End-to-end fulfilment: why you should let someone else sweat the small stuff
Outsourcing to a specialist provider can supercharge your ecommerce business growth but how do first-timers avoid the pitfalls?
Ecommerce is booming, and with it the businesses that have launched off the back of the push towards more specialised online retail companies are beginning to scale up rapidly. But any founder knows that standards have never needed to be higher, with strengthened competition and increasingly picky customers.
What could once be explained away or blamed on poor courier firms, delayed post and glitchy customer service is no longer possible – the sector has matured and so have customer expectations. Which is why end-to-end fulfilment – from processing orders to picking and packing items, through to delivery, returns and aftersales communication and support – has become a major area of interest for companies looking to build their presence in the world of ecommerce.
Enabling a seamless customer experience takes lots of time. Enter end-to-end fulfilment. By working with third-party partners, organisations can streamline and brand every element of the customer journey, right down to branded “Sorry we missed you” delivery slips.
End-to-end fulfilment takes the hassle out of one of the hardest parts of any ecommerce experience. However, it comes with as many risks as it does rewards. “Getting a package from A to B is a lot more difficult than it sounds, particularly for a business that is expanding,” says Enda Breslin, general manager for Europe at ShipBob, a fulfilment company. “The logistics of shipping multiple packages every day is a massive time drain and can hold you back.”
Being the ‘everything’ store
“That division between being a retailer and being a delivery company that handles fulfilment has always been quite problematic,” says retail analyst Bryan Roberts. “Obviously, there are economies to be had if you run your own fulfilment and operations – you’re not paying a premium for a third party to deliver that service for you.”
But for many companies that aren’t major players like Tesco or Amazon, the cost and hassle of doing so is far too expensive. It’s like running a business within a business.
For that reason, it’s become more common for ecommerce companies to outsource the end-to-end fulfilment process to third parties, who they expect to carry the weight when it comes to the tricky business of bringing products to customers.
Yet doing so comes with its own drawbacks, says Roberts. “A lot of retailers have realised that by outsourcing fulfilment to third parties, you’re putting your brand equity in their hands,” he says.
While many customers can identify most major delivery companies, in many cases the delivery process is white labelled, with third-party employees presenting themselves and their processes as the business they’re providing a service to. Rather than a courier such as DPD or Evri “Sorry we missed you” label slipped under your customer’s door, it’s increasingly one in your business’s name.
That’s all well and good if the delivery driver genuinely calls when your customer is out but it jeopardises your reputation if something goes wrong, or the person supposed to be doing the delivering fails to knock on the door. “That’s where reputational damage can occur,” says Roberts.
Go in with your eyes open
Avoiding reputational damage is why it’s more important than ever that businesses looking to contract out their end-to-end fulfilment services ensure that the company they choose is reputable and has their best interests in mind. “You need to be cognisant that they are, to some extent, holding your brand equity,” he says. “And if they don’t fulfil their side of the bargain in an elegant fashion, you’re getting dragged into it, even though you’re not responsible for that part of the supply chain.”
Of course, ensuring that anyone you enter an agreement with shares your interests and brand values is only part of the equation. There’s also the bottom line to consider. “For lots of retailers, it doesn’t make sense to have that end-to-end capability,” says Roberts. The capital investment in buying a fleet of trucks and delivery drivers to staff them doesn’t make sense, so you’re often looking at picking fulfilment partners based on price.
But don’t compromise quality for cost, warns Roberts. “The ability for consumers or shoppers to separate out various parts of the chain can be hard to pick apart,” he says. “If you order from a retailer and the delivery company doesn’t deliver in a satisfactory fashion, it’s you that can be affected.” Still, businesses often seek out delivery “at an appropriate – and generally lowest – cost point”, says Carmen Carey, chief executive of Sorted, a delivery experience platform.
Four key areas of end-to-end fulfilment
However, that’s just one of four key areas that Carey believes businesses should think about when contracting with an end-to-end fulfilment partner. They also need to think about how the delivery process matches the promises made to consumers when they check out. They need to be aware of the content and updates that they and their customers will be given about the progression of their package, on both the outbound and return journeys (if needed). “And finally, the return being seamless and frictionless,” says Carey. “That’s what we’re trying to do with our customers – to fulfil all angles of that customer experience through different elements of that parcel lifecycle.”
Before flicking through those four questions and trying to answer them, though, there’s a more fundamental question to pose. Do you need a partner at all? “There are circumstances where handling fulfilment internally is the right call,” says Breslin. “For low-volume, personalised products, delivering yourself can make more sense than outsourcing. But once you break the threshold where delivering internally is becoming so time consuming it is stopping your progress, it is time to outsource. If your product is featured on TV or an influencer shares it, that threshold can be crossed quickly.”
Then it’s about finding the right partner – and making sure you do the dos, rather than the don’ts, of end-to-end fulfilment. Two examples of small ecommerce businesses that weighed up the options of whether they needed a helping hand to grow their business – and came to different conclusions – can be seen below. But alongside the four key checks that Carey recommends, Breslin has some more pointed questions you’ll need to consider.
