E-commerce order fulfillment is all about speed and accuracy, but never loose track of the fact that when customers open that package, they are getting an impression of your web site and a big impact on the overall experience.  Pay attention to the little details and use the packing list to re-enforce your brand!

Modern order fulfillment is characterized by a high tech process that is designed to accurately and efficiently pick, package and ship an order in a very short amount of time.  In fact, TAGG, as many of today’s modern fulfillment providers, fulfills it’s client’s e-commerce orders the same day.  This process is only made possible when the various systems are working together in a seamless environment.

A customer needing their Vitamin B supplement goes to their favorite e-commerce site, picks out a supplement and proceeds to the shopping cart.  Here, vital information regarding the customer is received – who they are, what they ordered, address, shipping method, etc. and payment is processed.  At this point, the order needs to be fulfilled – the supplement bottle needs to be picked, packaged and shipped.

While there are countless variations of what happens next, I will focus on the typical process TAGG’s order fulfillment uses.  Once payment has cleared, an order number is generated and a confirmation is sent from the e-commerce site to the customer.  We all have gotten it;  “Thank you for your order of…..  Your order number is….  We will let you know when it ships….”  At the same time, this supplement order is sent to the fulfillment provider.  Here again, there are a variety of ways TAGG receives these, from a live XML feed to batched in a CSV file.  A third party order fulfillment provider should be good at receiving orders in a variety of formats.  Because TAGG works with so many e-commerce sites, we have a middle-ware whose purpose is to take order files from a variety of formats and convert them into the format in which our Warehouse Management System (WMS) can use.  The information is the same, name, address, order number, items ordered, etc… but each shopping cart might have subtle differences.  The fulfillment center imports this data and uses it to pick package and ship the order.

Now that Vitamin B supplement is in the capable hands of the USPS, FedEX or UPS but the information flow is not over.  In fact, now the process happens in reverse.  The fulfillment provider needs to tell the e-commerce site that the order has shipped and relay the tracking number.  A file gets exported from the WMS back to the shopping cart in much the same manner as it was sent to TAGG in the first place.  In most cases, our clients then send an e-mail…we have all gotten it;  “Thank you for your order of….  Your order has shipped!  The tracking number is….  You might also want to try our Vitamin E supplement….”  When we go on-line to buy a product, the reason we get two e-mails and delay we get between the order confirmation e-mail and the order shipment e-mail is the result of this two-way flow of information between the e-commerce site and the order fulfillment provider.

All of this typically happens in real time and shipping at TAGG is mostly same day.  So if I ordered that supplement at 10:00 a.m. Eastern, once that order clears payment, it is sent to TAGG either immediately or in a batch of orders.  We receive it and it hits a picker’s scanner in our warehouse.  It is picked, packaged and when a shipping label is printed, a tracking number is generated.  Then it is put on a feeder truck to be pulled for USPS, FedEX or UPS that evening.  Then our system takes that order, along with all the other supplement e-commerce orders and sends the file back to our client.  All same day!

Again, there are many possible variations to this process and at TAGG, we work with each client to customize the information flow to fit their needs.  However, the important pieces are always the same; information needs to flow seamlessly between the separate technology systems and that information needs to be accurately preserved and transmitted.

So the broad term logistics can be used by UPS and TAGG but the meaning might be slightly different.  UPS is talking mostly about picking up and delivering a package from point A to point B, and TAGG is talking about warehousing product, picking, packaging and fulfilling orders.  I suppose since we are both teamed up to deliver a product to an end-user, we can both love logistics!

Next time you see a UPS ad about how much they love logistics, think of TAGG too….

By Tod Yazdi

New sales channels have enhanced supply chain complexity. Consumers who wish to buy a sweatshirt, for example, can make their purchase from the local mall; a big box retailer such as Walmart or Target; a catalog; a direct-response television ad or shopping network; or a Web site. Shoppers might also receive an email from Groupon, Living Social, or another daily-deal service offering the sweatshirt at a discount.

One sweatshirt, so many options for buying it—and so many different requirements on the supply chain to deliver that sweatshirt to the store or the consumer’s home.

Big Sales = Big Demands

The complexity of all these different channels has driven growth in the outsourced fulfillment industry. Product manufacturers and Web retailers must determine how to fill orders for promotional and daily-deal sites.

This new breed of e-commerce can bring huge sales volume in a very short time by reaching a targeted audience with appealing offers. In 2011, Groupon, the largest of the daily-deal companies, sold more than 650,000 holiday deals between Black Friday and Cyber Monday.

All those deals require delivering a product, and need to be fulfilled with the right merchandise getting to the right buyer quickly and efficiently. Instead of a steady daily flow of orders, shippers must handle an explosion of orders that need to be picked, packaged, and delivered—often in as few as 24 hours.

A Fulfilling Partnership

It is critical that the shipper’s fulfillment center understands the daily-deal sales channel and can handle the fluctuations without causing another explosion—this time in the supply chain.

Work with your fulfillment partner on the following three points to prepare for the rush of orders a daily-deal site can generate.

1. Plan ahead. Get your fulfillment center involved early, and stock inventory before running the promotion.

2. Prepare the product. Let the fulfillment center know how the product will be sold so it can package and prepare it for shipment before the promotion launches. Then, when consumers place orders, the fulfillment center only needs to pick product and apply shipping labels.

