It’s risky for an eCommerce business to be entirely dependent on one selling platform or one order fulfillment model. What if your system for placing orders fails due to unforeseen circumstances? Or what if unexpected disturbances occur in the order shipping chain and you don’t have a backup plan? You’d stop receiving and fulfilling orders which could lead to financial losses and even damage your business reputation.
Fortunately, there’s nothing you can’t overcome with some creativity and flexibility. One of the ways to prevent a “sales outage” scenario is to incorporate several strategies, such as selling on different platforms and shipping from different bases. In other words, taking advantage of hybrid fulfillment.
Home base, Amazon warehouses, and a fulfillment center combined sound complicated? No worries! We’ll guide you through the ins and outs of how to blend everything together.
Hybrid fulfillment is the employment of different eCommerce fulfillment models. This approach offers more flexibility and some security since it frees you from being reliant on a single fulfillment model. Usually, the hybrid model involves the combination of in-house fulfillment and outsourced fulfillment.
In-house fulfillment refers to the model when an eCommerce business takes care of all aspects of order fulfillment on its own. This strategy grants the eCommerce business owner full control of logistical operations. It is mostly applied in the early stages of business development when the number of orders is relatively small.
Although it is possible to keep on fulfilling orders by yourself by renting warehouse space and hiring employees when you’re expanding, in-house fulfillment stops being cost-effective and may impede other aspects of business development with a certain number of orders reached. Therefore, many e-shop owners turn to outsourced fulfillment as their order numbers grow.
When you outsource order fulfillment to a partner, you delegate the third-party company to handle the process. Depending on which outsourced logistics model you choose, e.g. 3PL or 4PL, you can assign one or several parts of eCommerce fulfillment to your partner and retain oversight of them. Or you can hand over the management of the entire supply chain if you are happy with your choice of fulfillment partner.
Either option allows you to have more time to focus on business expansion. Fulfilling orders with a fulfillment center also helps you to optimize the costs and ensure faster order delivery. This model is especially beneficial to small and medium eCommerce businesses that are expanding to new markets.
While you can choose from several order fulfillment models, there’s no one-size-fits-all approach. Each business is unique and has different needs. That’s why taking the best that each fulfillment model offers and combining those aspects can be more beneficial than sticking to one strategy.
Hybrid fulfillment grants a lot of flexibility and allows plenty of room for optimization. Even if you yourself prefer to stay active in the fulfillment process, it doesn’t mean that you can’t share the workload with a 3PL partner. In fact, you can choose to divide the responsibilities based on several factors described in more detail below.
It’s natural that some types of products sell better than others. And trying to fulfill all orders you receive by yourself may require too many resources. Thus, handing over to a fulfillment partner the items that receive the most orders per month, while keeping the other items for in-house fulfillment, can be both time and cost-saving.
Nowadays, there’s a wide selection of eCommerce platforms to sell your products. Many businesses take advantage of that by using multiple platforms to appeal to customers with different preferences. However, you may notice that the number of orders you receive on different sales channels is not the same. For example, you may receive the majority of orders via Shopify, and few orders on your brand website.
Therefore, outsourcing order fulfillment from your busiest channel to a 3PL logistics partner and leaving the slower platforms to in-house fulfillment can also be beneficial. If you choose a technology-advanced 3PL provider such as HappyParcel, you’ll have no trouble integrating order fulfillment software with the most popular eCommerce platforms.
Bringing the order shipping base closer to your customers ensures faster delivery and contributes to customer satisfaction. But it’s also expensive to rent warehousing space by yourself, especially if you’re looking to expand to new markets.
That’s another situation where outsourcing a part of order fulfillment can be more advantageous than keeping it all to yourself. By partnering with a 3PL provider you get warehouses with personnel close to your clients without the need to buy storage space and employ staff on your own. For instance, HappyParcel has multiple warehouses across the USA and can help you significantly facilitate your expansion.
If you’re selling on Amazon which is one of the most popular eCommerce platforms, you get to choose from two fulfillment models. One is called FBM (Fulfillment By Merchant) and the other is FBA (Fulfillment By Amazon).
Selecting FBM means that you’ll be fulfilling orders by yourself or delegating them to your fulfillment partner. FBA, on the other hand, refers to the services where you leave the fulfillment to Amazon. The latter offers similar benefits to having a 3PL partner as it frees you from daily logistical operations and grants you access to some of Amazon’s premium features. But it also comes with certain disadvantages.
If you choose Amazon as your only fulfillment means, you’ll have to adhere to storage and inventory restrictions. So you’ll be restrained and will have to be smart about how to use the space you’re allowed. Plus, Amazon ships its order in boxes with its logo which makes it harder to build a brand identity for your business.
However, these cons can be upturned if you sell on different platforms and divide shipping orders between a home base, Amazon warehouses, and a fulfillment center. In this hybrid model, you can take advantage of Amazon services and compensate for their cons with other fulfillment models.
HappyParcel doesn’t apply storage limits and you only pay for the space you use at the end of the month. We also don’t force our branding on shipping boxes as you can choose whichever eCommerce packaging you prefer – from standard to custom-made.
To better understand how the hybrid strategy works in practice, let’s look at the example of MagicLinen. It is a dear client of ours that has successfully taken advantage of selling on various platforms and shipping orders from different geographical bases.
MagicLinen is a Lithuanian company that sells linen products, including clothing and home textiles. They have their own brand website with an e-shop and use Etsy and Amazon as supporting platforms to reach a wider international audience. They employ two fulfillment locations – their own base in the EU (Lithuania) and a warehouse in the USA provided by HappyParcel.
Because of these combined fulfillment approaches, MagicLinen is able to offer fast worldwide shipping since the products are dispatched from the location that is the closest to the client. You can learn more on their website.
While hybrid fulfillment may sound complex to manage, it’ll be a piece of cake to take advantage of it if you join hands with a dependable fulfillment partner, such as HappyParcel. To find out more about how we can help scale your business, don’t hesitate to contact us.