E-commerce Fulfillment: Everything you need to know
E-commerce fulfillment entails, in a nutshell, the supply chain of items that are sold online. Whenever a customer orders a product, be it from a seller’s website or through an online marketplace, the procedure that begins with the order placement and finishes with the delivery of the order at the buyer’s location is known as e-commerce fulfillment.
The eMarketer led surge has resulted in a rapid growth of e-commerce in the Middle East, which witnessed double-digit growth in 2020. From $5 billion to $20 billion, the increase in e-commerce profit made by the Gulf States was estimated to be four times between 2015 and 2020. E-commerce has witnessed a 25% increase from 2019 to 2020, which resulted in a significant rise in this sector in these regions
Consequently, this surge has resulted in a far-reaching global penetration of e-commerce industries. With over 90% internet penetration in the Middle East and almost half the users using online shopping mode, it has been forecasted that the e-commerce market size would increase to $48.6 billion in 2022 from $26.9 billion in the Middle East and North Africa (MENA) region. Also, e-commerce retail sales increased more than twice in the Middle East. It grew from 2-3% in 2019 to 5% in 2020. The highest penetration rate of 4.2% was witnessed in UAE, followed closely by Saudi Arabia at 3.8%
Reasons why E-Commerce sellers shouldn’t miss out
It’s pretty common knowledge by now that there is immense potential for e-commerce in MENA because of high internet usage in the region and e-commerce user penetration coupled with a relatively low market share of 5%. The covid-19 induced lockdown and restrictions have further accelerated the growth in the e-commerce industry as retailers jumped to online platforms to continue their businesses. Statistics show that 98% of e-commerce in UAE and Saudi Arabia consists of Electronics, Groceries, Fashion, Beauty, and other Home products, making these two countries an attractive market for e-commerce sellers.
One of the most critical aspects for any e-commerce seller entering MENA is setting up an efficient e-commerce fulfillment Infrastructure and strategy.
The supply chain of items sold online, business-to-business (B2B) or business-to-consumer (B2C), is known as e-commerce fulfillment. The activities requiring satisfaction include receiving the goods to be sold and storing the inventory. After receiving an order, the goods are packed, prepared for shipping, and transported to the customer’s destination. If it needs to be returned, that too is considered in the e-commerce fulfillment category. E-commerce fulfillment can be in-house, or you can outsource it to a third-party business.
Importance of E-Commerce Fulfillment Strategy
Customer satisfaction due to the efficiency of supply chain management and fluid fulfillment is the most critical factor for the success of e-commerce industries. It is the only way by which you can meet the demands of customers in time.
The strategies which you can implement for e-commerce fulfillment are:
- In-house fulfillment: Every process related to e-commerce fulfillment can be arranged in-house by highly resourced companies, right from managing inventory efficiently to fast deliveries. Even small and mid-sized companies can do the same if they contain only a limited amount of stock.
- Outsourcing to 3rd party professional logistics service provider: For most of the e-commerce companies with a large inventory and high customer’s demand, it makes more sense to utilize the service of professional logistics service providers for their efficient processes due to their expertise in logistic operations, technological setups and well-established networks, the combination of all of which leading to long-term cost savings for the company.
- Drop Shipment: Drop Shipment is a popular strategy employed by e-commerce industries in the UAE. Instead of owning an inventory, they can transfer the incoming order to manufacturers or wholesalers to send it directly to customers.
Things to consider while choosing E-Commerce Fulfillment Partner
Some of the points that need to be evaluated before choosing an e-commerce fulfillment partner are:
- Shipping Speed: The chosen partner should have a proven fast shipping record, with an efficient fulfillment process in place.
- Fulfillment Warehouse location: The location of e-commerce fulfillment warehouses should be close to customers for the fast delivery of items.
- Advanced e-commerce fulfillment software: A must for large-scale handling orders is the use of e-commerce fulfillment software solutions such as warehouse management systems (WMS) and barcoding technology. Automation tools that significantly assist in enabling the business to complete their deliverables on time. It is also helpful in tracking items right from their inventory to the customer’s destination.
- Return Management: Since there are many returns in e-commerce industries, a return management system should be put in place by e-commerce fulfillment partners to handle reverse logistics.
- Scalability capacity: The e-commerce fulfillment partner should have enough expertise and facilities to scale up quickly if online orders increase rapidly.
Future E-Commerce Trends & Developments
Although the growth of e-commerce in MENA accelerated due to the pandemic, it also brought new challenges, with many companies having to rethink their e-commerce fulfillment setup with the change in market conditions and increased customer demands and expectations. Below are some trends which resulted because of such developments.
- Resilient supply chain: The customer’s desire to receive orders quickly kept increasing despite the pandemic-induced supply chain disruptions. As a result, creating a robust and flexible supply chain and fulfillment process along with clear contingency plans is the need of the hour to ensure an unhindered and smooth flow of goods.
- Timelines and Last-mile delivery: There’s a need for e-commerce sellers to invest in an efficient distribution system and last-mile delivery system to combat not only the growing competition but the heightened customer expectations as well. You can achieve this by using advanced technology, a real-time monitoring plan, and strategically located e-commerce fulfillment warehouses.
- Data and Technology: From AI-based technologies to automated administrative tasks for minimizing human error, e-commerce industries have witnessed automation in every step of the fulfillment process. As such, there’s a greater need for data collection and analysis to enhance fulfillment warehouses.
- Sustainability: Sustainability has become the prime focus of industries ever since the pandemic struck, with the manufacturers and customers giving more attention than before to the sustainability of a product. Companies have started giving more attention to their e-commerce fulfillment process to make them more efficient and competitive.
Although the growth of e-commerce in MENA regions has been generous, success, in the long run, can be achieved only by a professional e-commerce setup for the smooth flow of goods and increased customer satisfaction. As a result, a suitable fulfillment strategy should be applied by e-commerce industries following their long-term goals and plan.
E-commerce industries should also look to optimize operations to maintain fast processes by continuously measuring the efficiency of the fulfillment process and identifying room for improvement so that they can stay relevant in this highly competitive environment.
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