a very large order could delay other orders. Now, Bon Bon Bon is able to manage all sizes of orders at the same time. Being able to accept more large orders, instead of being constrained by operational limitations “is largely beneficial,” Rodriguez says.

Tackling New Challenges

As soon as the two companies were up and running with regular orders, they began working on new opportunities, Rodriguez says. One was developing an effective pre-sale system. This allows customers to, for instance, place Valentine’s Day orders in January, but delay shipment until early February.

Later in 2024, Bon Bon Bon plans to release two new extensions to its website. One is a “box builder.” This will allow customers to select exactly which bon bons they want in their box. Bon Bon Bon actually offered this capability years ago, but it didn’t have the back-end operations ironed out. Now, through its partnership with Evans, Bon Bon Bon will be able to offer this feature to its customers, while also being confident it will work operationally.

Building Large and Customized Orders

Bon Bon Bon and Evans also are working on a large-order builder. Customers placing large—often custom—orders will be able to complete their transactions with several clicks.

If Bon Bon Bon was working with any other company, management probably would be more nervous about embarking on multiple new initiatives at the same time. “But Evans has already proven to us that they can handle it and that they’re willing to figure out how we can offer these things,” Rodriguez says.

The Bon Bon Bon team hails from across the city, as well as the world, and they are united in their belief that good people deserve good chocolate, Rodriguez says. “The Evans team has joined our efforts in accomplishing this mission in the most genuine and collaborative way,” she adds.

Casebook Study: How Sweet It Is

The Challenges

Finding a way to effectively and efficiently manage order fulfillment and shipping as Bon Bon Bon grew to encompass multiple locations and national and international shipments, while still creating quality chocolate.

The Solution

Partner with Evans Distribution to handle fulfillment, shipping, logistics, warehousing, and product storage.

The Results

A significant reduction in order processing time and greater ability to handle large orders.

Next Steps

Working on extensions to Bon Bon Bon’s website, including a pre-order feature and the ability to enable customers to create large orders with several clicks.

THE CUSTOMER

Branch Basics, headquartered in Minneapolis, Minnesota, is a non-toxic cleaning products company founded by three health-conscious women. Its mission is to help people toss the toxins and live healthy lives.

THE PROVIDER

ODW Logistics, based in Columbus, Ohio, is a third-party logistics provider offering supply chain design, e-commerce fulfillment, warehousing and distribution, and transportation management solutions across a range of industries nationwide.

Originally founded in 2012 before being relaunched in 2017, Branch Basics’ product line centers around a fragrance-free, multi-purpose cleaning concentrate. The all-in-one formula can be diluted to various concentrations to meet all cleaning needs.

Branch Basics’ founders Marilee Nelson, Allison Evans, and Kelly Love were prompted by their own health challenges, or those of family members, to start their company.

“The women will tell you they never set out to sell soap,” says Greg Bastian, Branch Basics president and chief financial officer. “They were on a mission to create a healthy home and it holds true. In fact, that has become the company’s tag line.”

As a mission-based company, Branch Basics provides numerous resources to create a healthy home including a blog, a podcast, various guides, and a Toss the Toxins course, which are all accessible through its website.

“To some extent we’re an education platform,” Bastian explains. “We just happen to sell cleaning products as the economic engine to drive our growth and to be able to create content centered around healthy living.”

The 2017 relaunch occurred because Branch Basics did not previously own the formula for their cleaning concentrate. The founders wanted to be 100% transparent in terms of ingredients and thus the company now owns the formula that creates the basis for its signature product.

Culturally in Sync

Recently, a critical milestone tied to a promotion, as well as the company’s overall plans for the future, led Branch Basics to do some reconnaissance. Pleased as they were by a particularly successful 2022 Black Friday/Cyber Monday campaign, the company faced challenges moving the resulting volume.

They’re also aware their strategic growth plan is likely to include sales through different and still-to-be-determined channels. There was plenty of impetus to start looking for an experienced 3PL to help them scale operations.

Being part of a tight-knit community of entrepreneurs made deciding who to work with that much easier.

“We leaned into our network, asking other DTC companies: ‘Who is doing this for you? What 3PLs have these capabilities?’” says Karen Lowery, Branch Basic’s chief operations officer. “Our business model is a different world than shipping into retail, or even into Amazon.”

When shopping the Branch Basics website, customers have the opportunity to order varying configurations of product. It was essential that any 3PL the company decided to partner with have the experience to deliver that need. The eco-friendly cleaning brand also wanted real-time visibility into its inbound and outbound shipments.

The Right Fit

Enter ODW Logistics. Right from the start, the two companies proved to be a cultural fit.

“There’s a spirit and a direct level plus a relationship mindset that we always look for in our partners,” says Casey Nofziger, vice president of client solutions at ODW Logistics. “Branch Basics checked that box for us instantaneously.”

ODW Logistics is appreciative of Branch Basic’s conscious effort to make an impact. “The products speak to people and the company has a huge following and a history of strong growth. As much as determining how we can help, our belief in a company and its products factors into decisions to partner as well,” says Nofziger.

To help Branch Basics meet demand, ODW Logistics provides a holistic supply chain solution that includes a diverse e-commerce fulfillment program, cost effective transportation management, and the ability to scale as the business grows.