The right fit
One major thing to consider is whether the provider is the right fit for you. Packing, handling and delivering T-shirts is quite different to meal packs – and specialised suppliers with experience in specific areas exist for a reason. “If you’re a fresh food specialist, you’ll want to partner with a business that is an expert in keeping foods cool on the move. Scope is also a big consideration,” says Breslin. “If you just sell products locally, you’ll need a different partner than if you are planning on expanding internationally.”
Likewise, what kind of data do they provide on key metrics that help you keep track of your business? While you’re willing to hand over the public perception of your business to a third-party provider, you can’t outsource everything.
“By outsourcing with the wrong partner, there is a danger that you will lose some of the control of your quality standards,” warns Breslin. “Find a partner that provides real-time information on stock levels, delivery status and number of returns so you’ll be able to maintain or better your standards, and still be able to react quickly to opportunities.”
And ensure that the partner and your relationship with them feels right. “Fulfilment is an essential part of the customer experience and the partner you choose has to have the same level of passion and care for your business as you do.”
Get it right and the benefits are almost immeasurably large. “By partnering with the right fulfilment business, you can unlock savings,” says Breslin. “The partner will have relationships with delivery firms and, due to economies of scale, be able to reduce costs for you. They will also provide access to tools and features that you simply don’t have the time to develop.”
More fundamentally, they let you get on building your business – focusing on the big picture while they sweat the small stuff.
The beginning of the end-to-end
London-based compostable coffee-pod company Moving Beans kept all its inventory in the shed of one of the founders, packed wall-to-wall with boxes. “As we started growing and doing daily runs to the Post Office carrying all these boxes, it became unfeasible,” co-founder Daniel Hardej says. “It was quite a nice problem to have,” he admits, but it did dawn on them that something needed to be done.
They began to realise that, in order to scale up, they would need to consider how to outsource delivery of their product. Shuttling boxes of coffee capsules back and forth was proving too time consuming and eating away at their ability to build other parts of the business. “It was at that point we thought, if we wanted to scale beyond this, it’ll be really important to get a good fulfilment partner,” he says. “We weren’t able to juggle all the tasks that come along with packing, labelling and posting all these parcels ourselves by hand.”
Hardej and his co-founders realised they’d soon need help when orders began reaching double digits in a day. “But once we got to push it towards 100 a day, that’s when we really saw the value, not just in terms of time but in cost as well,” he says.
They shortlisted half a dozen fulfilment companies based on recommendations or a Google search. Then they whittled it down to the ones that had experience working with small-scale but fast-growing companies – and that had handled perishable products. “We were looking for really economical pick-and-pack costs that made sure our courier fees wouldn’t completely erode any money we made,” he says.
Initially, the founders tried one fulfilment company and found it good, but decided to change because of a lack of proactive communication. Another company offered a competitive bid to take over the business and promised to keep Moving Beans in the loop. That has paid dividends, says Hardej. “As we grow, we might have more niche requirements for certain customers,” he says. “Knowing we’ve got that person helping us take care of anything that might go wrong, that’s a lot of security and peace of mind.”
The sums didn’t add up
Lawrie Jones set up his Bristol-based health supplements business, Stronger Bones, in December 2021. “At the moment, it’s small volume and we’re trying to build up our brand name,” he says.
Of course, building your brand takes time – and devoting brain space to that comes at the expense of tackling other key parts of the business. That’s why Jones scoped out the possibility of outsourcing end-to-end fulfilment to a third-party provider.
But ultimately, he decided not to contract with an end-to-end fulfilment company. The reason? Primarily cost. “We sat down and looked at the products we had, looked at the margins on the products and looked at what it would cost to outsource the fulfilment,” he says. The sums didn’t add up.
In part, that’s because of scale: at the moment, fulfilling orders isn’t a major time sink for Jones and his employees. Likewise, he found that some outsourcing companies wouldn’t consider Stronger Bones as a client because of the scale they operate at. “With some organisations, there are minimum volumes,” he says.
Most suppliers offered a fixed fee as a baseline, then a variable fee on top depending on the number of orders they were expected to process on Stronger Bones’s behalf. “When we did forecasted turnover and trade volumes, it was easy for us to say, ‘Is this going to work for us or is it not going to work for us?’,” he explains. “With the products we’ve got, it wouldn’t.”
There were other considerations, including the risk of returns. Customers who send back products to large online retailers that handle end-to-end fulfilment, such as Amazon, are often granted refunds as soon as the product is received. For a supplements business like Stronger Bones, reselling any returned products is nigh-on impossible. “It does make it easier for international trade and puts you in front of millions of customers,” he says. “But you don’t own those customers.”
That said, Jones doesn’t discount redoing the sums later on. “There’ll come a point where we’re not shifting 1,000 units a month but are shifting 5,000,” he says.