3. Understand volume. Handling volume fluctuations in fulfillment is all about dealing with capacity. Whether you expect 500 or 10,000 shipments, your fulfillment center can schedule the right labor and equipment. The greater challenge is if you forecast 500 sales and end up with 10,000.

Ready to Sell

Daily-deal and promotion sites have been called the biggest thing to hit online retailing since eBay. They are in their infancy, and may shape an entirely new way of shopping online.

When considering using this channel, think about your supply chain. Fulfilling orders from these sites requires planning and flexibility to ensure success.

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How do you know how much space you will need next year?  How do you know how much space you will need in the next 5 – 7 years?  Nearly the only certainty is that you don’t know.  Those of you that have decided to go it alone and lease or purchase a warehouse have been faced trying to figure this out.  Maybe you are growing and adding volume or product lines requiring additional space.  Maybe your are shrinking or moving to a just-in-time inventory and will need less space.  Under any scenario, wouldn’t it be nice instead of entering into long-term commitment and a large fixed overhead, to be able to just rent the space you want on a month-to-month basis?  That is what our outsourced fulfillment and distribution clients do from us.  As I look around at buildings and face very challenging decisions, I can truly realize the benefit of an outsourced warehouse.  Now if I could just find someone to outsource to I could avoid this space anxiety….oh wait, that is the business I am in!  Nevermind.

• Next day air = 17.5-8.5%
• Next day air saver = 8.0%
• 2 Day air AM = 6.5%
• 2 Day air = 7.5-8.0%
• 3 Day air = 8.0-10.0%
• Ground = 7.0-8.0%

2012 FedEx increases announced are as follows:

• Priority = 4.0-6.0%
• Priority = 4.0-6.0%
• Standard Overnight = 6.0-7.0%
• 2 Day AM = 6.0-7.0%
• 2 Day = 6.5%
• Express Saver (3 Day) = 6.5-10.5%
• International Priority = 4.5-9.0%
• International Economy = 5.5-7.5%

FedEx is expected to match the UPS Ground increases.  It is important to also note that the ground minimum shipment charge will increase from $5.17 to $5.49, a 6.2% increase.  In addition, other accessorial charges are as much as 10% higher in 2012, such as Delivery Area Surcharges, Residential Surcharges, Declared Value, Dimensional Rates and many other fees.

As always, TAGG works with its fulfillment clients to manages these costs between FedEx and UPS.  We match the right services with the right price to each of our clients…which can also include looking at the USPS as an alternative…although their recent announcements on service and price will be a whole other Blog!

One of the main drivers of complexity in the supply chain has been the explosion of sales channels. Lets say you wanted to buy a new sweatshirt. You could go to the mall to buy the sweatshirt. You may find it in a big box retailer such as Wal*Mart, Target or Kohls. Maybe you will see it in a catalog. What about a direct-response TV ad or shopping network? You could also go on line…just Google the sweatshirt and you will probably get more than a dozen sites offering it for purchase. More recently, you might get an e-mail from Groupon offering the sweatshirt at a discount. One sweatshirt, so many ways to buy it….and so many different requirements on your supply chain to get that sweatshirt to the store shelf or deliver it to your doorstep.

Last year I wrote an article “The Rise of Outsourced Fulfillment and Distribution” in which I discussed how the complexity of all these different channels has driven growth in the outsourced fulfillment industry. To prove that nothing is constant in retail, in the short time since I wrote the article, we have seen even more variations arise, if not whole new channels. Recently, we have been working with product manufacturers and web retailers on how to fill orders for promotional sites and daily-deal sites. This new breed of e-commerce can bring huge sales volume in a very short period of time by reaching a targeted audience with appealing offers.

Match Fulfillment to Your Sales Channel

Groupon, the largest of the daily-deal companies, announced that they sold more than 650,000 holiday deals between Black Friday and Cyber Monday. Remember though, all those deals that require delivering a product, need to be fulfilled with the right merchandise getting to the right buyer in a timely manner. Instead of a steady daily flow of orders, you have an explosion of orders, often in as little as 24 hours, that need to be picked, packaged and delivered. It is critical to have a fulfillment center who understands the channel and can handle the fluctuations without causing another explosion….this time in the supply chain. Some critical points to work through with your fulfillment partner are:

1. Plan Ahead Get your fulfillment center involved early, work out a plan and have inventory present at the fulfillment center prior to running the promotion.

2. Limit Variations Knowing how the product will be sold, the fulfillment center can pre-package and prepare the product for shipment prior to the daily-deal. The best scenario is at the time the promotion is run, all that will need to be done will be to pick product and apply shipping labels.

3. Understand Volume Dealing with volume fluctuations in fulfillment is all about dealing with capacity. It doesn’t matter whether your volumes will be 500 or 10,000, if you predict in advance, your fulfillment center can plan accordingly with personnel and equipment. The hard part is if you think it is going to be 500 and it ends up 10,000!

The new daily-deal sites and promotion sites have been called the biggest thing to hit on-line retailing since eBay. They are just in their infancy and many feel they will shape an entirely new way of shopping on-line. When thinking of using this channel, also think about your supply chain. There are some very unique characteristics of fulfilling orders from these sites and a little bit of planning and a whole lot of flexibility is necessary to ensure success.

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