Transition Period

Efficiency is often achieved in a smaller footprint. Prior to partnering with ODW, Branch Basics had been operating out of three warehouses.

“Going to a single node wasn’t even in our thought processes, but ODW laid out the value,” says Bastian. The 3PL’s capabilities convinced the eco-friendly company that they could reduce inventory complexities and still meet customer expectations in terms of timing.

Not having to implement processes in triplicate made the transition period that much simpler. Organizationally, the partners aligned on efficiencies such as standardizing case labeling to achieve an effective flow within the single node. They also agreed it was essential to create an item master that acknowledged changes in SKUs and how things are packaged.

Leading up to the go-live date, there were technological integrations to manage and inbound inventory dates to meet. “We did a lot of testing,” says Joe Atkinson, manager of finance and operations at Branch Basics, acknowledging ODW’s dedication in that regard. As predicted, having a good master SKU list came in handy when Branch Basics started loading in inventory.

There was also customer service and portal training for Branch Basics’ roughly 22 employees from brand and warehouse managers to pick-pack workers and kitters. “It was all very structured. We met our timelines and our go-live date, which is always a huge deal,” says Atkinson.

Slippery Moments

It was a juggling act for Branch Basics to keep the incumbent 3PL at their three original warehouses set with inventory while filling up ODW and transitioning to a single node. “It was a challenge making the whole matrix of our co-manufacturers, suppliers, with all the lead times and SKUs we have, fit,” says Atkinson. The company ended up bringing one of their lower volume SKUs off the site for a few weeks.

“Some of the lead times were tough and we had to take a small hit,” he adds.

As for ongoing challenges, Atkinson references the importance of addressing “edge cases.”

“If 99% of your business is clean and simple, you spend the rest of your time handling that last 1% shipping to remote locations and P.O. boxes, or just odd orders,” he explains. Branch Basics has been focused on cleaning up those edge cases since the go-live date.

Healthy and Happy

Implementing standardization provides plenty of perks. As a result of partnering with ODW, Branch Basics is grateful to now have a document detailing their operations moving forward.

“ODW Logistics understands our business—how we kit, how we pick and pack, all the freight routing,” says Atkinson. “It’s great to have everything documented and on paper. Prior to this we had just tribal knowledge building over the years.”

Atkinson also appreciates ODW’s freight brokerage services. “I’ve gone from sourcing freight on my own to handing off the details to the ODW LTL team,” he says. “The process couldn’t be smoother.”

In addition to achieving real-time visibility, all products are now barcoded. “It’s a clean process,” says Lowery. “I don’t think our prior process would have been sustainable. Going with a more sophisticated operation is going to benefit us as we grow.”

This is reassuring to a company that brought in nearly $27 million in revenue in 2022 and now touts a 50% customer repeat rate. Branch Basics’ gross sales grew by around 57% year-over-year from 2021 to 2022.

Accelerating Future Growth

For its part, ODW Logistics equates being able to provide expertise in the omnichannel world with thinking larger.

“The management team has a mindset of continuing to accelerate business growth,” says Nofziger. Branch Basics may introduce new products or consider manufacturing in different ways across the United States or potentially get into the retail channel long term.

“As much as our partnership is about helping Branch Basics in today’s world improve on the areas they called out, it’s also about assuring them that ODW Logistics has anything they need to help them grow in the future,” Nofziger says.

Case Study: Journey to Health

The Challenge

Branch Basics, a direct-to-consumer, non-toxic cleaning products company, needed an experienced third-partner logistics provider to help them manage their distribution, fulfillment, and transportation services.

The Solution

Branch Basics partnered with 3PL provider ODW Logistics to streamline operations and gain real-time visibility into their inbound and outbound shipping. They achieved greater efficiency by downsizing from three warehouses to a single node.

The Results

The company acquired a master SKU list, all products are now barcoded, and inventory complexities have been reduced. Customer expectations are still being met. Instead of having to rely on tribal knowledge, Branch Basics now has a comprehensive document detailing their operations moving forward.

Next Steps

Handling Black Friday/Cyber Monday surges with greater efficiency. Expanding the product line in response to customer requests for new solutions on how to remove toxins from their homes. Considering exploring the omnichannel world.

For small and mid-sized businesses, proactive holiday planning is a priority—and retailers and other shippers as well as carriers and last-mile delivery partners have been busy prepping for some time now. Indeed, 37% began holiday supply chain preparations in Q2 2023 or earlier, according to a recent DHL survey. 

Despite persistent inflation and ongoing geopolitical turmoil around the globe, the survey shows SMEs are surprisingly optimistic about their prospects this season. To gain insight into what’s driving their business expectations for the 2023 holiday season, DHL compiled responses from more than 800 U.S. businesses. 

Here are some key takeaways:

• Supply chain is still their top challenge, but inflation is a close second.

33% of respondents say supply chain delays are their biggest concern followed closely by inflation (24%).

• Online sales are expected to surpass 2022 levels. 

About 70% of respondents believe their business’ online holiday sales will increase (38%) or match last year’s sales (31%).

• The 2023 holiday outlook is global. 

25% say they will prioritize expanding globally with both international customers and business partners during the holiday season.

Greg Hewitt, CEO of DHL Express US, recently joined us on the Inbound Logistics podcast to share more findings from the survey. Listen now to see if your peak season is likely to be merry and bright.

