Although eCommerce is projected to grow at a CAGR of 11.58% globally, eCommerce brands in the United States are having difficulties in scaling their business. A new report from NFI eCom revealed that most brands found scaling their business and expanding their fulfillment operations globally to be two of their biggest challenges.
Nearly nine in every ten eCommerce brands reported the inability to grow and scale their business to be amongst their top three fulfillment challenge.
Survey respondents were asked to rank common fulfillment frustrations:
90.91% of the surveyed brands reported scaling was amongst their top three fulfillment frustrations. Brands revealed it was “difficult to find a fulfillment provider that scales with us”.
Further analysis revealed growing brands considered finding a partner with the capability to scale with them as one of the important criteria while evaluating fulfillment provider. Some brands went on record to say, “When we evaluate fulfillment providers, we check whether they have the ability to help us scale into new markets”.
Some brands even switched providers due to this reason – “We outsourced our fulfillment to a different provider as we wanted to scale and needed someone who had already invested in fulfillment tech”
While searching for the next fulfillment partner, brands also made it a point to look for tech-enabled providers. Brands said, “We want to partner with a brand that’s invested in growing their technology and automation.”
8.5 in every ten eCommerce brands reported lack of transparency in pricing and unfair rates were another one of their top three frustrations with fulfillment providers.
When choosing fulfillment providers, brands said “fair pricing, transparency and competitive rates” were crucial to their decision-making process.
When brands say transparent pricing, they are referring to unexpected fees or hidden costs fulfillment providers charge at the time of billing without brand’s prior knowledge. Unexpected charges of such nature were also another reason brands switched providers.
Brands revealed they prefer providers with “simple pricing structure that takes into account the nature of our business“.
For more than 75% of the brands, reaching global market is one of the challenges. Brands are seeking fulfillment partners that offer international shipping as a means to reach a global audience. This issue aligns with the troubles brands are battling as they look forward to scale their operations. In the growth stage, brands often change fulfillment providers in favor of the one that can help them ship products internationally. One of the growing brands interviewed divulged, “We are looking forward to expand into international markets. We need a fulfillment provider that can support us.“
Seven in every ten eCom brands unanimously agreed the lack of good customer service and timely support was the fourth biggest challenge they encountered when outsourcing fulfillment.
The frustration arises from the fact that poor customer service from a fulfillment provider often results in poor end customer experience. One major brand revealed, “Losing a lifelong customer due to fulfillment provider’s poor service is one of our biggest fears”.
Brands are on the search for partners who are easily accessible over email or call. Many are willing to switch providers in the quest for better customer service. One brand reported, “We chose our current fulfillment service provider as they were able to help us serve our customers better.”
Similarly, another brand said, “We changed fulfillment providers as our current provider is diligent and provides ways to access open order reports daily. They listen to requests and needs and are willing to communicate anytime over call or email.”
Nearly 55% of the respondents agreed fulfillment providers need to offer brands more resources, and education on the topic of fulfillment.
This need stems from the fact that growing brands often do not have a complete understanding of the nuances of fulfillment. Resources to help understand the responsibilities brands need to shoulder to ensure their orders are shipped on time. For example, articles or guides on how the brands should label their products when they send products to the provider’s warehouse prove helpful.
The knowledge sharing would also enable brands to understand the challenges providers encounter and work in partnership to overcome them. One brand revealed, “Fulfillment providers should offer client coaching in terms of what brands can do differently or better to help them succeed, save on inbound and production costs, streamline the receiving, or put away process, etc.”
With over 20 years of experience in the eCommerce fulfillment space, industry veteran Michael (Mike) Simpson (Vice President of eCommerce, NFI) has helpful insights on how brands can win over their fulfillment problems.
According to Mike, the key issues holding growing eCom brands back from scaling include:
Mike expounds “To obtain and increase customer loyalty, brands need to deliver on their customer promises. Every. Single. Time.
Great customer service isn’t enough. It’s table stakes. To truly stand out and grow, you need to earn your customer’s trust and, ultimately, their loyalty.
The ability for you to get products into the end consumer’s hands accurately and quickly ultimately determines the perception of your brand. Incorrect orders and/or slow deliveries will negatively impact your customer satisfaction and ultimately customer loyalty.”
Mike, with his eCom wisdom, suggests the following three ways brands can overcome their fulfillment challenges:
For a growing brand, focusing on its core competencies is more important than worrying over the intricacies of fulfillment. Brands should invest more time honing their product design, manufacturing processes, research and innovation efforts, marketing, and sales than in fulfillment operations.
A brand’s lack of experience in handling fulfillment might hamper their customer experience; especially during peak season.
On the other hand, outsourcing fulfillment to a provider takes away the weight off of the shoulders of brands. They can rely on the expertise and experience of the provider to navigate the pitfalls of operations.
When it comes to fulfillment, brands should aim for a partnership based on trust instead of a brand-service provider relationship.
For growing brands, it’s necessary they evaluate potential fulfillment providers against set criteria. At a minimum, this should include:
Finding a fulfillment partner that brands can trust is the most essential component of growth.
eCommerce growth requires a tight grasp of technology and automation to scale fulfillment operations.
While considering fulfillment providers, brands must seek those with expertise in technology – one that has tech-enabled warehouses and processes.
Technology and automation are the keys to growth, especially considering the sensitivity of the labor market. Partnering with a provider that is committed to advancing its technological capabilities will help brands overcome their scaling problems.
Although scaling is one of the biggest challenges for growing brands, the right fulfillment strategy and partnership with the right fulfillment provider can help brands move forward on their growth trajectory.