ACEX about Fulfillment

12/2/2019

ACEX о фулфилменте

E-Commerce sooner or later faces the problem of having a room for storing goods and expanding the staff to complete orders. The room can be rented, employees can be hired and trained. But there is a simpler option – to outsource all this to professionals.

This way a fulfillment – a new kind of business that provides all the logistic processing of orders – had arisen. This process includes: storage, acceptance and processing of orders from buyers, packaging of goods, organization of delivery, receipt of payment from buyers, processing of returns.

Людмила СимоноваLyudmila Simonova, Managing Partner of M. A. Research:
"For logistics service providers, the most attractive segment is small and medium-sized businesses, for which e-commerce offers opportunities for growth and entry into new markets."

Fulfillment is a dynamically developing industry that offers great advantages to any online store, any retailer that goes into e-commerce, and now almost all major trade goes into e-commerce. It is very important to find the right fulfillment provider, check the quality of the warehouse, warehouse capabilities, work experience, the level of automation of processes – this is necessary in order to be competitive in this market and develop further.

Мирослав ЗолотарёвMiroslav Zolotarev, Board Director of First Worldwide Logistics Alliance ACEX:
"The fulfillment market in Russia is still at a very low, initial level of development, compared to other countries. On the other hand, it gives hope for its rapid growth and that more and more providers will be involved in it. All solutions for this – technical, terminological - are already on our market»

In Russia, there is still a high proportion of online stores that carry out the formation of orders and delivery on their own. Nevertheless, the growth of the industry is obvious: since 2016, the fulfillment market has grown almost three times, and by 2023 it is projected to grow three times more-up to 75.3 billion rubles. According to the research of Data Insight Agency, today largest fulfillment operators in Russia are: Arvato, Beta PRO, Route, SDT, eTraction.


Игорь ЛебедевIgor Lebedev, CEO of Gofrotrade LLC:
"The specificity of Russia is that we lived for a long time when we had nothing. Now everybody wants to have a large horizontal structure, and it is difficult to outsource it. They think it is better to do everything themselves. Of course, It hinders the fulfillment development in our market ".

For an online store, it is important not to make a mistake with the choice of a fulfillment provider. Assessment of a warehouse quality is a subjective thing, so such issues as the cost of storage services, technical equipment of warehouses and environmental friendliness of the whole process come to the fore. The technical aspect implies the degree of the warehouse automation, for example, the presence of a WMS-system that allows you to track the movement of each unit of goods and provides real-time data exchange about where the goods are, what is the current status of order processing, etc. the issue related to claims, returns is no less important. This management resource can exceed the cost of the operation itself-if there is a large percentage of defects.

Майкл ван КемпенMichael van Kempen, Managing Director of Westwing Russia:
"All issues associated with the fulfillment are related to the specifics of a retailer's business. Online stores offering a certain product require providers who are able to work with this category of goods."

As a rule, the owner of the online store pays the provider for each pallet-place. The warehouse can be heated or not, so if the goods have a temperature storage mode, this issue must be specified in advance. If the goods are valuable, some companies may provide separate rooms with limited access, but this service may require additional payment. Also, the supplier should have a system to track the productivity of each operation, efficiency, the presence of errors made by him, etc. And, of course, the speed of order processing is an essential parameter of cooperation. Here you can cite the example of the famous Amazon – the number one provider in the world – where the time between order and shipment is 15 minutes.

Focusing on the low cost of services when choosing a provider is not always the best way. A distinctive feature of the large range is a wide assortment matrix with small root reserves. An average online store can cope with orders without any technology, when its range – a dozen items, but when the bill goes to hundreds of thousands, and all this must be constantly completed, here outsourcing logistics will be the right decision.

Хейвуд ГаспарHeywood Gaspar, Logistics Efficiency Manager of Danone:
"Warehouse technologies are very different, the choice depends on many parameters, and they will be different for everyone, but the main thing is that technology is not a replacement for a person, but his complement."

When transferring supply chains to a provider, the set of specific fulfillment operations may vary. The online store can outsource all business processes, and can only some part of them. For example, to entrust the processing of returns not to the fulfillment center, but to its own employees, or to store goods in its own areas.

One of the key aspects of fulfillment is packaging. If the order is handed to the buyer in a substandard form, all the logistics, all the work of operators and machines will come to naught – the client will "go into denial" or next time will not apply to this company. A satisfied customer is repeat orders.

Дмитрий ЕллинDmitry Ellin, Head of Engineering group at SSI SCHAEFER:
"The market requires that the fulfillment center simultaneously process goods for retail and e-commerce. We need flexible technologies, greater efficiency. Stores should be supplied daily, in small batches."

In addition to the fulfillment itself, many providers offer customer support services (call centers and contact centers), provide integration with various corporate systems and payment services. It should be mentioned that the emergence of an additional link in the supply chain puts the Internet merchant in a certain dependence on the fulfillment operator. It is not known whether the owner of the online store will get free access to the warehouse. Probably not. It can cause information risks, problems with document circulation, problems with processing of claims. You can not dismiss the main risk – the sudden closure or bankruptcy of the company providing the fulfillment. Here in no time you can lose both goods and money. All this is desirable to provide in advance.

What awaits the e-commerce industry? The trend today is that large retailers are moving to fulfillment - both in the world and in Russia. The largest service provider offering logistics services was the aforementioned giant retailer Amazon. 58% of its sales are already sales of third-party companies. So, the fulfillment will develop further.