5 Biggest Execution Challenges for Ecommerce Brands


The global e-commerce market is expected to grow at a compound annual growth rate of 14.7% over the next five years – although it doesn’t quite match the explosive growth we saw at the start of the pandemic, that’s still a healthy level.

But with all this growth, e-commerce brands are struggling to keep up. As many brands have discovered, building websites to take orders online is only half the battle. In fact, delivering these orders to customers is an entirely separate business.

Fulfillment has become one of the most important – if not the the most important — hurdles facing e-commerce businesses, which are coping with a mountain of new online orders.

And not delivering can have serious consequences for brands looking to attract new customers and retain old ones: according to a survey by e-commerce platform FarEye, 85% of respondents said they would change retailers after have had one bad delivery experience.

“To retain and grow customers, brands must deliver on their promises. All. Only. Time. Excellent customer service is not enough. It’s table stakes. To really stand out and grow, you need to earn your customers’ trust and ultimately their loyalty,” explained Mike Simpson, Vice President of E-Commerce at 3PL NFI Industries.

“The ability for you to get products into the hands of the end consumer accurately and quickly ultimately determines the perception of your brand. Incorrect orders and/or slow deliveries will negatively impact your customer satisfaction and ultimately your customer loyalty,” he said.

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Simpson and the e-commerce division of NFI want to understand why brands are struggling to satisfy themselves. The company recently released a study outlining the biggest challenges companies face when trying to outsource their fulfillment to a third-party provider.

The survey found that scaling execution to meet demand is the biggest issue, but it’s far from the only barrier cited by respondents. Here’s a full breakdown of the research.

The vast majority of brands struggle to scale

Unsurprisingly, more than 9 in 10 respondents (90.91%) said scaling was among their three biggest execution challenges. In particular, brands mentioned the difficulty in finding a partner capable of scaling.

“When we evaluate fulfillment providers, we check if they have the ability to help us expand into new markets,” one brand explained.

Many respondents said they had to switch fulfillment providers because they didn’t have the market reach they were hoping for. And that goes for the global market, too: more than 75% of brands cited reaching international customers as a top challenge.

“We look forward to expanding into international markets. We need a fulfillment provider that can back us up,” said one respondent.

Brands looking for automation and work

While the report didn’t provide a specific percentage of respondents citing automation as an issue, it did note that many brands are turning to fulfillment providers who have optimized their networks using technology.

“We outsourced our execution to another vendor because we wanted to scale and needed someone who had already invested in execution technology,” one company explained.

“We want to partner with a brand that invests in growing their technology and automation,” another remarked.

Automation in the warehouse is becoming a hot market, with fulfillment vendors bringing technologies such as machine learning, AI, and autonomous mobile robots (AMR) to speed up the process.

While adoption of newer technologies like AMRs remains low (about 20% by most estimates), more than half (56%) of material handling companies use warehouse management software (WMS) and 36 % use supply chain management and planning software, according to a survey by Peerless Research Group.

Know what you pay

More than 8 in 10 brands feel they have been taken over by their outsourced fulfillment provider. According to the survey, 85% of respondents rated lack of pricing transparency and unfair pricing as among the top three frustrations they have with fulfillment providers.

The research clarified that a lack of transparency typically refers to unexpected charges or hidden costs being charged at the time of billing without the brand’s knowledge. Because there is no conventional pricing structure for 3PLs, some partners may charge a flat fee for services such as pick and pack, while others may break this category down into smaller fees .

Companies cited “fair pricing, transparency and competitive pricing” as key to their decision-making processes. Their preference is for providers that have a “simple pricing structure that takes into account the nature of our business.”

Customer service leaves more to be desired

In the age of supply chain disruptions we live in, agility and flexibility are essential to avoid delays. However, 7 in 10 e-commerce brands said that lack of good customer service from 3PLs was their fourth biggest challenge when outsourcing fulfillment.

Poor customer service isn’t just about putting a company’s supply chain manager on hold for an hour – this can ultimately create bad experiences for the end consumer, as the brand is unable to act quickly.

“Losing a lifetime customer due to poor service from a service provider is one of our biggest fears,” one respondent said.

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“We chose our current fulfillment service provider because they were able to help us better serve our clients,” added another.

As they say in the sports world, availability is the best ability. A 3PL could have all the capabilities in the world, but if there is no one to answer the phone in case of trouble, does it matter?

Daily communication is a necessity for e-commerce brands, as one company explained: “We changed fulfillment provider because our current provider is diligent and offers ways to access open order reports on a daily basis. . They listen to requests and needs and are ready to communicate at any time by phone or e-mail. »

A need for more education and knowledge sharing

While not as pressing an issue as others on the list, lack of nurturing education was a pain point for more than half (55%) of respondents. Especially for growing businesses, navigating the e-commerce space can be tricky without understanding the nuances of execution.

For many growing and established players, a little advice can go a long way. For example, brands said an article or guide on how to properly label their products before sending them to a 3PL would be helpful.

“Fulfillment service providers should offer customer coaching on what brands can do differently or better to help them succeed, save on input and production costs, streamline the receiving or put-away process, etc. .”, suggested one respondent.

The sharing of data and analyzes also falls within this framework. E-commerce brands and 3PLs need to be able to communicate which parts of the network are underperforming and why, and having reliable access to this information can make the difference.

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