Overall, the survey findings suggest that while challenges—such as inflation and supply chain disruptions—persist, a majority of SMEs are optimistic about the holiday season and the global trade market going into 2024. That means growth in faster fulfillment.

Any harbinger of good economic news is welcome. Other factors that spur the growth of ecommerce shipping and the increasing calls for smaller shipments and delivery velocity are not directly related to the state of the U.S. economy.

One would be, I hate to say it, the Amazon effect on culture, specifically on retail and industrial consumer buying behavior and expectations. Seasonal fluctuations in buying and resultant shipment levels aside, consumers of all types have been acculturated to expect near-immediate delivery. The Amazon fulfillment model has bled over into normal business expectations.

Another reason for the speed and size trend is the impact of inflation and economic uncertainty on held inventory levels. To that point, several surveys show increasing use of less-than-containerload (LCL) and less-than-truckload (LTL) shipment delivery choices. Those modes are typically more expensive than full container or truckload, so why is that happening? It’s a balancing act between paying more for transportation and limiting downside risk on holding too much—or the wrong kind of—inventory. Both LCL and LTL open up the ability to better match demand to your supply chain.

A third reason is the convergence of AI and supply chain operations and intelligence. It’s in the preliminary stages, but already shows how fast fast can be, and how exact inventory investment can result in better customer service.

Amazon recently announced a warehouse overhaul initiative that uses AI to drive robots. Amazon expects the program, known as Sequoia, to improve the speed of storing and then finding products by up to 75% and then kick up order fulfillment by 25% while cutting costs significantly.

In addition to automation, Amazon has built out more regional hubs. “We’ve re-evaluated every part of our fulfillment network over the last year,” said CEO Andy Jassy. “We obviously like the results, but don’t think we’ve fully realized all the benefits yet. And when customers receive items quickly and conveniently, they’re going to consider us more frequently.”

Is this sustainable? Can Amazon competitors use the same playbook? Yes, and they have to because the call for smaller, closer, and faster shipments by industrial and consumer buyers will continue unabated.

Distribution centers were “a back-closet kind of operation,” says Gary La Point, professor of supply chain practice at Syracuse University. “That has all changed now.”

“Today, the DC is the gem in the crown for a lot of companies,” says La Point, a former warehouse supervisor for Xerox. “It’s where a lot of supply chain technology—robotics, new picking systems, new warehouse designs—is being developed. It’s a showcase for what you can do.”

Multiple factors contribute to the DC’s increased prominence. One is that “inventory is very expensive and companies realized they weren’t paying much attention to this huge expense item,” La Point says.

Another factor, which has particularly accelerated the advances DCs have made in recent years, is the transformational shift that has occurred in consumer expectations.

Ecommerce Intensifies Focus on DC Efficiency

DC efficiency intensified in importance with the rise of ecommerce and increased expectations for faster and more accurate order fulfillment, especially after the pandemic.

“Many companies feel the pressure to optimize operations and increase productivity to meet customer expectations,” says Abdil Tunca, senior principal analyst, Gartner Supply Chain Practice.

“Also, inefficiencies started turning into capacity issues,” he says. “Growing demand for faster response, increases in volume seasonality, and the introduction of new products are pushing the limits of warehouse capacity.

“Warehouses are under pressure to process more inventory faster than before, leading in many cases to capacity constraints,” Tunca adds.

Technology Enables Improvements

A host of developments are helping to create much-sought-after DC efficiencies.

“After the pandemic, businesses started investing more in process standardization, error and waste reduction, and technology such as automation, robotics, inventory management systems, and labor management systems,” Tunca says.

“We also see some of the early AI use cases such as dynamic warehouse slotting, predictive maintenance, and advanced analytics in logistics through warehouse management systems,” he adds. “In today’s competitive market, these solutions have started becoming a necessity rather than an option.”

Historically, distribution centers have faced major inefficiencies in the amount of travel required to operate inside their walls—including workers both walking and driving equipment, such as forklifts, great distances, La Point says.

Particularly problematic is when deadheading occurs, meaning neither the worker nor machine is carrying any product during their travel. “Someone driving a forklift with nothing on the fork is not productive—they’re inefficient,” La Point says.

“In the old distribution centers, all kinds of deadheading took place, but there is a lot of effort now to reduce walking time, travel time, and deadheading time,” he says. “You find a lot of DC efficiencies from there.”

In addition, mistakes are one of the most serious causes of inefficiency. For instance, when workers pick the wrong part and that part is then shipped, it’s “a disaster,” says La Point, leading to labor hours and costs to fix the error.

“The most important efficiencies in distribution centers now are about picking the right part and minimizing missed picks,” La Point says. Technologies—such as pick-to-light systems, smart glasses, and RFID solutions—play a key role in those efforts.

Here’s a look at two providers of equipment solutions that demonstrate the importance of combining technological advances and improved processes to solidify efficiency gains in the distribution center.

Gorbel’s Dock Door Solutions Provide Far-reaching Benefits

Gorbel’s portable ergonomic conveyor systems—Restuff-it™ and Destuff-it™—help workers unload floor-stacked products from trailers and containers.

The dock door area is a critical focal point of the distribution center. In fact, it helps set the tone for the entire operation. If the process at the dock door is an efficient one, it bodes well for the rest of the DC and can create new efficiencies elsewhere in a facility.

