Managing the end-to-end fulfillment process, including storing inventory, order processing, picking/packing, and shipping, is the usual route for new merchants trying to establish a brand presence.
It’s quick and easy to get started with self-fulfillment, especially when your order volumes are not high enough to make it cost-effective to partner with a 3PL. Having direct oversight of your entire fulfillment operation is also valuable for spotlighting brand-building opportunities.
Yet in-house fulfillment does involve some unique challenges for brands. Managing order fulfillment yourself can quickly grow complex and costly during periods of turbulence in the retail marketplace – and the onset of 2022 will certainly be one of these.
Even as the obvious effects of COVID-19 begin to recede, pandemic-induced supply chain issues are still wreaking havoc on retailers and changing consumer behavior in unpredictable ways. While all merchants will be grappling with these issues throughout 2022, those relying on self-fulfillment are going to be more vulnerable to disruption.
Here are the three biggest challenges that self-fulfilling merchants are going to face in 2022 – and how you can address them for smoother, more cost-effective fulfillment.
Thanks to ongoing supply chain challenges, the post-holiday return rush is set to be far more complex in 2022.
Afraid of missing out on sought-after products, consumers have been starting their holiday shopping earlier than ever this year; over 40% of consumers say they started shopping for gifts earlier than last year due to concerns over shortages or delayed shipping, with 34% starting their holiday shopping by Labor Day.
While these newfound holiday shopping habits have been good for retailers’ bottom line in Q3, there’s an unintended side effect. Many consumers are feeling under pressure to snap up items just because they’re available. The result is that many shoppers are ‘hoarding’ items with the plan of gifting only the best.
The rest? It ends up back where it started.
This means that merchants need to be prepared for an even more intense holiday return season than normal – one which is likely to continue far into 2022 as supply chain shortages continue to bite.
Solution: Return management in 2022 isn’t just about how quickly you can process returned items, but about how well you can forecast which items are likely to experience high return volumes due to ongoing ‘overbuying’ by shoppers. This is a time-consuming practice for brands that are fulfilling in-house, requiring both knowledgeable logistics managers and advanced data analysis to deliver accurate insights. Partnering with an experienced fulfillment partner is your best pathway to better return management and planning
These supply chain challenges also have a knock-on effect on other areas of your fulfillment operation. With products flying off the shelf thanks to consumer FOMO (Fear Of Missing Out), you must have full visibility into your inventory. This means:
There are few customer experiences worse than ordering an item and receiving a notification that the item has sold out. For retailers, it can be very difficult to repair the relationship once this happens. After all, if you can’t get your stock levels right, why should the customer trust you with anything else?
In the reverse, a lack of inventory visibility can also result in inventory piling up because retailers end up ordering more units than they need to provide a buffer against stockouts. But if this extra inventory outstrips customer demand, you’re going to end up with a lot of capital tied up in stock that isn’t selling.
Solution: Brands who are self-fulfilling are more likely to run into these issues because they generally don’t have a Warehouse Management System to assist them in monitoring the location and quantity of their inventory. Because onboarding this technology is time-consuming and expensive for smaller merchants, it’s much more cost-effective to partner with a 3PL that can provide you with the technological infrastructure to boost inventory visibility.
With peak season order volumes now the norm due to booming ecommerce sales, businesses have had to grapple with seemingly endless surcharges from parcel carriers since the pandemic first began in 2020.
Carriers have argued that higher operational costs and the pivot away from commercial services have made surcharges on everything from residential delivery to additional handling a necessity – something that industry commentators have referred to as surge pricing by stealth.
Unfortunately, things are set to get worse before they get better. GRIs (General Rate Increases) announced by both FedEx and UPS for 2022 highlight that the ‘temporary’ increases experienced as surcharges are set to become permanent. Both carriers are introducing GRIs at an average of 5.9% across service levels – a whole percentage point higher than the previous two years.
Solution: While these changes will affect high-volume shippers the most, smaller retailers are set to see a significant hit to their profitability because they cannot qualify for wholesale shipping rates. Partnering with a 3PL will allow you to leverage their parcel volumes for more cost-effective shipping, in addition to using multiple fulfillment locations close to your customers to make shipping distances as short as possible.
2022 is set to be another disruptive year for retail as the world continues to adjust to the new realities brought about by the COVID-10 pandemic.
Supply chain challenges will continue to bite, pushing consumers into ’just in case’ buying habits that can both help and hurt retailers. The increased two-way movement of products in and out of warehouses has made inventory visibility more critical than ever to avoid missing out on reselling opportunities. As shipping costs continue to rise, retailers will find themselves in a tricky balancing act between meeting customer expectations for affordable shipping versus maintaining strong profit margins.
This is where partnering with a well-resourced 3PL is your best bet to weather the storms over the next year. As an experienced omnichannel fulfillment provider with over a decade of logistics experience, Whiplash offers wraparound support via advanced ecommerce technology, a nationwide network of facilities, and a knowledgeable team, leaving you well-positioned to prepare your business for the challenges of 2022.
Interested in outsourcing fulfillment? Check out our full guide on how to transition from self-fulfillment to partnering with a fulfillment provider.