Solving the Shipping Problem
Casey Armstrong, Chief Marketing Officer at ShipBob, discusses how to optimize your 3PL strategy to make Ecommerce shipping more efficient and effective.
What happens when your customer clicks ‘order’ on your eCommerce site?
Do your systems have rules that look at the customer location and choose the nearest warehouse to fulfill that order? Or are you relying on one fulfillment center and allowing days or weeks to pass before it arrives to your customer?
The real-world logistics behind each digital order can be a complex process… but if you could set up the proper systems, what if you could then compete with the new industry standard of two-day shipping?
Understanding this logistical side of eCommerce is vital for any store owner or executive team looking to master this world.
Companies like ShipBob are the masterminds behind the fulfillment process, and people like Casey Armstrong, the Chief Marketing Officer at ShipBob, are the ones working behind the scenes to ensure that eCommerce shops are able to get products to their customers effectively and efficiently.
The value proposition of a 3PL like ShipBob is simple, Armstrong says, and while every eCommerce shop might decide to use a 3PL at different points in their growth, what ultimately drives them to make the decision is consistency.
“The time to outsource it is when you start getting close to a point where the fulfillment side of the business is eating into your time that can be better spent on sales and marketing and product development fulfillment is often a low leverage use of your time,” he said. “There’s a reason why people utilize companies like ShipBob. You should be spending your time on growing the business, again, sales and marketing and product development, probably not picking and packing boxes, which also takes a lot of time.”
Choosing the right 3PL can be a challenge, though. Armstrong explains that there are any number of options, but in order to find the right fit you have to narrow down what is most important to you. Do you need multiple distribution centers? Do you want to customize your unboxing experience? How much data do you want access to? Answering these questions will help you get to the right partner. And, depending on your answers you might actually be steered away from the so-called ‘gold standard’ of fulfillment: Amazon.
As Armstrong detailed, Amazon has completely revolutionized the fulfillment process — everyone tries to mimic some or all of the things that Amazon has made standard, like fast, free shipping. But when you use Amazon, there are also certain concessions that eCommerce companies are forced to make.
“With Amazon, which really sets the gold standard in logistics, it’s really you ship stuff to their fulfillment centers, everything goes out in an Amazon box, you get extremely limited data if something goes wrong, or if they make changes,” Armstrong says. “For example, they stopped shipping essentials or receiving essentials, early on in COVID. Most recently, they are limiting the amount of inventory you can store in their facilities. They’re the end all be all. They make that decision and there’s nothing you can do about it. You just have to conform your business to how they change.”
Not all 3PLs operate in this way, though. As Armstrong says, ShipBob is all about mastering the entire tech stack and then providing as much data to the customers as possible. And they do it while still offering fast delivery and other necessities to eCommerce shops looking to keep up with skyrocketing demand.
eCommerce is seeing rapid growth recently, sped up due to the COVID-19 pandemic, and as a result, fulfillment needs are increasing as well. Having poor fulfillment capabilities or not meeting customer expectations when it comes to delivery time is almost a death sentence these days. But more than that, investing in better processes has been proven to help grow business substantially.
“We had another customer that saw a 97% increase in average order value once they started showcasing this fast and free two-day shipping,” Armstrong says. “I would not mark that as your baseline or your benchmark or target because doubling your average order value is pretty insane. But it does go to show things that people think about a lot more now than they used to. That shipping and fulfillment experience, whether it be free or two days or free and two days can really move a lot of levers that will also help feed back into your ROI and your marketing.”
With the increased need for shipping and delivery, Armstrong says that there are going to be areas to watch in the fulfillment space, especially when it comes to distribution centers. Recently in the news it was reported that Amazon was looking to use closed shops in malls as new distribution centers, which could change the game even more.
“A big question is what’s going to happen with these malls?” Armstrong says. “These large mall operators and owners, what are they going to do with the space? Amazon unsurprisingly is right in the mix. Are they going to start leveraging these now vacant or near vacant malls, because these malls are often in suburban areas, which are close to a lot of the end consumer. Can they start leveraging these mall facilities for their last mile operations? That’ll be interesting.”
So next time your customer hits that order button on a purchase, stop to think about what is going on behind the scenes. Consider all the factors going into the delivery of that item. It is an intricate process and people like Armstrong are staying on the cutting edge of what’s possible and where the industry is going next.
To hear more from Armstrong, check out his interview on Up Next in Commerce, here