Gorbel, a crane, ergonomic lifting, and fall protection manufacturer based in Fishers, New York, offers portable ergonomic conveyor systems—Restuff-it™ and Destuff-it™—that are built to maximize efficiency at this deceptively complex juncture in the shipping journey.

Both systems help workers unload floor-stacked products from trailers and containers, and Restuff-it™ is a bi-directional unit that also helps with loading products.

The Restuff-it™ and Destuff-it™ systems help clients unload trailers much more quickly than before, reducing the number of workers needed for the process and cutting labor hours by approximately 50%—supercharging efficiency and creating a clear return on investment, says Anton Sawatzky, warehouse solutions sales manager for Gorbel.

“We work closely with our customers, and we know how much speed and safety at the dock door matter to them,” Sawatzky says.

Gorbel’s solutions are the only ones in the dock door field that have both a pivoting conveyor that ensures easy access to the conveyor and a platform that raises and lowers to ensure operators never have to reach above their heads for lifting, Sawatzky says.

Together, those features make unloading and loading at the dock door not only markedly safer but also markedly more efficient, he adds.

Flexible Solutions Boost Safety

In addition, the solution is fully mobile. So, instead of needing to dedicate the system to a single dock door, clients can use the solution at multiple doors, moving from trailer to trailer without the down time of waiting for a truck to pull away an empty trailer and restage the dock with a full one.

The solutions also boost safety. The dock door remains the place where the largest percentage of warehouse injuries occur, Sawatzky says. The difficulty of the work can limit the labor pool for open positions. Gorbel’s solution makes the work more appealing and provides a competitive advantage with the workforce.

“Using a machine to reduce the strain of lifting and twisting when workers are carrying a box—all while they’re under duress because they’ve got to move as quickly as possible to meet the budgeted timing for the work—helps a great deal with employee retention,” Sawatzky says.

“Warehouses can differentiate themselves with a focus on making the work safer and easier,” he adds.

Restuff-it™ and Destuff-it™ are drop-in solutions, but Gorbel team members walk clients through the systems and how to incorporate them into their unique operation to take advantage of the efficiencies they can introduce, Sawatzky says.

Often, Gorbel will provide a solution on a rental basis, helping clients to get acquainted with it and understand how quickly products come out of the trailer so they can make necessary adjustments elsewhere in their operations to maximize their gains.

“From a customer service perspective, right from day one we bring a lot of experience with dock door solutions to the table and bring ideas to the customer that will make them as efficient as possible,” Sawatzky says. “We know the difference that our solutions can make for them.”

Engineering Innovation: Emphasizing Agility and Efficiency in Automation

Engineering Innovation’s Chameleon parcel-processing solution can shift and change as volume and market requirements fluctuate.

The advance of innovation is constant and rapid in today’s distribution centers, and those who operate DCs must be ever prepared to accommodate that progress, says Don Caddy, CEO of Engineering Innovation, an Indiana-based provider of automated mail and parcel sorting equipment.

“Whatever you’re doing today, in one year or two years it’s going to be different,” Caddy says.

“There’s just too much changing in the world for that not to be the case,” he notes. For that reason, Engineering Innovation’s products each have a modular design that makes them readily adaptable.

Companies operating DCs should emphasize a dynamic approach in today’s climate. “You need to work with vendors that can be responsive so that you can make incremental changes to your process more rapidly,” Caddy says. “You don’t want to be stuck with a solution that becomes outdated and you say, ‘Yeah, we could do it better, but we’re still paying off this project so we can’t throw it away yet.’

“Change is constant—processes change, people have new ideas, and the industry is just moving too rapidly for people to get locked into a huge investment that starts out with a benefit but ends up being an albatross,” he says. “That’s why while we’re helping our customers automate, we also have to make sure we’re helping them be agile.”

For example, an Engineering Innovation customer bought one of the company’s automated sorting machines solely to scan and sort packages but later developed a need to weigh those packages before scanning them.

Instead of requiring a new machine, Engineering Innovation spent a day adapting the equipment, and “that machine suddenly became a different machine,” Caddy says.

Rather than eliminating labor with automation, Engineering Innovation focuses on multiplying the effectiveness of labor, including by improving accuracy.

Engineering Innovation integrates its solutions with customers’ existing processes rather than attempting to change the way they operate and asking them to rearrange their approach around Engineering Innovation’s equipment.

“We tend to be more targeted, and we go in and ask, ‘How can we help without disrupting your entire operation? How can we make the people you have be more effective and then leverage your available staff to get more done?’” Caddy says.

Engineering Innovation offers solutions that can provide “the most bang for our clients’ automation dollar,” says Caddy.

Spotlighting Long-term Success for Customers

“We want to focus on things that machines do well that can help people do what they do better and more accurately,” Caddy says.

“One of the big keys is establishing a relationship with customers and actually visiting and talking to them about what they do, how they do it, and what their goals are. Because we understand that, it allows us to help them as much as possible,” he notes.

In that way, Caddy says Engineering Innovation emphasizes long-term success for its clients.

“Sometimes, customers will come to us wanting product A and then we go and look at their operation, and we see that there’s a way bigger opportunity to do something with product B,” Caddy says. “We take the consultative approach, so that we can find those opportunities for them. We play the long game of supporting customers and helping them succeed as much as possible.”

