Over the past decade, we’ve witnessed fundamental changes occur in the consumer buying cycle. The concept of traveling to a brick and mortar store for purchasing products was unrivaled for many years, and the entire shipping and logistics industry as we know it was built around fulfilling this need. However, the introduction of e-commerce markets flipped this notion on its head, as many people flocked to this new convenient online marketplace.
With e-commerce’s quick rise, supply chains around the world had to also adjust quickly to meet the changing scope of what it means to ship and fulfill products. Consumers are adding to the pressure with expectations of quick and flawless deliveries of their products. In this competitive era of e-commerce fulfillment, a supply chain can’t afford to breakdown.
While the market may be better established now than it has ever been, that doesn’t mean that there aren’t opportunities and gaps that still need to be filled. For more information on this, we spoke with Ben Jones, Head of Business Development at the Fulfillment Group, about the niches that still exist and what his company is doing to answer the needs of customers around the globe.
Addressing the Need
Mr. Jones began by explaining, “We noticed that there is a gap that larger freight forwarders have, based upon the way they’ve built their business focused on the traditional model of the way consumers buy goods. We’ve started to see smaller players, which are usually more localized, becoming fulfillment companies. These smaller companies are faster to adapt to consumer and market changes, but they don’t necessarily have the reach and the depth that the larger freight forwarders possess.”
“At the other end of the spectrum, smaller players are actually quite flexible and able to adapt to market changes quickly. A gap has formed with multinational consumer brands are in dire need of a way to adapt to consumer and market changes, and fulfillment companies have bridged this need with a foundation of big company logistics and the knowledge behind that, but also the flexibility and technology to adapt quickly.”
Technology as an Enabler
Mr. Jones spoke highly of the technology that has enabled their business to compete with some of the larger players in the field. Mr. Jones explained, “We integrate with all of our clients’ sales channels. Because a brand now utilises an ever-expanding list of ways in which they reach the consumer, the management behind that is becoming increasingly difficult. We have a “plug-and-play” system that integrates with a client’s already established sales channels, including their web platform and their brick and mortar stores; enabling them to synchronise and manage all their products across a multitude of sales channels though one centralized inventory. In the end it cuts down on labor and time. The way to stay ahead of market changes is to remain at the forefront of the channels through which a brand reaches consumers.”
While larger freight forwarders certainly have their advantages, the scale of their technology means implementing any change ends up being quite costly and time consuming. This isn’t to say that the larger players can’t implement this type of technology, it’s just normally a costly a time-consuming endeavor.
This is where the smaller, more flexible players in the fulfillment field can add real value to the supply chain. Mr. Jones said, “Beyond software, as a fulfillment company we have facilities and staff, who are picking and packing orders. The technology implemented behind the scenes is involved in all of our operations, so the client has end-to-end visibillty and control across all stages of order fulfillment and delivery. We’ve implemented automated processes to keep our overheads as low as possible. Everything from automatic label generation, packing lists, invoice generation; we constantly look at how we can keep the costs as low as possible by using technology as an enabler. All of this picking and packing could can be very labor intensive, but can cut be down greatly by having the right system in place.”
Partnering for Success
Fulfillment companies have to find the right balance of technology and real-world operations to realize their end goals. It may look like a fulfillment company could easily move between being a service provider to taking over what the larger freight forwarders already do. However, Mr. Jones said that he doesn’t see it like that, and each business has its own specialties and niche they fill. As a fulfillment company, they are much more focused on partnering with other businesses for mutual success.
He said, “We work with other freight forwarders, and I think that we play to their strengths and they play to ours. We normally partner with them in the areas of the supply chain which they do best; their strengths being traditional air and sea freight. We’d be silly not to as they are so good at what they do, and we’re happy to work with them, particularly on the final mile.”
This doesn’t mean that they only support and partner with last mile delivery companies, on the contrary, as a fulfillment company Mr. Jones gave an example of how their services can be further utilized. “For example, one of our customers is a brand that operates around 25 retail stores in Australia and New Zealand, and also sells online domestically. We helped them to reach new customers and expand into Southeast Asia. They wanted a combination of selling direct from their website and via various Southeast Asian marketplaces. The bulk of their products are made in China and will still be shipped to Australia for store replenishment. We simply hold a selection of their inventory in Hong Kong and via integration we synchronise and fulfill all of their orders to Southeast Asia.”
In the end, fulfillment companies can offer a variety of solutions for businesses looking to expand their market reach. The technology behind the scenes is very important for keeping all the ducks in a row, but the ability to drive a business’s scope from a regional to a worldwide market is a powerful tool.
Mr. Jones says, “It’s a bit of a no brainier, but it’s understandable that decisions like this can slow down when you’re dealing with a really big organization. It’s our job to have this conversation with customers about how straight forward it can be. The process and steps they need to take aren’t that demanding, it’s more difficult just convincing them of the demand, especially in Asia. Our long-term plan is to take our customer’s local brands and businesses and help them to expand further.”