Reduce Ecommerce Business Costs With Order Fulfillment

Ecommerce has always been about two things, reducing the costs of selling merchandise to the public and adding convenience that was never seen before. Convenience comes in the form of being able to shop form stores located anywhere in the world and doing it at any time of day. There are no restrictions on when you can shop online, allowing many customers to prefer this method over traditional commerce which involved driving to a local store and physically looking through merchandise. Of course, there is a comfort level that is associated with touching a product that will never be able to be matched online, but the added values of lower prices and convenience have turned the ecommerce world into the biggest shopping method on the planet. Ecommerce businesses were able to offer their goods cheaper than traditional merchants by eliminating the costs associated with the physical shopping experience. Ecommerce merchants do not need to pay rents or mortgage payments on their stores, as they exist in a virtual world. There is also no need for employees that will assist in the shopping process itself, except maybe for an online customer service person, as the checkout and shopping process is accomplished using software that is embedded into the website. The only physical costs that ecommerce merchants must cover have to do with the actual fulfillment of orders, and typically had to pay warehouse rents and employees to process orders. Now, thanks to the dawn of specialized businesses called “fulfillment companies” an ecommerce merchant can become completely virtual.

Ecommerce business owners are able to outsource the fulfillment responsibilities to companies that specialize in order processing, saving time and money. The way it works is simple, the merchant ships inventory to the warehouse owned and operated by the fulfillment company, who maintains that inventory in a dedicated space alongside other customers. This allows the fees that are charged to be associated with only the space that is used, instead of the merchant having to speculate on the size of warehouse necessary to accommodate his or her business. A specialized software used by the fulfillment company connects to the ecommerce software on the merchant website, and when any orders are placed the information is transmitted to the fulfillment company. At that point, the fulfillment company uses its employees to pick the order from inventory and process it for shipping to the customer. Transportation is arranged using the shipping company of choice, and the order is shipped to the customer from the facility. A small fee is charged per order and a warehousing fee is charged, representing the only fees that the merchant will have to pay. This “virtual” shipping and fulfillment department saves merchants costs as well as relieving the responsibilities associated with traditional warehouse management. The merchant can then reduce their prices even lower if necessary, as the added costs typically seen in the process are not applicable.

Merchants have long struggled to reduce costs in order to compete on a global scale with other merchants who are able to manufacture products for lower prices. Ecommerce provided merchants with the ability to reduce costs associated with traditional storefronts, and now shipping fulfillment companies are allowing these companies to reduce costs even further by eliminating the need for warehousing and employees who would be needed to process orders from that warehouse. We are finally seeing the levels to which costs can be reduced, and will enable customers to buy at the cheapest prices possible