Take a Strategic Approach

Gorbel and Engineering Innovation each stress the importance of integrating new solutions with a strategic purposefulness. Too many DCs are transformed without that considered intent.

“I’ve seen companies that spend tens of millions of dollars reconfiguring their DCs, but fail to consider that culture aspect of it,” says La Point. “They never achieve the level of productivity they were supposed to achieve.”

Similarly, some companies take large existing buildings designed for another purpose—often manufacturing—and adapt it as a distribution center. The building inevitably will not have been designed in a way that allows for maximizing DC efficiency.
For instance, a former manufacturing plant likely will have dock doors on opposite sides of the building—a problem for a distribution facility.

Technology brings opportunities but companies must be smart and strategic in how they adopt those solutions.

“Technologies have different maturity and adoption levels, benefits, and risks, and they mean different things to different supply chain domains and participants,” Tunca says.

“Companies struggle to find, evaluate, and prioritize the most relevant innovative technologies for their needs,” he adds. “Once they prioritize their needs, the goal should be to look for the best fit for the business rather than the best solution in the market.”

A concerted and complete effort is necessary to identify and realize new DC efficiencies.

“The correct approach maintains a balance between people, processes, and technology,” Tunca says. “Organizations sit on this three-legged stool; achieving a balance requires a holistic and strategic approach. Businesses should align their goals, communicate effectively, and continuously adapt their strategies to optimize their DC operations.”

This article unravels the intricacies of ecommerce fulfillment. It offers insights into the evolution of ecommerce order fulfillment, the transformative shift from brick-and-mortar shopping, and the strategic approaches to optimize this crucial process. It also discusses companies that perform ecommerce order fulfillment services (know as an ecommerce fulfillment company) and can help brands maintain a fulfillment center.

E-Commerce Fulfillment Development

The birth and proliferation of e-commerce can be traced back to the revolutionary advent of the internet and the subsequent digitalization of retail. E-commerce has evolved dramatically, transforming how consumers shop and interact with brands. E-commerce fulfillment has concurrently developed to accommodate the surging online retail businesses, linking customer orders to delivery, thus completing the online purchasing experience.

Originally, e-commerce was an extension of mail-order shopping, but it rapidly morphed, integrating advancements in technology and logistics. The collaboration with couriers, third-party logistics (3PL) providers, and product developers forged a multifaceted fulfillment network. As e-commerce companies burgeoned, the need for efficient, scalable, and customer-centric order fulfillment processes became paramount.

Fulfillment centers emerged as hubs where online orders are processed, packaged, and shipped. These centers evolved to incorporate sophisticated technologies such as AI, machine learning, and real-time tracking to optimize inventory management, order processing, and shipping. Today, e-commerce fulfillment is a sophisticated dance of technology and logistics, striving to meet and exceed customer expectations, balancing speed, accuracy, and cost-effectiveness in an ever-competitive online retail landscape.

Traditional Order Fulfillment

The departure from traditional brick-and-mortar shopping to e-commerce marked a seismic shift in consumer behavior. This shift wasn’t abrupt but rather a gradual transition fueled by the convenience, variety, and personalized shopping experiences online stores offer. As e-commerce soared, the spotlight turned to order fulfillment, the silent engine powering online retail, determining the speed and accuracy with which orders reach customers.

In the era of physical stores, consumers were accustomed to instant gratification – walking into a store, making a selection, and leaving with the purchase. E-commerce introduced a waiting period between order placement and receipt, bringing order fulfillment into sharp focus. The efficiency of e-commerce fulfillment became a critical determinant of customer satisfaction and brand loyalty.

In today’s e-commerce era, the fulfillment process is a sophisticated operation, often outsourced to specialized fulfillment services companies or managed in-house, depending on the scale and complexity of the business. E-commerce order fulfillment has become an art and science, balancing inventory management, order processing, and shipping to deliver a seamless and satisfying customer experience. 

The evolution from in-store shopping to e-commerce has transformed how consumers shop and reshaped the logistics and supply chain landscape, embedding e-commerce fulfillment as a critical component of online retail success.

Steps of Order Fulfillment Service

In the intricate world of e-commerce fulfillment, each step is pivotal to ensuring that the customer’s online shopping experience mirrors the satisfaction and convenience of in-store purchases. Each phase is intricately woven to ensure efficiency, speed, and customer satisfaction, from receiving the inventory to managing returns. Here’s a breakdown of these critical steps, unraveling their unique characteristics in the e-commerce landscape compared to traditional brick-and-mortar retail.

Receiving

In the realm of e-commerce, the receiving process initiates the fulfillment cycle. Unlike traditional retail, where products are delivered directly to stores for immediate shelving, e-commerce relies on a systematic receiving process to intake goods into fulfillment centers. Each item is inspected, inventoried, and stored, ready for order processing. 

For example, Amazon’s fulfillment centers, sprawling complexes equipped with state-of-the-art technology, are orchestrated to receive and catalog millions of items, ensuring an efficient flow from suppliers to end consumers.

Inventory Supply and Storage

Inventory storage in e-commerce is characterized by dynamic, technology-driven systems ensuring real-time tracking and accessibility. While brick-and-mortar stores display products on shelves for direct customer selection, e-commerce fulfillment centers focus on optimized storage solutions to facilitate swift order processing.

