“Hybrid” is a term that’s getting a lot of attention these days. We have hybrid cars cruising the streets, and hybrid working models emerging post-pandemic. But what about hybrid fulfillment?
In essence, hybrid fulfillment follows the same principle as other hybrid concepts—it brings together two or more different elements with a shared goal, aiming to offer you the best of both worlds.
When it comes to handling the order fulfillment process for your online store, precision is key. Your chosen fulfillment model should be adaptable and capable of growing alongside your expanding e-commerce business.
Hybrid fulfillment often emerges as an ideal solution for thriving e-commerce stores. But what exactly is it, and how can it enhance your business? Keep reading to discover more!
What Is Hybrid Fulfilment?
Simply put hybrid fulfillment or hybrid order fulfillment is a fulfillment model whereby you use two or more fulfillment methods to complete your orders.
This means that you use a combination of various fulfillment techniques like third-party fulfillment services, dropshipping, and others to get the products your customers order delivered to them.
One major reason e-commerce entrepreneurs start using the hybrid fulfillment model is growth and expansion.
If a business decides to expand its product catalogue and after consideration decides that the new products do not fit into its current means of delivery, it will have to choose another delivery or fulfillment method for the new product.
For example, let’s say you originally sold sneakers and shoes and are now expanding to selling clothing. You could either choose to take on the burden of revamping your warehouse to accommodate the different storage requirements both products need or you could find a company that specializes in storage and order delivery of clothing and other apparel.
The hybrid order fulfillment approach gives you more options and controls over how your products are sourced, stored, and delivered to customers. You get to adapt to whatever is best for business.
What Types Of Fulfillment Are There?
Hybrid fulfillment is a smart choice for businesses that are growing quickly, offer a variety of products, serve different markets with unique expectations, and need a customized solution for fulfilling orders based on the business and customer requirements.
For instance, if you’re thinking about using Amazon FBA to handle some online orders, a third-party logistics provider (3PL) can help by sending inventory to Amazon fulfillment centres.
Meanwhile, they can also store other products in their warehouses for later fulfillment.
Similarly, if you currently handle all your orders in-house and find it challenging to keep up with demand, outsourcing the fulfillment of certain products through dropshipping is a good way to test the waters.
Here are the types of fulfillment options you can combine as required by your business.
1. In-House Or Self-Fulfillment
If you are just starting out in the e-commerce business, this is likely the current means of fulfillment you are employing.
This fulfillment option is the easiest to understand and do. It is when a store handles its delivery.
Whenever an order is made, they will be responsible for picking it up, packaging, buying or printing the shipping labels and then delivering the products either personally or through a carrier.
When you are just starting and have just a few orders to fulfill, this option is the cheaper and local option. But, as your inventory and orders start expanding, this fulfillment option will start getting expensive.
You will have to pay for more storage and warehouse, pay employees to handle the packaging process, manage the return process, and handle the customer support for your growing customer space.
At this point, most companies will need to start outsourcing some of the processes and logistics.
2. Third-Party Fulfillment
A third-party logistics company is another order fulfillment channel you can go with as an e-commerce business owner.
For this option, you are going to be outsourcing everything from inventory storage, picking and packaging, handling shipping and delivery, and dealing with any customer returns.
This way you have more time and resources to focus on other things like business development, marketing, and sales strategy.
Check out this article for more info on finding third-party logistics companies.
Some other advantages of the third-party fulfillment option are:
1.Reduced Costs Of Shipping: Most third-party logistics companies have connections with shipping carriers and can negotiate for better shipping carrier and transportation rates.
Also, because they handle orders from multiple sellers and the huge volume of products being shipped, third-party logistics companies can leverage this to acquire bulk shipping prices which are usually lower than any price you could get as a self-fulfiller.
2.Faster Shipping Speeds: The teams and management working for third-party logistics companies are highly trained and experienced in order fulfillment.
This skill contributes to the speed and finesse used in managing and delivering your inventory.
