The Complete E-Commerce Book, Second Edition: Design, Build & Maintain a Successful Web-based Business

A logistics and fulfillment plan lays out the chain of events from receipt of the customer’s order through delivery of the product to the post-sale processes. It should be a guide upon which all fulfillment decisions are based. A formal logistics and fulfillment plan will ensure that everyone considers, not only your e-commerce website’s requirements, goals and objectives, but also what each player can bring to the table. This will help to assure that everyone is on the “same page.”

You must craft a logistics and fulfillment plan that fits your e-commerce business’s specific needs. Thus there are questions that must be answered.

Product and Packaging:

Average Order:

Shipping:

Delivery Quality Control:

Inventory:

Returns:

International Orders:

Seasonal Considerations:

If the website offers products that are seasonal, how will that affect the warehousing/inventory requirements?

Suppliers:

Infrastructure:

Warehousing and Fulfillment Centers:

Insurance:

Exceptions

Just as in the traditional sales channel, there is the need for handling exceptions. If your website uses the drop-ship model (explained later in this chapter under “Fulfillment Models”), what do you do when an individual customer order includes products from multiple suppliers and one of the products ordered is out of stock or backordered? Or perhaps you handle your own shipping and inventory and you are out of stock and you don’t know when it will be replenished.

How will your website handle a partial shipment? Hold the shipment for all the items, ship all ordered items that are available and cancel the rest? Do you request a customer’s input prior to making the decision? Do you hold the order until you receive a reply from the customer?

One solution is to have the order fulfillment system include event-based triggers that are modeled on specific business rules. To implement such a rules-based system requires that you sit down with the appropriate personnel, suppliers and, if necessary, the fulfillment provider, and correlate the business rules.

Management of Suppliers and Channels

Most websites will have multiple suppliers providing a wide array of products. Again, the drop-ship model (although in some instances it is the most efficient) poses the most problems to the web-based business. However, unexpected situations can arise with any fulfillment model, and web-based businesses should have the ability to accommodate customer orders that include products from a variety of suppliers. The website must be able to apportion each order appropriately and to track it through each supplier, and at the same time give each customer a seamless view of their order’s shipping data. If a supplier messes up in product delivery, your customers will hold your website responsible, not the suppliers. Thus you must keep on top of your entire supply chain.

Back-end Integration Issues

An e-commerce business must have a clearly defined process for moving an order from its website to its fulfillment center, whether it is in-house or outsourced. This process ties the order to its payment and fulfillment processes — this is where integration with your back-end systems becomes critical. The large and enterprise websites will also find it necessary to tie into back-end applications, such as enterprise resource planning (ERP), inventory management, and financial applications.

A brick-and-mortar that is making its move to the Web may already have pieces of the fulfillment process in place, but the in-house operations may not be familiar with the one- and two-item shipments that will, in all likelihood, become the norm for its web operation. This business group will be tempted to build out their existing “bulk” distribution center to handle the new website’s fulfillment needs. While not always a good idea, depending on the legacy infrastructure, this method could provide low ongoing costs with optimal operational control, easy stock status information, and higher product availability. On the downside, there may be a risk of confusion to current operations. Also, the ability for existing personnel to adapt to change should be a consideration. Furthermore, the transition could generate a long period of inefficiencies due to the necessity of building a complex system of individual software components that require integration, customization, and management in order to merge the web-based business with the traditional business’s systems.

An alternative solution is to find a fulfillment provider to handle the your website’s logistical processes. The decision should be based upon scalability — does the brick-and-mortar (and its website) have the budget and the time necessary to build and maintain its own customized solution? Or can a fulfillment provider more effectively furnish a solution to fit either or both its e-commerce and traditional channel needs?

All web-based businesses will find integration with their back-end systems (content management, customer management, customer service, order fulfillment, inventory management, financial, etc.) to be a costly challenge. Still, such integration is absolutely necessary if you are to avoid fulfillment chaos.

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