When selling online order selection and shipping are big decisions
One decision you will need to make early in your online selling journey is how you will select orders and how you will ship products. There are options and they all cost money. With Amazon Prime online shoppers are expecting ‘free’ shipping. They forget they paid an annual fee to Amazon for Prime. To develop your online sales you really need to work with a delivered price.
Once the consumer makes the decision to buy you need to figure out how to manage their order and then how you will deliver it.
Managing the order includes selecting the right item(s), depleting your inventory, packing the product and preparing it for shipping.
Delivering the product includes shipping to the final destination and working through any delivery or damaged product issues with consumers.
Just the same as selling in bricks and mortar, success is not just about making great products to sell, it is about selling the great products you make. To help you do this we have designed a new SKUFood C.A.R.T. process specifically for e-commerce. We have been learning a lot about this channel and invested the time to develop our proven process for this channel.
You can maximize the opportunity when you put the resources and effort into selling your products in a different channel. In the second segment of our C.A.R.T. process for e-commerce we ask the question ‘What is your logistics plan?’
Internal order fulfilment and shipping
Many food and beverage processors opt to fulfill online orders and manage the shipping, especially in the early stages. This is an opportunity to learn about this channel and understand what the service is worth if/when you decide to our source the functions.
Order fulfilment requires you maintain an inventory of product ready for shipping and that you have all of the other components you need. This can include wrap to protect the product, the most cost effective sized boxes, the ability to print shipping labels and an inventory management system.
There are a lot of steps to include to ensure your orders are accurate and shipped properly. If you do decide to fulfill your own orders develop a standard operating procedure that can be implemented by anyone in your organization.
There are many options for shipping and the right answer will depend on the markets you plan to serve, your product weight, size and value. Investigate the options and reduce the complexity with a few options. Preparing orders for several different shipping companies to save a few cents can add a lot of complexity.
If you plan to fulfill and ship orders internally you will have to dedicate some resources to orders that do not arrive as expected by your online shoppers. It will happen so be prepared and determine how you will handle problems. Most large online sellers have decided it is less costly to just replace damaged products than to invest the time in figuring out whose fault it is and making them pay.
Third party logistics (3PL)
There are a number of companies who will perform your order selection and shipping for you, for a fee. They are specialized in this work and they are often less expensive per order than the cost of performing this internally.
They have warehouses dedicated to selecting product for online orders and the volume they put through can generate better shipping rates than your business by itself.
One other benefit is you should not have to focus on order selection and shipping day after day. It is exciting to pack the first orders but it can get tedious week after week.
Similar to any relationship with an outside supplier you need to find the right fit. If you forecast your online volume to be relatively small a large 3PL company might not be a good fit. They are looking for volume and your products will not get the focus you might expect. You should also investigate the process for damaged shipments. Is this your responsibility for follow up or the 3PL supplier? If they manage it are they going to treat your customer as you would expect?
Online marketplace fulfilment
Online marketplaces like Amazon offer their own fulfilment for sellers. Amazon calls this fulfilment by Amazon (FBA). It can be a cost effective option and there are other benefits to the supplier.
When you decide to use FBA your products will be shipped free to Amazon Prime members. This can be a huge advantage over other products in your category. Consumers will always consider the delivered price and free shipping can make the difference.
Amazon charge you a fee for FBA and you can calculate this fee for your product on their website. You should also check into inventory levels as Amazon have made a lot of changes in this part of their business. The pandemic impacted their business so they have reduced inventory levels.
Consider the costs
Regardless of the option you select, consider the cost to your business. Consumers will make the decision to buy based on the delivered price, they do not see shipping as extra.
We know there are frustrating costs to working with brick and mortar retailers but there are also costs to consider when selling online. Order fulfilment and shipping are big decisions to make early as you develop your online selling strategy.
If you have any questions or help figuring out how to get your product online or in the virtual shopping cart you can always call me at (902) 489-2900 or send me an email peter@skufood.com.
We are adding more industry updates and interesting ideas to your SKUFood newsletter. Hopefully you have heard me say this before and that it resonated with you in your business.
“Success in this industry is not just about making a great product to sell; it is about selling the great products you make”
Peter Chapman
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