World e-Com Blog|EN

9 Terms of fullfilment and order logistics that every online seller should know.

Here are nine key terms that every salesman should know:

1. "3PL Logistics."

A third-party logistics company (or 3PL) provides warehousing,   and delivery services to other businesses.

A key service for online sellers is usually e-commerce fullfilment. When your order volume becomes too large to handle in-house, you can turn to a 3PL to handle it for you. They provide all the services necessary to outsource your logistics operations so that when orders come in, they are fulfilled and shipped by your 3PL instead of you.

Some 3PL services are necessary to ensure orders are fulfilled, such as receiving inventory, warehousing, picking, packing, and shipping. Some companies provide additional services such as picking, customizing, and handling returns.

2. "Distributed Assortment."

If your customers are all over the U.S. or even around the world, having your inventory in multiple warehouses in different areas makes order delivery faster and cheaper.

In the U.S., this might mean spreading your inventory between warehouses in Los Angeles, Atlanta and New York. That way, instead of having every item shipped to every location from one warehouse, you can choose the closest one to save time and money.

Having distributed merchandise also opens up a wide range of services and delivery speeds you can offer customers. If you can provide two-day shipping throughout the United States instead of three to four-day shipping, customers are more likely to buy from you.

3. "Self-realization."

Self-fulfillment is essentially the opposite of 3PL outsourcing - it means you do everything yourself, on your own (it can also be called self-made fulfillment). This applies to any business that handles its own inventory and may encompass receiving, sorting, packing and/or shipping products.

Any small e-commerce business just starting out will almost certainly be self-fulfilling in the beginning. As order volume increases, they have a number of opportunities to keep up. Either they expand their operations to a professional level, move to Amazon FBA, or contract with a 3PL. Some use a combination of all three to get the right balance for their product types and customers.

4." Article Width."

Article width is simply a way to measure the number of different products you sell. The more articles you offer, the wider your range. It's not such a big problem for self-fulfillment, but if you're contracting with a 3PL, be aware that some companies have article width requirements. Some flat out refuse to work with companies with a wide assortment, and others just charge more.

As a general rule, the more articles you sell, the more difficult (and therefore more expensive) it is to manage your inventory. If you plan to contract with a 3PL once you get big enough, keep the width of your article in mind.

5." Multi-channel."

The easiest way to think about omnichannel is to easily integrate all the places where your customers can buy from you, and the data you have on each of those channels.

Every Facebook platform you sell on (physical stores, website, Amazon, eBay, Shopify, Etsy, Facebook Marketplace, etc. etc.), Stores data in its own storage because they are not connected. But you are connected to all of them, so you need to merge the data you have from each of them.

Customers today expect to collect orders, receive customer service, and process returns through whatever channel they prefer to use, regardless of which channel they originally used to buy from you.

6. "Package weight."

Most people think that package weight determines how much it costs to ship, but that's not really true.

Two different types of "weights" are calculated when items are shipped: the actual weight in pounds and ounces and the dimensional weight. Dimensional weight, also known as dimensional weight, is the volume a package takes up, and you are charged for the higher of these two numbers.

Each major U.S. carrier (UPS, FedEx, USPS) has its own unique formula for calculating dimensional weight. This is why it's so important to be as skinny as possible with large, lightweight items, because the dimensional weight will be higher than the actual weight.

If your items are small and heavy, you will be charged for the actual weight, so the more you can reduce the weight of your package, the better.

7. "Reverse Logistics."

This is one of those fancy industry terms, and in this case it means "kickback." Depending on whether you're self-returning or outsourcing to a 3PL, it can be done yourself or in a warehouse thousands of miles away.

There are many costs associated with returns that are worth evaluating when you're putting together your return policy. The two biggest costs are shipping the item back to storage and the cost of restocking the item. This is why you will often see restocking fees charged to returning customers to try to recover some of these costs, although this practice is extremely unpopular.

8. "Kitting."

Kitting is the combining of several articles to be sold together as one article, or, more simply, several products to be sold together as one product.

Selling and shipping bundles, rather than individual products, reduces both packaging and shipping costs. It can also increase your average order size because you are selling multiple products instead of one. Even if you lose some of your margin to sweeten the deal for customers, you can probably break even by saving on packaging and shipping, and get more inventory.

The disadvantage of bundling is the labor involved. Someone has to take all these individual items and put them together in one box. Different 3PLs have different rules about this, too. Some will fulfill kit orders for you, but only if they are pre-assembled, and some will do the assembly (or disassembly) for you on demand.

9. "Last Mile."

Finally, as you might expect, the last mile. This is the last and most expensive step in the delivery process, when the package is delivered to the customer's doorstep.

Rather than being transported on a massive container ship, which is very economical for transporting large shipments over long distances, it is usually done using a small or medium-sized van. The smaller number of items that can be transported is one reason that contributes to the cost.

Transportation companies are constantly trying to lower the cost of the last mile and are experimenting with various new methods to do so. Drone shipping is still in its infancy and has yet to succeed, but in-store pickup is now commonplace and extremely popular.

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