How to Use Product Fulfillment to Increase Customer Loyalty
There are several things that are important when it comes to a successful product fulfillment that will lead to more sales and increased customer loyalty. Location, technology integrations and free 2-day shipping, are at the top of the list. Here is what you need to understand about fulfillment centers before you decide to partner up with a third-party provider.
Location is Everything
Whether you only sell online or have a brick and mortar store, physical location still matters in ecommerce. Next to storage space, location is can help meet customer expectations around delivery costs and speeds. Always keep in mind that both affordable and fast shipping are important to your customers, so optimizing your fulfillment operation based on where your customers reside is the most cost-efficient strategy.
A strategic step in optimizing fulfillment is to distribute inventory to multiple locations that are as near as possible to your customers. For this reason, there has been an increase in urban fulfillment centers as they give online sellers the opportunity to quickly and affordably ship to customers in big cities with large populations.
You can greatly reduce the cost of shipping and time in transit by reducing shipping zones, or the distance packages travel. It is also best, when possible, to use fulfillment locations near common shipping destinations. In doing so, ground shipping can be leveraged, and it is much cheaper than expedited air and faster than shipping from a greater distance.
The Role of Technology Integrations
Fulfillment centers have software that integrates seamlessly with ecommerce platforms and online marketplaces can help manage orders across sales channels automatically thereby reducing duplicate data entry. While the order is being updated in the database, the fulfillment staff can be quickly alerted to pick, pack and ship the items to the customer. Tracking information will be sent back to the platform or marketplace and shared with the customer. Customers who shop online appreciate these real time updates.
Additionally, this benefits you as the seller as you will have a clear and accurate visibility into inventory quantities on hand across fulfillment locations. This will help you stay on top of when to order more inventory to prevent stockouts. In leveraging this integration and connecting the upstream activities of purchasing and manufacturing to the downstream activities of sales and product demand, you can make more accurate purchasing as well as production decisions.
Stay Competitive with Free 2-day Shipping
You can silently curse at Amazon for demand of fast shipping speeds like 2-day and even same-day shipping, but that has become the norm for shipping. Fortunately, there are creative ways to create loyalty from your customers. And yes, this can be challenging as shipping is not free and can be expensive for some online sellers. Fortunately, there are highly effective strategies that can help you achieve higher conversion rates without hurting your margins. Here are some simple ways that you can use ecommerce fulfillment strategies for profitable shipping options:
- Work in the cost of shipping into the product price using the average shipping cost.
- Require a minimum purchase for free shipping. This can increase the average order value.
Remember the power of the word “free.” Offering free shipping has a major impact on shoppers’ behavior. Think of the last time a merchant offered you something free and how much you spent. Offering free 2-day shipping helps lessen cart abandonment rates and get more shoppers to your checkout page in the first place. Of course, the goal is to do this without increasing product returns.
You will need to determine if you can offer free shipping or will need to have a purchase minimum. If you sell inexpensive products, it might work in your favor o have a purchase threshold. Most sellers find that the free 2-day shipping strategy often works best for more expensive products or stores with shoppers that generally spend more on average.
It would be best to gain some suggestions on which ecommerce order fulfillment model will work best for your online business. Examine inhouse fulfillment, third party and dropshipping and learn the advantages and disadvantages of each.