For decades, the process of getting a new product on store shelves was fraught with risk. Retailers didn’t want to gamble on an unproven product. If they did, they could end up with inventory that they would need to mark down at a loss. The items could even end up in the trash.

Some items were great and would surely become hits once consumers discovered them. But if the retailer wouldn’t stock them, the supplier would take the hit for all the research, development and production costs. Sometimes the dream product died before it even made it to the stores.

Test newly launched products online first

Today, eCommerce makes launching new products so much easier. Manufacturers, suppliers and even retailers can test how newly launched products sell by first making them available on their eCommerce or marketplace sites. Online sales information can help determine whether items should be stocked on retailers’ shelves and in which stores they should be stocked.

What’s more, suppliers who are confident about their products can take the risk out of the retailer’s hands altogether, making it more likely for retailers to test the product on their eCommerce sites.

For example, say a supplier has a new cosmetic they’d like to get into stores. Retailers don’t want to take a chance on an unproven product, only for it to languish on the shelf, get marked down and sold at a loss.

By negotiating to have the new product on the retailer’s websites and taking responsibility for inventory and drop shipping, the supplier can remove much of the retailer’s risk. In this scenario, the retailer is much more likely to agree to a short trial.

Then, if the newly launched product is successful and appeals to the retailer’s customers, the retailer is more likely to order the product and put it on the shelf because it was proven online first.

Piloting the product to store shelves

Once the product has been proven online, the supplier and retailer can negotiate a pilot program and decide which stores should have the product.

It’s even possible to split products up based on customer preference, such as sending certain popular colors to stores while less popular ones go online. 

Finally, the supplier can prove their success and get the retailer to pick up all their items as part of the general inventory. Of course, this means the supplier needs access to sales and inventory data from the retailer for both in-store and online sales.

For more insights on how to maximize your success with new products, contact our team.

The acceleration of eCommerce also has massive implications for how retailers and distributors fulfill orders. Yet fulfilling eCommerce orders efficiently and profitably is an ongoing challenge.

Looking to boost the efficiency of your eCommerce fulfillment? Get the data you need from your vendor community to profitably fulfill omnichannel orders. 

Here’s a guide to four of the most common forms of eCommerce fulfillment:

1. Fulfilling orders from warehouses or distribution centers

Most retailers and distributors fulfill the vast majority of their orders through a warehouse or distribution center (DC) from inventory they own. This includes eCommerce orders shipped to the consumer’s requested location, or, to a retail store for customer pickup from a distribution center. Sometimes this is called “drop shipping.”

Advantages of fulfilling orders from a DC include:

• Economies of scale from ordering product in bulk
• Efficiencies from receiving inbound shipments in bulk
• Increased ability to to keep stores in stock by pulling available inventory from multiple locations

2. Fulfilling orders from stores for in-store pickup

Many consumers prefer to buy products online and pick their purchase up in a store. This fulfillment method is also known as BOPIS, curbside pickup, click-and-collect and other terms. These orders are fulfilled from store inventory and set aside for customer pickup.

Advantages of this type of fulfillment include:

• Satisfy consumer demand for getting products quickly
• Drive incremental revenue from additional in-store purchases

3. Fulfilling orders from stores to consumers’ homes

Increasingly, retailers are also using their stores as small-scale distribution centers to fulfill online orders from store inventory to consumers’ homes. Sometimes, this is also called “drop shipping.”

This fulfillment method has many benefits, including:

• Improve customer experience by getting products to consumers quickly
• Reduced freight costs by shipping in the location closest to the consumer
• Less wasted inventory by cycling through older inventory first
• More efficient returns by reducing the number of returns that have to go back to the warehouse or the supplier

4. Fulfilling orders directly from suppliers to consumers

Suppliers can also fulfill orders on behalf of a retailer, distributor or marketplace to a consumer (or another business) from inventory the supplier owns. This is often called “drop shipping” or “direct to consumer” fulfillment.  

For most retailers and distributors, drop shipping is a niche fulfillment model that complements other forms of fulfilling orders. Typically, the value of a drop-ship order is much smaller than a bulk order because it is used for single items.

Advantages of drop shipping include:

• Satisfy consumer demand for specialty items, such as sizes or colors, that don’t make sense to carry in inventory
• Quickly expand assortment with additional SKUs
• Test new products before stocking in stores

Based on the retailer or distributor relationship with the supplier, these orders may also be shipped to a retail store for consumer pickup.

Supplier data is critical for all eCommerce fulfillment methods

In today’s omnichannel environment, most retailers and distributors use a blend of different fulfillment models to satisfy consumer needs. 

The key to successfully executing any of these eCommerce fulfillment models is having the right data from suppliers and other trading partners. This includes item data, inventory updates, real-time order status information, visibility into shipments and more. 

If you’re looking to expand or improve eCommerce fulfillment, the SPS Commerce expert team can help. Contact us today for a free evaluation or visit our website.