If the third-party logistics company has warehouses in various locations, they could distribute your SKUs across their locations depending on how close it is to your customer’s location resulting in faster deliveries.
3. Dropshipping
In the past years, dropshipping has garnered a ton of attention and this is evident in its growth, being valued at $225.99 billion in 2022.
Basically, it is a retail business model that allows you to operate an online store without needing to hold physical inventory. Instead, they work with third-party businesses like manufacturers, who will be responsible for the process of storing, packaging, and directly shipping the products to customers.
This business approach removes the need for expensive upfront investments in inventory, making the fulfillment process more efficient and cost-effective. The disadvantage of this is that you don’t get to personally vet the quality of your product.
4. Print-On-Demand
In this business model, products are created and produced only when a customer makes a purchase, allowing for a more cost-effective and flexible approach.
The print-on-demand model and the dropshipping model are quite similar in some aspects but they do have their use cases.
Approaches to Hybrid Fulfillment
Using Different Fulfillment Options For Different Products
This is probably the simplest way to set up a hybrid fulfillment model, allowing you to choose the best fulfillment method for each item.
For instance, you might decide to handle the self-fulfillment of high-value or fragile items, while outsourcing the fulfillment of cheaper and non-fragile goods to a third-party provider.
This approach makes it straightforward to divide the fulfillment tasks, and each provider knows exactly what they are responsible for.
First, you look at all the things you sell. Some might be small and light, others big and heavy. Depending on their characteristics, you put these products into groups.
Then you choose which fulfillment option will be best for each product. Perhaps dropshipping might be best for certain products you can’t store in your warehouse so you set it up to be delivered straight from the manufacturer to the consumer.
Other products might require you to send them to third-party logistics (3PL) services that have warehouses close to your customers.
However, it can get a bit complicated if a customer places an order that includes multiple items falling into different fulfillment categories. In such cases, your customer might receive multiple shipping bills, order labels, and packages, which may not provide the optimal customer experience.
Using Different Fulfillment Options For The Same Products
This method is commonly employed when businesses aim to split their shipping based on geographical locations.
Imagine you have a popular product in your inventory. Now, instead of just having one way to get this gadget to your customers, you decide to be flexible and offer them choices. This is where the idea of using different fulfillment options for the same product comes in.
Firstly, there’s the traditional way – you have a central warehouse where you store your gadgets, and when someone orders one, you ship it to them.
Then, you think about your international customers. For instance, if your business is located in the United States Of America, you might choose to handle all orders for any local US address. However, for international orders, you opt to outsource the fulfillment to 3PL companies that can reach there easily.
Now, let’s talk about speed. Some customers might be in a hurry – maybe they need that product as a last-minute gift or an urgent need. For them, you offer an express shipping option. To do this, you use another fulfilment service that offers fast overnight shipping.
This approach typically demands a more intricate logistical setup, and you’ll need to closely monitor stock levels.
Mixing The Options As Is Needed
A mixed approach in fulfillment provides the flexibility to employ multiple, overlapping fulfillment methods tailored to specific product categories.
Consider an online furniture store as an example. In this scenario, you might opt for one fulfillment method for chairs and sofas, a different one for tables, and a combination of both for soft furnishings.
Implementing a mixed approach requires meticulous attention to logistics and planning. It’s crucial to ensure seamless communication among all chosen fulfillment providers to avoid operational hiccups.
This complexity raises questions about the practicality of outsourcing fulfillment in the first place, as the added logistical challenges may negate the benefits.
In many cases, a mixed fulfillment model might not be the optimal choice for a business, given the potential complexities and the relatively few instances where it proves to be the most efficient solution.
Conclusion
Embracing a hybrid fulfillment approach is a viable option for e-commerce businesses, though it comes with its complexities due to the management of multiple fulfillment operations.
Coordinating inventory across various locations and ensuring timely order fulfillment through diverse approaches can be both challenging and time-intensive.
By adopting the right strategy, allocating appropriate resources, and leveraging technology effectively, a hybrid fulfillment model can offer your business the flexibility required for sustainable growth.