IKEA’s automated storage systems exemplify this, where products are systematically stored and retrieved by automated systems, ensuring speed and accuracy in order fulfillment.

Processing E-commerce Orders

The order processing step in e-commerce fulfillment is marked by automation and real-time data. Unlike in physical stores where customers pick their items, in e-commerce, this task falls to automated systems or warehouse personnel who pick, pack, and prepare orders for shipment. 

For instance, Shopify’s order fulfillment process integrates with inventory data to automate order picking and packaging, ensuring accuracy and efficiency, a precision and speed seldom matched in physical retail spaces.

Shipping E-commerce Goods

Shipping is a cornerstone in e-commerce fulfillment, directly impacting customer satisfaction. In contrast to the instant gratification of in-store purchases, e-commerce relies on efficient shipping processes to deliver goods to the customer’s doorstep. 

Companies like Zalando leverage real-time tracking and customer support to keep customers informed and engaged during the shipping process, a level of communication and transparency absent in traditional retail.

Customer Service

In e-commerce, customer service transcends in-store assistance, evolving into a 24/7 support system. E-commerce platforms provide real-time assistance, tracking, and support, ensuring customers are supported from order placement to delivery. 

Amazon’s customer service, for instance, integrates technology and human touch, offering real-time solutions, a dynamic shift from the traditional in-person assistance available in physical stores.

Managing Returns

Returns management in e-commerce is a sophisticated process, necessitated by the absence of ‘try and buy’. E-commerce businesses invest in seamless return processes to enhance customer confidence. 

ASOS’s free return policy and easy process contrast the often tedious return procedures in physical stores, marking e-commerce’s evolution in enhancing customer convenience.

Relying on Software and Technology

Software and technology are the linchpins of e-commerce, intertwining every step of the fulfillment process. While brick-and-mortar stores rely on manual processes, e-commerce harnesses technology for real-time inventory management, order processing, and customer support.

Shopify’s integration of AI for personalized shopping experiences exemplifies the pivotal role of technology in e-commerce, an enhancement that traditional retail is progressively adapting to augment in-store customer experiences.

Logistics of E-Commerce Fulfillment Strategies

Logistics are the backbone of the dynamic ecosystem of e-commerce fulfillment, intricately linking customer orders to final delivery. The strategic placement of fulfillment centers, the integration of cutting-edge technology, and policies like free shipping are crucial. Simultaneously, technology is pivotal in streamlining the order fulfillment process, enhancing accuracy, and customer satisfaction.

In-House Fulfillment

In-house fulfillment gives e-commerce businesses direct control over the entire fulfillment process. While this model offers complete oversight of inventory management and customer orders, it also poses challenges. The need for extensive warehouse space, technology, and staff can escalate operational costs. 

Yet, for businesses like Apple, the direct oversight ensures brand integrity and a personalized customer experience, balancing out the operational challenges.

Third-Party Fulfillment

Outsourcing to a third-party fulfillment provider offers e-commerce platforms the luxury of focusing on core business functions while experts handle logistics. This strategy provides access to a network of multiple fulfillment centers, reducing shipping costs and enhancing customer satisfaction with expedited deliveries. 

However, relinquishing control can sometimes result in generic packaging and less brand personalization, a potential drawback for businesses focusing on brand experience.

Drop Shipping Fulfillment

Drop shipping offers the appeal of minimal inventory handling. E-commerce businesses like Printful rely on suppliers to ship directly to customers. This model reduces the need for inventory storage and management. 

On the other hand, it poses challenges in quality control and dependency on the supplier’s inventory management, impacting the ability to meet customer expectations regarding stock availability and shipping times.

Hybrid Fulfillment Strategies

Hybrid fulfillment strategies are emerging, where businesses leverage both in-house and third-party solutions. This model offers the flexibility and control of in-house fulfillment while benefiting from the expertise and resources of third-party logistics. 

Managing this integrated approach requires sophisticated fulfillment software to ensure seamless coordination and efficiency.

E-Commerce Fulfillment Challenges

Navigating the landscape of e-commerce fulfillment is rife with challenges. Untrained staff can bottleneck the fulfillment process, while excessive volume requests, especially during peak seasons, strain resources. Additionally, branding issues arise when e-commerce stores outsource fulfillment, potentially diluting the personalized customer experience.

A resolution lies in robust training programs, technology integration, and strategic partnerships with fulfillment providers that value brand integrity. For instance, ShipMonk offers customized packaging and branding even when outsourcing, ensuring the customer experience remains untouched. 

Selecting the right fulfillment software also mitigates challenges, as seen with platforms like WooCommerce that offer extensive customizations and integrations to streamline operations.

Follow By Example: Best Fulfillment Services

Here are a couple of prime examples when it comes to fulfillment services.

Amazon

Thanks to its customer-centric approach, Amazon’s e-commerce fulfillment sets the gold standard. With multiple fulfillment centers globally, Amazon ensures rapid delivery and reduced shipping costs. The company’s seamless return policy, backed by a robust customer support system, underscores the emphasis on customer satisfaction.

Shopify

Shopify is another beacon in the fulfillment landscape, with its merchant-centric approach. Shopify’s e-commerce fulfillment network is famed for its technology integration, offering real-time inventory management, and tracking. 

The platform provides businesses access to multiple locations without the operational headache, ensuring that e-commerce businesses can focus on growth while Shopify handles the logistics intricacies.