To create the optimal shopping experience, eCommerce retailers (and their drop-ship suppliers) have found that it all comes down to the three F’s:

• Fast Delivery
• Flexible Orders & Returns
• Free Shipping

The secret to the success of each of these steps is automated trading partner relationships. Only when a retailer and a supplier (and their systems) work together can these processes can become deliver the speed and visibility necessary for eCommerce order fulfillment.

Fast: eCommerce order delivery times get shorter

Speed is essential, but can you consistently deliver…especially with drop-ship orders that are out of your direct control?

The key is to automate your trading partner relationships. eCommerce orders should flow directly into an ERP, OMS or WMS solution so fulfillment can start the second it’s received, routing orders to the supplier for drop-ship fulfillment if necessary. Any stops along the way for keying in orders translate into delays that are no longer an option. Orders simply cannot sit on a desk for data entry at your site or your suppliers. Why does fast shipping matter? Does your customer really need their purchase tomorrow? It doesn’t matter, it is expected. And, if an eCommerce order is slow to reach its destination, delayed shipments can drastically influence a consumer’s decision to purchase from you again.

Flexible: order and return options required

Retailers are no longer an online store or a brick-and-mortar store. Shoppers think of you as one entity and want to interact with your website, stores and staff as a single brand. You no longer get to choose how a shopper can order and return their items, and if you make it difficult, they won’t be around for long.

BOPIS and BORIS are an important part of a retailer’s operations. BOPIS can influence repeat purchases just as much as free returns or exchanges. Shoppers are embracing this channel as a means to skip the line and save time. Not only does BOPIS make eCommerce orders easy and faster to pick up, but retailers are also finding that shoppers make additional purchases in-store when picking up an order. The same can likely be said of shoppers coming in-store for a return. If you aren’t offering this service today, you are missing sales opportunities.

The bottom line is that customers like choices. With automated trading partnerships, retailers can better manage inventory at all of their stores, DCs and suppliers. You can place items where they are most likely to be purchased and/or shipped for fast delivery.

Free: eCommerce order fulfillment at no cost to consumers

Lastly, shoppers do not want to pay for shipping. This continues to be one of the biggest turnoffs to online consumers who have grown accustomed to free shipping, thanks to Amazon Prime. Retailers and suppliers must streamline their operations to cut costs if they want to maintain their margins on eCommerce orders.

We’ve seen retailers and drop-ship suppliers tackle new efficiencies from a number of avenues:

• Automate with EDI or APIs to improve trading partner compliance, thus avoiding any chargebacks or other fees
• Integrate their orders with a shipping solution to make the picking, packing and labeling process faster and less error-prone
• Receive inventory updates more often to ensure access to more items if sales take off. In the case of drop shipping, inventory details to ensure they can fulfill every SKU listed on the retailer’s website

All three foundations of digital order excellence rely on fulfillment and strong vendor partnerships. To learn how your omnichannel retail relationships can provide more profits and better customer service, visit our omnichannel retail page for more information.

Order fulfillment is more complex in an omnichannel environment.

Enlist the help of your trading partners to profitably satisfy today’s consumer. Download our white paper to help you strategize your action plan.

GET YOUR DIGITAL FULFILLMENT GUIDE

This post is the first of a three-part series designed to help suppliers begin to answer these questions. Today’s post will focus on Knowledge and Expertise. Future posts will address Capacity and Capabilities, and Systems and Technology.

As consumer buying behavior changes, the supply chain becomes more complex and the retail sector pushes more and more requirements upstream and downstream.

Since logistics organizations can’t be good at everything (though we like to think we can), many 3PL’s choose to specialize in a particular vertical, a specific region, or even retailer relationships because they know the requirements inside-and-out.  That’s their value prop.

It’s important for suppliers to understand WHAT the 3PL’s knows and WHERE their expertise lies. Suppliers rely on and leverage this knowledge and expertise to grow their business.

Growth in E-commerce means creating Branded Packing Slips and reverse logistics

In an effort to increase turn, retailers want shipments packed by-store and marked-for DC. This means cross-dock ASN’s, UCC-128 labels, pallet configurations, shipping compliance for EACH retailer…the list goes on and on for suppliers and 3PLs.

To demonstrate their ability to handle the complexity and breadth of requirements, logistics companies can provide several proof-points:

1. Referenceable customers
2. Current scorecards and metrics
3. Facility tours

While there’s other evidence of how well the logistics company knows and executes against the requirements, referenceable customers provide peace-of-mind, publishable metrics (i.e. on-time delivery % perhaps validated by the retailer through a customer) mean they manage the business, and a tour offers first-hand visibility to the organization.

Good 3PLs confident in their services readily offer these up to companies who want to do business. To get more relevant updates like this, follow SPS Commerce on Facebook, LinkedIn, and Twitter or contact a sales representative here.

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