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A New Seller's Guide to E-commerce Fulfillment & Shipping

This guide will help you understand more about ways to leverage the opportunities of logistics to drive revenue and growth for your UK-based e-commerce business. While you’re focusing on getting sorted to sell on those online platforms, you can count on us to take care of your e-commerce accounting, reporting and tax filing.

What Is the Definition of Fulfillment in E-commerce?

When we refer to the definition of fulfilment in e-commerce, we’re talking about the process from the moment your customer hits “CHECKOUT” to the moment their package is delivered to them. Shipping forms part of the overall fulfilment process, specifically referring to the movement or transit of a package from its original storage location to its final physical destination.

E-commerce Fulfillment in the UK: Why It Matters

First, the benefits: More conversions. More sales. Second, the business obligation. As a business owner in the UK who’s planning to sell online, order fulfilment is your responsibility. You don’t have a choice about that duty but you DO have a choice about how you’ll handle the processing of your online orders.

These are the 3 main methods of fulfilment which we cover in a detailed overview a bit further down:

  1. In-house fulfilment
  2. Dropshipping
  3. Third-party Logistics aka 3PL

Is this feeling a little overwhelming? If you’re just after some pointers for the best e-commerce website builders in the UK, we can help with that too.

E-commerce Fulfillment Strategy: Local & Global

There are a few important considerations that’ll help you decide on an entirely new fulfilment strategy from the ground on up, or help you refine what you’ve got going on already.

Let’s explore them through the lens of Rose, the proud owner of a small business called Dish, Spoon & Dandy, selling custom kitchen accessories and specialised tools online.

Shipping costs & methods:

Rose has two options here. She could offer free shipping or she could pass the full cost of shipping to her customers. She’s looking to gain loyal customers who appreciate her quality products, so Rose chooses flat-rate shipping, a happy medium where she absorbs some of the costs without putting her profit margins at risk (more about methods in a bit).

Products weights:

Whenever a new product’s added to the Dish, Spoon & Dandy catalogue, Rose takes care to measure, weigh and record product specs. This info serves a dual purpose: it’s added to product descriptions for customers to view and means Rose can also factor in the info when working out total shipping costs and product prices.

Sourcing packaging materials or suppliers:

Branded packaging is part of Rose’s growth and customer acquisition strategy at the mo. She puts a lot of time and consideration into it as she knows that a good experience now may help customers recall in the future. Down the line, she’ll consider free packaging provided by couriers and seal packages with branded Dish, Spoon & Dandy stickers.

Packaging preferences (and presentation):

Rose’s love for Dish, Spoon & Dandy started a long time ago. This is why she prides herself in preparing and packing every order with the addition of a flour-sprinkled photo of her and her grandmother. No product quality is ever compromised but the upfront effort is part of her intention to grow customer loyalty. Beyond the aesthetics and pulling of hearts strings, boxes are also weighed and factored into shipping prices, take a look below.

Dish, Spoon & Dandy: Calculating Product Shipping Costs

Here’s how Rose would calculate the total price of the toddler’s bamboo bowl she’s just launched so it includes e-commerce shipping costs:

Cost of Bamboo Bowl (product) £6.00
Cost of packaging materials & pic £0.70
Cost of shipping £5
Fee for credit card £1.80
Product profit margin 46%
TOTAL PRICE: £18.90
Remember: Any final decisions you make should be informed by the underlying financials of your business. Want to ping your accountant and check your financial reports on the go? We can help you with that.

E-commerce Fulfillment & Shipping Models

Method & meaning What’s to like? What’s not to like? Who it’s best for?

Direct order fulfilment (or self-fulfilment)

The entire process happens in-house (even IN your house) using all your facilities, supplies and assets.

  • Easy implementation
  • Startup costs are the lowest
  • Packaging can be customised
  • You’re in control 100% of the time
  • Limited opportunity to scale
  • Time-consuming
  • Storage space is limited to what you’ve got
  • No shipping or bulk storage discounts
Startups selling less than 100 items per month, like the artist who features limited edition work on Etsy or C2C platforms similar

Third-party Logistics

All functions of the supply chain are outsourced and managed through external resources

  • Easy integration & automated, time-saving tech
  • Quick setup & easy to scale
  • View of sales data for practical insights
  • ccess large network of providers & better shipping rates
  • Customer service is not 100% in your control
  • Supply chain reliance on 3rd-party vendors for success
  • Less opportunity for personalisation of packing
  • Storage fees are often rigid
Startups who lack resources are looking to scale or focus efforts on product development and marketing

Dropshipping

Ecommerce orders go directly to your chosen supplier or manufacturer and they sort out the rest. Products are never handled directly by you.

Check out the 15 best dropshipping websites in the UK

  • Low startup costs
  • Order fulfilment costs are low
  • Updating inventory is a breeze
  • Inventory costs are low
  • Only pay for what you sell
  • Shipping and handling is out of your control
  • Sales are reliant on supplier stock
  • Customer service not managed by you
  • No bulk pricing & shorter lead times
  • Lower profit margins
A good option for startups just starting, acting as a supplementary side hustle without full-time obligations or risk

What Are the Best Services Offered by Fulfillment Centres?

Local or global, a fulfilment company takes the reins of processing, warehousing and storage of your goods right down to the shipping of the actual orders. So when a customer hits that glorious “CHECKOUT” button, signals are sent straight to Rose’s fulfilment centre so they can get to work to pick, pack, and ship orders on her behalf.

It’s a pretty neat way to alleviate hands-on responsibilities linked to hiring, managing stock, tech equipment, ops and infrastructure. Here’s what Rose would consider when looking for a 3PL fulfilment partner with services that suit her:

  • E-commerce platform integration: It’s a non-negotiable that Rose finds a provider that can successfully integrate the e-commerce platforms she’s currently stocking her products.
  • Multichannel integration: Rose is looking for a partner that’ll allow her to sell her kitchen products across various online channels because she already sells her e-commerce products on Shopify but she’s also looking to sell from eBay and eventually Amazon too.
  • Shipping provider integration: Rose needs the assurance that shipping will be a seamless process. A 3PL partner that helps her complete more orders is a partner that’ll help her biz scale.
  • Costs & fees: Are the financial obligations for warehousing and fulfilment realistic, sustainable, fixed, scalable? These are important questions, for now, that’ll matter later.
  • Shipping turnaround times; Are they speedy and similar to what Rose’s customers have come to expect?
  • Product volumes: Do they ship broad & vast or specific & specialised? Or both? And whatever their volumes, does this model align with Canine & Catwalk?
  • Customer support: Is there a single person Rose can reach out to? A live chat service to access on her commute for a quick query? Does she have a direct phone line in case things get scary?
  • Real-time reporting & inventory: What management system or software is the driving force behind warehousing capabilities? Will it scale, suit or complement Rose’s products?
  • Network of fulfilment centers: To reduce her shipping costs and get products to customers quicker, she’s looking for a 3PL with the added benefit of centres in different locations.

From New Seller to Seasoned E-commerce Sales in the UK

Tip

E-commerce can be exhilarating but the weight of invoices, reports and taxes could quickly make it lose its sparkle. That’s where we come in. Osome can free you from manual accounting and get you trading across the EU without any complications. If you’re after bookkeeping and accounting services that could save you money, time and maybe even the ever-elusive luxury of sleep, let’s chat.

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