In the vibrant world of e-commerce, these fulfillment giants epitomize the balance between operational efficiency, cost-effectiveness, and impeccable customer service. They illustrate that the cornerstone of successful e-commerce fulfillment lies in a seamless integration of technology, strategic logistics, and an unwavering focus on customer expectations and satisfaction.

Qualifications to Aim for When Choosing a Reliable Fulfillment Provider

When selecting a fulfillment provider, businesses should focus on:

• Relatable Industry Experience: A provider with experience in your business niche understands your specific challenges and customer expectations.
• Client Base: Providers serving diverse and extensive clients are typically more reliable and tested.
• Cost Effectiveness: Evaluate if the cost aligns with the quality of service; neither cheap nor expensive guarantees quality.
• Current Technology: Look for providers with up-to-date technology for efficient order processing and data management.
• Data and Analytics: The ability to provide actionable insights can optimize inventory and improve customer satisfaction.
• Versatility: A provider should be adaptable to your business needs and market dynamics.
• Customer Service Approach: Effective communication and support are vital for resolving issues promptly.

Switching Fulfillment Providers

Indicators that you may need to switch providers include:

• Cyclical Sales Issues: If your provider struggles during peak sales periods, it’s a red flag.
• Unsatisfactory Service: When business and consumer needs are met, consider alternatives.
• Poor Infrastructure: Inadequate facilities can lead to delays and errors in order fulfillment.
• Outdated Technology: Modern, efficient technology is crucial for optimal e-commerce fulfillment.

Misleading Information about E-Commerce Fulfillment

Contrary to some misconceptions, e-commerce fulfillment isn’t just about shipping products. It encompasses an intricate process involving inventory management, order processing, and customer service, each requiring a tailored approach to effectively meet specific business needs and customer expectations.

FAQs

Delve into frequently asked questions to better understand the nuances of e-commerce fulfillment.

What is e-commerce fulfillment?

E-commerce fulfillment involves the entire process from receiving an online order to delivery, including inventory management, order processing, shipping, and customer service.

What are the fulfillment methods for e-commerce?

Fulfillment methods include in-house, where businesses manage their own inventory and shipping, third-party logistics providers, and dropshipping, where products are shipped directly from the supplier.

What is the difference between dropshipping and e-commerce fulfillment?

Dropshipping involves suppliers shipping directly to customers, eliminating the need for inventory management for the retailer. E-commerce fulfillment involves the retailer managing or outsourcing inventory, order processing, and shipping.

What is retail and e-commerce fulfillment?

Retail fulfillment pertains to brick-and-mortar stores managing inventory and sales in physical locations. E-commerce fulfillment handles online orders, involving inventory management, order processing, and shipping to the end customer.

E-Commerce Fulfillment Service Conclusion

Integrating efficient e-commerce fulfillment strategies is pivotal for enhancing customer satisfaction and optimizing operational efficiency. Key takeaways include the significance of selecting a proficient fulfillment provider, the intricacies of various fulfillment strategies, and the imperative of adaptive technology to meet evolving customer expectations and business needs.

2. Optimize Warehouse Operations. Consider implementing solutions such as automated sorting and dimensioning, a mobile warehouse management system, conveyor systems, and robotic process automation to speed order fulfillment. A well-designed warehouse layout can also significantly reduce the time it takes to pick and pack orders.

3. Boost Customs Compliance Efficiency. For ecommerce imports into the United States, take advantage of Entry Type 86 or Section 321 to save time and money with faster clearance and minimal manual processing. Automated Border Interface (ABI) software from an experienced provider lets you mass-upload house bills from a simple spreadsheet to expedite the customs release of your packages.

4. Prioritize Real-Time Inventory Tracking. Use RFID tags, barcodes, and other tracking technologies to monitor inventory movement in real time—not just in the warehouse, but at every step of the product journey. This can help prevent stockouts, reduce overstock, improve coordination between agents, and ensure that inventory is replenished quickly.

5. Evaluate Inventory Management. Efficient inventory management is tantamount to ecommerce success. But inventory management techniques are not one-size-fits all. A strategy that works well in one company may not suit another, so it’s important to research and evaluate several options to find the best one—or a combination—for your specific business needs.

6. Implement Effective Returns Management. Don’t neglect the returns process when analyzing efficiency. A streamlined returns process can reduce costs and improve customer satisfaction. Consider centralized return centers, third-party partners, and other techniques to reduce handling. Use analytics to understand return reasons, which can, in turn, inform positive product and process improvements that will reduce future returns.

7. Diversify Supplier Networks. Avoid relying too heavily on a single supplier, carrier, or partner. Building relationships with multiple partners ensures that your ecommerce supply chain remains robust even if one stakeholder faces issues.

8. Set Risk Management Plans. Regularly assess potential risks, such as geopolitical issues, supply chain weaknesses, natural disasters, or labor shortages and strikes. Put contingency plans into place to ensure minimal disruption to your supply chain in case of unforeseen events.

9. Train and Develop Your Staff. As technology and best practices evolve, ensure that your team receives regular training to keep current. A knowledgeable and skilled workforce can adapt to changes more rapidly and ensure the effective management of your logistics and supply chain processes.

