a2b Fulfillment recently returned from the inaugural PDMI Summit in Las Vegas, NV. The PDMI is a leadership organization dedicated to promoting, protecting and advancing its membership through education, networking and marketing, and advocacy. The PDMI hosted over 1000 leaders from the direct response industry in an effort to share its vision for 2019 and beyond — and invited attendees to voice their thoughts and opinions about that vision and the future of performance-driven marketing. We are excited for this new organization and look forward to supporting them in this new venture.
We always love having an opportunity to reconnect with our partners in Direct Response and also meet new marketers and suppliers that are entering the market as well. After meeting with several prospects and industry contacts we thought we would take some time to give an update on some of the common questions we’re hearing with regards to order fulfillment in the Direct Response industry:
What are the key issues performance-based marketers need to understand about the fulfillment industry today and why are they so important?
Location is always going to be important for performance-based marketers. The demand for 2-day shipments has placed a heavy burden on marketers.
Next, you need to think about your power of scale. You need a fulfillment partner that can support increased volume as your media hits and those orders ramp up. Think about the seasonal peaks. You need to understand the amount of space that you have available; as well as how fulfillment centers manage the labor. Can standards be maintained during these busy periods? You also can’t ignore the power of retail in today’s climate. You want to have flexibility to shift and integrate with new e-commerce marketplaces when the time comes.
Finally, experience is really where you can save a lot of time (and money) in outsourcing fulfillment. Carriers and freight programs are ever-changing, technology is evolving and consumer expectations are becoming more demanding. An experienced fulfillment provider is on top of these changes and can shift merchants into more advantageous programs quickly. Outsourced fulfillment centers often have years of experience across many product lines, campaigns and industries.
What are the three best opportunities for performance-based marketers in working with a fulfillment vendor today?
As we mention earlier, location is really important. Most merchants don’t have enough distribution centers to cover a large geography. A fulfillment center having just two facilities in optimal locations can achieve a 2-day ground transit to over 90% of US households. Merchants without enough coverage in the US could easily be burdened with costs of express and priority shipping in trying to meet the high demands of today’s customer.
Fulfillment partners have established many of the relationships needed to get products shipped to consumers and to retailers. Sure, there are the discounts with carriers and freight forwarders; but you’ve also got your call center, payment processors, media buyers, etc. Retail expands that need even further. The online marketplaces on which to sell is growing. Fulfillment centers spend hours of time learning these integrations, so that you don’t have to spend valuable time learning it yourself.
Finally, treating the customer right doesn’t just fall on the merchandising and marketing teams. The fulfillment of the orders and trust in the performance of this process often trumps price. Tools, including, Order Management Systems, Warehouse Management Systems, Shipping Execution Systems and the integration of them all play a vital role in a successful order experience. It’s important to realize that these tools are ever changing and evolving. Merchants and their 3PL’s must continuously reinvest in these technologies to maximize the potential.
What are the most serious mistakes marketers make when choosing fulfillment partners today?
A lot of marketers focus on the services that are important today, but don’t spend much time considering the needs that could come in the future. Many fulfillment providers offer the basics: warehousing and shipping. But others go way beyond and offer far more value. Having complimentary services can save you from having to manage these processing in-house or through several additional vendors, and include: customer care, kitting and assembly, reverse logistics, product refurbishment, order management technology, data analytics, subscription management, marketplace integration, payment processing and more. You may have needs for several of these functions, and with the right provider you can create a package that is provided by one supplier, simplifying your management efforts.
What technology is impacting fulfillment most these days and why is it so important?
Information is critical in making good decisions and improving the execution of order fulfillment. To stay ahead of the curve, merchants and especially their 3PL’s, need to leverage the data. This can be done with Business Intelligence (BI) tools that allow the merchant to slice and dice data in order to learn about their customers, order trends, operational metrics, and so much more. The more sophisticated the tool set, the more empowered the decision makers will be.
What trends do you see hitting the fulfillment industry in the near future that marketers need to keep an eye on?
Ability to cater to Amazon and other companies that require 2-day shipping and shipping intelligence is going to be a top priority in the year ahead. Amazon has an advantage due to the location of its distribution centers. Marketers should be doing detailed analysis to determine where their customer base is located. Utilizing zone skipping and opening additional distribution centers in strategic locations will help maximize transit benefit.
In this industry, Technology is always something to keep an eye on. As costs and the availability of labor continue to challenge fulfillment operators, mechanization, automation and AI will play an ever-increasing role in the future Distribution center. If you follow the supply chain trends, you’ll see things like automated trucks, delivery drones, 3D printers, and robots doing picking and packing. Many of these are still in their infancy and will both improve and become less expensive over time. Merchants should be following these technologies closely with their 3PL and be ready to act when the numbers pencil out. That said, caution should be exercised not to lose focus on the “blocking and tackling” fundamentals such as a good OMS, WMS and SES/TMS.