Demand & Inventory Planning

Flexible Fulfillment Solutions to Grow Your Business

Demand & Inventory Planning
August 4, 2022
8 min read

Learn how flexible fulfillment allows you to scale your operations up or down to meet your business needs, increasing profitability and decreasing risk.

What Is Flexible Fulfillment?

A flexible fulfillment model is one that can expand or contract to meet changing levels of demand. Flexible fulfillment is also characterized by the ability to fulfill multiple order types – from small parcel to freight to white glove – through a single network.

Flexible fulfillment models have three primary characteristics that allow them to pivot quickly to meet changing business needs and increase margins by improving fulfillment and delivery costs.

  • Asset-light
  • On-demand
  • Technology-first

Ahead, we’ll discuss how each of these qualities support agile business models that can pivot quickly and launch into new channels and markets with minimal risk.

Why Does Flexible Fulfillment Matter?

1. The ecommerce explosion changed the game.

Today’s shopping environment is digital-first, and digital shoppers have specific expectations for fulfillment and delivery. In fact, McKinsey reports that 90% of ercommerce consumers expect free 2- to 3-day shipping and that over half will simply purchase from a different merchant if they believe shipping speeds are too slow.

So, while digital sales channels may be easy to scale and launch into new markets, consumer expectations mean that merchants must have a fulfillment solution in place before expanding into new geographic markets or planning an aggressive promotional campaign.

It could be seen as a risk to expand operations and stand up a fulfillment solution when testing out a new market. That’s why merchants need a flexible fulfillment solution – rather than investing hard assets in an unproven market or new sales channel. However, fast shipping promises actually drive sales at the top of the funnel. A full 69% of consumers report that they are more likely to click on an ad that mentions fast and free shipping, and 77% are more likely to make a purchase when free, 2-day shipping is offered.

Plant-based protein, Aloha, stood up a flexible fulfillment model before investing heavily in the growth of the ecommerce sales channel. By distributing their inventory across the country, they were able to offer 2-day shipping to 98% of their ecommerce customers, which increased their direct to consumer sales by over 300% year over year.

In fact, digital sales channels can expand overnight, and sometimes unexpectedly. This exact scenario happened to YBell Fitness in 2020 when their brand was featured on the Today Show as a top holiday gift for fitness enthusiasts.

The feature happened organically, and YBell Fitness had no warning before the segment ran. Overnight they saw their order volume spike – with 172k orders coming in the day the feature aired.

Had YBell not been prepared with a flexible fulfillment model that could scale up quickly to meet the sudden spike in demand, shoppers would have flocked to their site only to be met with stockout notifications or shipping delays.

Instead, their fulfillment partner was able to fulfill all of the new orders within 72 hours, and shoppers received their orders well before the holidays. New customers that discovered YBell Fitness through the Today Show feature were met with an exceptional delivery experience that increased brand affinity and customer loyalty.

2. Consumer demand is unpredictable.

The past few years have proven tumultuous for merchants and retailers of all sizes. From supply chain disruptions to revolving consumer shopping habits, merchants have had to pivot their strategies to succeed in the current market.

Flexible fulfillment enables you to pivot your strategy in real-time to take advantage of new opportunities and pull out of unprofitable ones. This kind of flexibility benefitted the 77% of merchants that had to shift their selling strategy in response to COVID-19.

It can also benefit merchants looking to optimize their inventory management as consumers change what and how much they buy. Having visibility into sales and shipping patterns will help merchants determine which of the SKUs are most profitable (hint: it may have changed since last quarter) and which are turning too slowly and depleting margins. That visibility must also be supported by operation flexibility to quickly move SKUs to a new fulfillment center, replenish high-velocity products, or liquidate inventory that’s no longer profitable.

3. Today’s consumers expect personalization.

The most successful digital sales channels are highly personalized, with product recommendations, fulfillment options, and size recommendations tailored to the shopper. Today’s consumers expect to have options when they shop online – all the way down to how and where they receive their order.

Flexible fulfillment allows you to offer customized options to meet those expectations, including fast shipping, sustainable shipping, and in-store pickup options.

Three Ways to Achieve Flexible Fulfillment

1. Co-warehousing

According to McKinsey, flexible options like co-warehousing enable small to mid-sized merchants to share warehousing space and labor costs, making more advanced fulfillment capabilities attainable for businesses of all sizes.

Sharing space and labor allows merchants to distribute inventory across multiple warehouses – forward stocking their products closer to the end customers, which lowers time in transit (TNT) on final mile deliveries. The result of lower TNT is faster, more affordable fulfillment that meets consumer expectations.

2. On-demand fulfillment

On-demand warehousing and fulfillment is an asset-light solution that allows you to only pay for the space and labor you need when you need it. An asset-light solution is essential to flexible fulfillment that allows you to take full advantage of seasonal or cyclical patterns of demand.

With an asset-heavy fulfillment model, merchants are forced to choose between two options when it comes to cyclical demand: either scale up operations to meet higher demand and continue to pay for those assets during lower demand periods, or miss sales opportunities to keep operating costs low.

On-demand fulfillment offers a third option that is fully responsive to both market and business needs. The United States’ fastest-growing helmet brand, LS2, found that traditional fulfillment models were too capital intensive to support their rapid growth. They found an on-demand fulfillment partner that allowed them to grow into new markets without rising additional capital expenditures.

3. Technology-first solutions

Supply chain technology has evolved to better serve increasingly flexible and scalable digital sales channels. It has never been easier to launch online sales. eCommerce shopping carts, third-party marketplaces, and social selling give merchants and consumers endless opportunities to buy and sell digitally.

The flexibility of ecommerce platforms enable them to be turned on or off based on product availability, demand, or profitability. Multiple platforms can be integrated through a single listing platform, which allows merchants to monitor and manage all of their channels through a single dashboard. However, launching or growing a sales channel without having a flexible fulfillment solution to meet ecommerce shipping expectations will ultimately lead to a frustrating customer experience. Technology-first fulfillment enables merchants to integrate their sales channels with their supply for complete flexibility.

Flexible Fulfillment with Ware2Go

Ware2Go is a UPS company that provides flexible fulfillment solutions for merchants of all sizes. With a diverse network of warehouses supported by best-in-class fulfillment technology and an integrated freight solution, Ware2Go helps merchants reach all of their customers with affordable 2-day UPS Ground .

To learn more about Ware2Go and get monthly insights and tips to grow your business, join our newsletter here.

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