Businesses cannot rely on a one size fits all method.
As a foreign manufacturer who wants to sell products with large and popular online retailers in the USA, you already understand the roadblocks and challenges that occur every step of the way.
Handling them at your end might not be easy (or even possible) with your limited understanding of offshore markets and processes.
Here are some strategies that are helpful when considering order fulfillment in the USA.
Understand your business size and order volume
The size of your business and how many orders you get matter. A smaller company might prefer to keep fulfillment in-house while it could benefit you to hire a third-party logistics (3PL) team or an end-to-end fulfillment organization when you grow larger.
Steady growth in sales volume would mean that you could quickly outgrow your current systems. You should consider whether opting for a different strategy could better facilitate the orders from your customers.
Having an integrated all-in-one solution can help with order fulfillment from taking an order until the customer is satisfied.
When choosing a fulfillment strategy, ask yourself, “Where are my customers located?”
Warehouses located too far from your customer base will incur more costs. Likewise, shipping from rural areas will also not be cost-effective. It’s important to have central urban locations for warehouses to ship out from.
If there’s an international market you wish to penetrate (especially lucrative ones like the USA), it would be good to partner with a fulfillment company that is familiar with the process in that country. This can minimize errors and provide customers with a good experience.
Maintain accurate inventory
Accurate inventory is crucial to keeping your warehouse operating smoothly. It can be incredibly frustrating to purchase something that is actually out of stock. Real-time cycle counts will show that products are out of stock and prevent customers from ordering items that are not available.
You will also be able to stock up on inventory that is running low and avoid having a stock pile of items when they’re not selling as quickly. When choosing a third party to operate your order fulfillment, ensure that they have good inventory management systems in place.
If a customer has ordered a product that is out of stock and will have to wait for new stock, it can hurt customer satisfaction. You will also run into problems having to ensure that future orders are fulfilled. You want to ensure that you’re working with a company that maintains inventory accurately.
Integrate with suppliers
It is common to have multiple suppliers for the different goods and services that you produce. The quality of your supplies directly affects the quality of your business and the service you provide to your customers. This means that a delay on the supplier’s end will affect your business flow as well.
Often when suppliers are not integrated, information like this could be missed out on or miscommunicated. Integrating your different suppliers into one system will allow for a smooth flow of transition. It will also help to resolve errors quickly, information will be up to date and communication lines are kept open.
When choosing the type of warehousing, the first criteria to look out for is location. You don’t want something that’s located too far away from your target market. Next, the type of warehousing you choose needs to meet the needs of your business.
Some options to consider could be smart warehousing or micro warehousing.
These are warehouses that are equipped with technology that automates systems and boosts efficiency. The levels of a smart warehouse can vary from having warehouse management systems to having robots that help pack items.
They can use RFID codes instead of SKUs or barcodes. The codes can be scanned by the system in the warehouse and reduce the need for employees to key it in manually. Warehouse management systems can automatically update inventory numbers as they get packed.
Using technology to handle the nitty-gritty work automates the entire process and reduces the margin for human errors.
A micro warehousing strategy sets up multiple small warehouses in different areas that are close to your customer base. Shipping processes can be quicker and inventory management will be more efficient. Customers could also have the option of picking up their parcels if they are within the area of the warehouse. This could be more cost-efficient than maintaining one large warehouse and shipping directly to customers.
Make the supply chain transparent
Keep your supply chain transparent so you can see which systems are working well and which ones need more help. When supply chain transparency is increased, it is easier to detect where the lag in order fulfillment is happening. You’re more likely able to fix the problem when you can tell where it starts.
There are software that can help track each step in the supply chain. These software can provide information that gives you the insight to help facilitate improvement. Without specific information, you will simply have to guess which parts of your supply chain are not working well.
Systems are able to tell you exactly when inventory shipments arrive, how long they take to be stocked and how long it takes for packages to be ready for delivery. If production is being delayed, you’d be able to see why that’s happening. Keeping things transparent helps to build a strong foundation for your business.
Use alternative shipping methods
Customers will abandon their cart if the shipping fee is too high. This can discourage customers even if you offer competitive prices or high-quality products. It usually isn’t an issue with items that are being shipped locally because local shipping rates wouldn’t fluctuate too greatly.
However, if you’re shipping internationally, you’ll have a few more things to consider. Your product needs to be something that can be shipped internationally and you have to consider the shipping restrictions of each country.
You’ll also have to determine the right freight carrier for your product. More recognizable carriers such as FedEx and UPS could start at a higher price.
Rate shopping would help you find the most affordable carrier but hybrid solutions could be a more attractive solution. Third-party logistics companies or fulfillment agencies in a country also have other shipping methods available and it might be cost-effective for your company to check out what options they have.
Online shopping does not have the same instant gratification as shopping in-store. You don’t get to receive your product immediately even though you’ve paid for it. Customers tend to be anxiously waiting for their packages especially when buying from a new store.
Implementing last mile tracking will let your customers know exactly where their packages are and give them predictability, letting them know when their package would arrive. They would be less frustrated and are less likely to think their packages got stolen or lost. It also saves customer service time replying to each inquiry about where their parcel might be.
Use CRM technology
Customer relationship management (CRM) technology enables a company to manage all interactions with current and potential customers. CRM benefits companies when they want to improve their customer service and understand customer-specific requirements.
CRM technology collects, stores, and enables access to your customer’s information. Creating this database ensures that information is up to date. Identifying your customers’ patterns allows you to market products to them more efficiently. Customers who are getting their needs met will likely become repeat customers.
This system can also be used to identify customers who are having problems and help to quickly resolve them. You’ll also be able to keep track and check if it is a repeating problem. CRM technology could be a large investment so be sure to pick a supplier who meets the needs of your clients and your business.
Keep communications open
Communication is so vital in your business and will save you a lot of hassle. Keep communications open with your suppliers, employees, and customers. Expectations should be clear and problems should be brought forward quickly so that they can be promptly solved.
Once customers have placed their orders, give them clear expectations about when they will receive their parcels. Often, customers are willing to be understanding about problems when they know you are being transparent and are putting in the effort to solve them. They are more likely to be upset when information is withheld from them.
Clear instructions ensure that employees are not confused. Asking for clarification from instructions will eat into productivity times and confused staff are also more likely to make mistakes. Open communications also allow staff to bring forward problems and even solutions you might not have thought of.
With your vendors and suppliers, clear instructions will avoid miscommunication that can cause delays and other problems. Having a good relationship with your supplier will benefit your business as they can provide you feedback and new perspectives which could grow your business.
The article is a part of our comprehensive series on “ Order Fulfillment Process in USA: Steps Involved”.