What is order fulfillment and how will the supply chain affect my business? Around the globe, eCommerce sellers are dealing with the complications of a supply chain on the brink. The COVID-19 pandemic’s impact on global supply and demand has created an imbalance in the market. This imbalance caused prices to rise and customers to become angry at long shipping times for their products.
As a small business, it is critical to stay ahead of supply chain issues. Therefore you ensure that you can provide quality service to your customers. A strong supply chain is essential, with eCommerce sales becoming the norm for B2B and B2C sales by 2025. Trends look to keep supply chain issues in place through the end of 2022. However, there are steps you can take to alleviate the pressure and set yourself up for success.
In this article, we will take a closer look at what order fulfillment is. Then, the trends that supply chain logistics face in the coming year. By understanding the trends, you can take the right steps. Thus, preparing yourself for what may come in the year ahead.
What is eCommerce Order Fulfillment?
Before we break down the trends in order fulfillment and logistics in 2022, a definition is required. Order fulfillment is the process of receiving, processing, and shipping products to customers. It entails tracking orders or work orders electronically for each step in the process. As technology continues to enhance online business, eCommerce order fulfillment has also become more sophisticated. Business owners can break down order fulfillment into these steps:
Receiving
When it comes to eCommerce order fulfillment, receiving generally involves checking products are in stock and have no damages. This also involves logging the product’s information so it can be used to populate the packing slip. Some companies choose to use barcodes for this step to speed up the processing time.
Picking and Packing
You’ve probably heard of pick and packing. But what does it mean? First, it is a type of order fulfillment eCommerce retailers typically turn to the most. The center doesn’t prepare and ship whole cases or pallets but instead relies on a system and team to pull (pick) individual items and then get into packaging (pack) addressed to the customer. Then the order is on to shipping.
Shipping
How you ship can depend on the type (BTB or BTC) and the size of the business or order. Rates and services may shift as well depending on what the customer chooses at checkout. One of the ways shipping can fluctuate is based on how the shipment is charged.
There is variable shipping which is based on the weight, location, and speed of delivery. Then, there is flat rate shipping. This means it does not matter what items are part of the order, and it will still only cost X amount. Finally, there is the good old’ FREE shipping. This structure is used to help attract more customers. Shipping can be handled by a single team or be divided into branches for each of the various shipping carriers. Further, there are ways to ensure greater success with this step. Be sure to check out our article on shipping for small businesses.
At the end of the day, shipping is about getting your customers’ orders to them once processed, picked, and packed. Make sure you have a good transportation solution in place with the best rates.
Returns
Many products, once shipped, will return to the sender for a variety of reasons. Companies that fulfill online orders must have a separate system for returns. This ensures products don’t have damage or are misplaced or mishandled. A quality returns system can also help increase customer satisfaction and retention.
2022 Trends in Order Fulfillment and Logistics
The COVID-19 pandemic’s impact on global supply chains has put a strain on the economy. Ports are lined with ships that can’t offload products and customers growing increasingly angry with long wait times. As a result, businesses need to be more prepared than ever for anything that could disrupt their supply chain.
When it comes to order fulfillment and logistics, here are six trends we expect to see in 2022:
On-Demand Logistics Are Here to Stay
The pandemic has required businesses to alter their supply chains. Yet, their demand for more on-demand logistics is not just due to the pandemic. The future of order fulfillment is about speed—and keeping up with the demands of customers who want things now. One of the most popular options for eCommerce businesses is on-demand logistics.
With this model, fulfillment providers can meet your order fulfillment and delivery needs at any time. This makes them a flexible option that allows you to scale up or down as needed. This also works well for businesses that need products shipped directly from manufacturers to customers. Thus, another way to meet the growing demand for instant gratification.
Localization is Set to Enhance Speed of Order Fulfillment
As more companies start looking for ways to cut down on delivery times, one solution is to localize your business. To achieve this, you’ll have to take inventory of where your customers are located. Next, determine whether it would be cost-effective to have fulfillment centers within close proximity to these areas. You’ll also want to consider whether sourcing products from a nearby supplier would affect the quality of your product. Also, don’t forget to factor in how much it would impact your total delivery time as well.
The Rise of Cloud Operations
Businesses try to avoid having bloated inventories. They also don’t want to deal with the headache that comes with managing a warehouse. As a result, more businesses are turning digital. The solution is virtual, cloud-based processes to lead their data-driven decisions. With this model, you’re able to store your inventory in a third-party warehouse and work directly with an operations specialist. This solution can make sure that you are always receiving the right amount of product for each shipment. This also gives eCommerce businesses the freedom to quickly respond to any changes in demand. Consequently, no more worrying about storing too much or too little inventory.
Supply Chain Visibility is Expected
Another trend we expect to see in 2022 is the desire for companies to have total visibility. Businesses want more data over their entire supply chain from supplier to consumer. With the issues that today’s supply chains face, people are looking for answers.
A popular option for achieving this comes through blockchain technology. Specifically, the decentralized ledger system that records all transactions made on a network. With blockchain, you’ll be able to access an extremely accurate, real-time record of all product movements. Thus, streamlining the entire order fulfillment process. Expect to see more businesses embracing this technology to make their operations as efficient as possible.
Last Mile as a Service (LMaaS) Will Grow
As the need for on-demand logistics rises, so too will the opportunities for Last Mile as a Service (LMaaS) providers. Don’t want to deal with the hassle of creating your own delivery system? There are plenty of options out there that can do it for you. The pandemic saw companies outsource their delivery processes to Uber, DoorDash, and other providers. Today’s businesses can even choose to outsource their last mile as a service to a third-party logistics provider. This will expand to more types of companies—not just eCommerce, but other industries as well—in the years to come.
Government Engagement in Order Fulfillment Process
The pandemic revealed problems in the supply chains of nations. As a result, governments are more involved. They are developing policies aimed at fixing the shipping industry. 2020 and 2021 saw more governments stepping in to alleviate strain. Furthermore, it has revealed the critical dependency freight has on communication and risk. As these risks increase, the authoritative bodies that govern the industry will grow even more involved. This has already been seen in the US stepping in to subsidize cross-docking companies to speed up shipping.
With this engagement, governments are asking for more real-time data. They want to better track supply chains and improve communication in times of crisis. We expect this trend to continue over the next several years. Furthermore, we expect it to get even stronger as eCommerce overtakes traditional retail.
How to React to 2022 Trends
As we head into 2022, we can expect to see small and sustainable eCommerce businesses continue to gain massive followings. Similarly, small businesses that may not consider themselves “eCommerce” will adopt many of the same successful operation policies and procedures. For small businesses, this means that you’ll have the chance to get in on a market that’s growing. Also, you can still offer competitive prices while offering local relationships that can overcome delays.
For companies already existing in the industry, this means diversifying your business model through digital transformation. This will help you find new ways to compete against players who are dominating the space.
To compete in the increasingly competitive environment, you’ll need a well-tailored fulfillment strategy. You need an order fulfillment strategy that allows your business to scale as needed. Now is the time to start planning.
Take Your Order Fulfillment Further with GEODIS eLogistics
GEODIS eLogistics is passionate about helping small businesses enhance their supply chain capabilities. Our 3PL services help companies to increase their profitability while reducing overhead. Thus, allowing them to focus more of their resources on growing the business.
2022 will be a make-it-or-break-it year for eCommerce—and you need to make sure your business can meet the challenges.
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