But it is attracting companies that lack the expertise or infrastructure to undertake the services they claim to offer, says Mark Elward
The right credentials?
Google ‘Fulfilment Company’ and the search engine throws up page after page of businesses claiming to offer everything the online retailer needs to maintain a slick supply chain.
Of course, with the growth in internet shopping set to continue its upward trajectory for the foreseeable future, it’s hardly surprising that third party logistics companies are keen to play up their ‘fulfilment’ credentials as they seek to ensure that they grab their share of this increasingly lucrative market.
With online fulfilment becoming something of a ‘gold rush’ in the past couple of years, it is attracting companies that do not really have the expertise or infrastructure to undertake the services they claim to offer.”
For example, traditional hauliers and transport companies who have built their business around storing and trunking full pallet loads, may find they have 10,000 sq ft of spare storage space and decide to set themselves up as a ‘fulfilment specialist’ but the reality is they do not have the IT infrastructure, facilities or the staff numbers that are required to pick, pack, re-kit etc etc efficiently.
To be a true fulfilment specialist, the right software is essential. Most of my company’s clients operate a number of sales channels– some can have up to 8-9 channels with pan-European coverage and all these orders have to be integrated seamlessly.
Many new entrants to the fulfilment market fail to invest in the appropriate software and their service – and the reputation of their clients – suffers as a result.
And, when it comes to offering a fulfilment proposition, a company also needs to have the flexibility to adapt its processes to meet its customers’ requirements as and when required.
For example, one of our clients – a major high street fashion accessories retailer – recently took delivery of 1.5 million products that had to be relabelled to go back in to their stores. We brought in extra staff from our other sites and completed the job within 10 days. I can think of several of the so called leading logistics firms that would still be having meetings to discuss how best to proceed after 10 days!
Of course, the bigger logistics firms do have a significant advantage when it comes to costing solutions for shipping. After all, e-commerce is all about volume. Quite simply the more you ship the better the price you can negotiate.
But, while price will always be an important consideration in any fulfilment contract discussion, any online retailer must consider all aspects of the potential fulfilment partner’s service proposition.
It goes without saying that it is frustrating to lose business to a competitor who I know does not offer the expertise that we provide because they quote a price that is 5-10% per cent cheaper. However, I also know in the first week of January we will receive three or four phone calls from companies that we have spoken to throughout the year asking us to ‘rescue’ them because their chosen provider has not been able to cope with the Christmas rush or lived up to any of their promises.
Mark Elward is managing director of Coventry-based DK Fulfilment Ltd. He has been involved in the logistics industry for most of his career and has held senior roles with a number of the best known names in the sector.