10. Regularly Measure and Monitor Ecommerce KPIs. Continuous improvement requires constant measurement and evaluation of ecommerce KPIs (key performance indicators). Regularly review and analyze KPIs such as order turnaround time and accuracy, overstocks, stock-outs, and inventory turnover to proactively identify areas for improvement.

SOURCE: Matthew Fotouhi, Chief Technology Officer, Customs Compliance, Magaya

Akash Gupta, CEO & Co-Founder, GreyOrange

Akash Gupta and Samay Kohli were barely out of college when they co-founded robotics and AI firm GreyOrange. From that start in 2012, the company, now based in Atlanta, has become a major force in supply chain automation, with operations across the Americas, Europe, and Asia.

“In 2012, supply chain was not as sexy as it is today,” says Gupta, who took over from Kohli as CEO of GreyOrange in 2023. “It was still a back-end function and a pure bottom-line driver rather than a top-line driver.” The world has changed since then, and demand for GreyOrange’s solutions has soared.

Gupta filled us in on the company’s history and recent activities and shared some insight into his leadership.

IL: When you and Samay Kohli founded your robotics business, why did you choose logistics as its focus?

In 2012, digitization was transforming manufacturing just as ecommerce was revolutionizing consumer behavior. We predicted that the supply chain, which connects the manufacturing and consumer ecosystems, would have to evolve quickly as well. That was a global problem.

Also, we realized that warehouses badly needed to be automated in two ways: to reduce manual labor and walking, and to become less dependent on human decisionmaking. We were intrigued to find an industry that needed a combination of robotic automation and software automation.

IL: Tell us about an event early in your career that taught you an important lesson.

Our first product was a sortation system. The launch was beautifully successful; it took just a few months to sell systems to two large companies in India. But then we had to spend 12 to 18 months refining those systems, because what you think you have on paper is very different from what happens in the warehouse. That experience taught us a lot of things that two engineers getting out of college needed to know.

And those lessons paid off extremely well. One of our first customers was the ecommerce company Flipkart. We worked very hard to make sure their peak season went well, and they turned into an amazing customer reference for us. The next season, we sold 37 sortation systems and went from $500,000 in revenue to between $10 million and $12 million.

IL: What keeps your customers awake at night?

Three things. First is how to develop a technology platform that will give their customers the right experience. Second is, once they’ve identified how to deliver that experience, how do they quickly scale up the solution to cover the whole enterprise? Third, how do they stay agile, so they can respond to any sort of event, from a pandemic to unexpected changes in consumer demand?

IL: Do customers bring any unusual challenges to GreyOrange?

One customer was shipping 80% of its volume to retail stores and 20% to ecommerce consumers from one facility. We designed a system to support that volume. Then COVID hit, and they asked us to flip the system to 80% ecommerce and 20% retail.

That was a drastic request, but fortunately we had been designing our solutions to accommodate a change in channel mix. We were able to reconfigure their system in a few days.

IL: What would we see if we followed you around at work?

I spend 50% of my time with current and prospective customers; I try to visit three or four customer sites every 15 days. Another 30% of my time I spend talking to folks in the company, including my direct reports and people at the execution level. And I probably spend 20% of my time putting out fires and making sure we keep the lights on.

IL: How would you describe your leadership style?

I’m fairly detail-oriented. I try to be as intellectually honest as possible, and I want everybody to do the same. I like to hear bad news as quickly as possible, so we can do something about it. Once we make a commitment to a customer, I go very far to make sure we keep that commitment.

IL: How do you nurture talent on your team?

Because it’s so important to understand our customers and their problems, I encourage team members to visit customer sites. I make sure that they feel comfortable trying new things and making mistakes, but also that they have a clear view of what is important, what is reversible, and what is irreversible.

These people have attained their roles because they’re capable, but through all the chaos of running a business, they need to be self-aware. It’s important to help them with that.

IL: What’s new and interesting at GreyOrange these days?

We’re making sure that each member of our leadership team spends time in one of our customers’ warehouses. And we’ve recently expanded the focus of our solutions from just the warehouse to the larger challenge of omnichannel execution, including in-store inventory.

IL: How have you been influenced by a mentor or role model?

I’ve had several mentors, but one who taught me a particularly interesting lesson was Thomas Chance, the CEO of C&C Technologies, where Samay and I did internships. We worked closely with him on a few projects, and he was kind enough to tell us about his experiences. He emphasized that you have to respect Murphy’s Law: If something can go wrong then it will go wrong, so it’s important to be well prepared.

IL: Is there something you believed strongly at the start of your career that you’ve changed your mind about?

When you start out, what’s most important is to get the technology or the product right. But the crucial thing is to get the people right. The value of having people who align on the company’s vision, culture, and behavior is even greater than the value of a good product or technology.

IL: Outside of work, how do you like to spend your time?

I love taking drives to remote places. I also love attending all kinds of musical performances. And spending as much time as possible with family is always on my priority list.

Keep Moving Forward

Looking back at his entrepreneurial journey so far, the characteristic that strikes Akash Gupta as most important is a bias toward action.

“You start your day with 10 decisions to be made,” Gupta explains. “No matter what happens, a few of those decisions will be wrong.”

But you can’t let fear of those inevitable errors keep you from moving forward. “You’ll never have enough information to make the perfect decision,” he says. “You just need to trust that you are making more right decisions than wrong ones.”