12/10/2014– Ken Nierenhausen
Ever wanted to sell a product online? No not your old Xbox, I mean a product you’re creating. Well the road ahead is can be a bumpy one, and it’s dangerous to go alone! If you’re curious about the process, are a startup looking to sell a physical product, or are searching for better ways to do a storefront or fulfillment, then stay tuned. Take this post as a roadmap for the course ahead.
There are many steps that take place when going from cart to doorstep. The major parts are the storefront, middleware, fulfillment, and shipping. There are a lot of options in each of these categories, so let’s explore the possibilities.
This is the part of the process that you have probably used before. The storefront is the portal from the product to the customer. It consists of two pieces: a place for customers to buy products, and a place where orders are stored for the seller to manage. There are two main approaches: doing it all yourself, or using an e-commerce solution.
More often than not, storefronts are designed, implemented, and maintained by the seller. They do it themselves, and it’s a complete control solution. This allows for high customizability and complete control over incoming orders. The downside is overhead. Creating and maintaining a storefront from scratch is very time consuming.
On the other end of the spectrum, there are services that provide an instant storefront. A few good places to start looking are Volusion, Shopify, and Celery. Basically they control the storefront (often with design options), and provide a service to manage incoming orders.
Volusion and Shopify are big names in this industry, who know how to get you set up with your own storefront. Shopify is slightly cheaper and generally better received, but Volusion has just as many features with great customer support. Along the same lines, Celery is a pre order management system; great for startups who might not have an actual product available yet.
The biggest thing to remember when determining what to do about a storefront is time. If there’s no time to waste and you need to sell quickly, use one of the e-commerce solutions. They’re easy to set up, fast when it comes to order management, and often have a trial period so you can test them out.
If you’re considering doing a storefront yourself, look at these solutions again. They offer API’s that can make order management easier. If you want to do it all from scratch, go for it! But expect a longer deployment. Your storefront might be exactly how you want it, but three months too late.
So what happens next? You have a list of orders sitting around. This is where fulfillment comes into play. Fulfillment is the act of taking an order, finding the parts, packaging it, and dealing with shipping. So what are the options?
The one that probably comes first to mind is in-house fulfillment; aka doing it yourself. As you can imagine, this can be quite time consuming; especially as the number of orders increases. Although this may be perfect if you sell a small number of items or something that’s really customized, it’s not ideal for scale. However it does have the benefit of not needing any middleware (more on that soon).
There are companies that exist that will handle fulfillment for you. Shipwire, Whiplash, and Rush Order are a few good places to start looking. What these companies do is take your orders from the storefront and get the pieces and parts packaged up and shipped out to the customer. All the hassle of fulfillment is taken out of your hands… if the price is right.
Shipwire is one of the bigger names here. They handle fulfillment, and have a lot of services (like Shopify and Volusion) already integrated, so there’s no need for middleware. Whiplash is a fulfillment startup that’s a great choice for startups. Rush Order is a little less known, but they have a very personal touch with all their orders; something that might be important to your customer experience.
So what are the tradeoffs? Here the biggest thing to keep in mind is scalability. Doing in-house fulfillment may be super attractive due to its simplicity and low cost, but if business starts booming you might crash and burn out early. Fulfillment houses have this down. They have the warehouse space, the time, and manpower to get orders shipped; simple as that. However, one caveat to using a fulfillment house is that you have to have middleware.
Some fulfillment houses have built-in order integration, meaning that you don’t have to set up any middleware. The point of a middleware server is to take orders from the storefront, change them to a format that the fulfillment house understands, and then forward them to the fulfillment house. So what are the options?
A heavier approach would be having a database on your middleware server. This is great for maintaining history, but a pain to deal with consistency. Introducing a database here means your storefront has a state, your fulfillment house has a state, and now your server has a state. All three of these need to be consistent, and this is going to take time to get right; not to mention dealing with downtime. If you have a use a database, keep these things in mind.
A lighter approach is setting up a webhook managing server. If your storefront and fulfillment house use webhooks then your server just has to listen and forward accordingly. New order from the storefront? Forward the order to my fulfillment house. Order just shipped? Notify the customer via the storefront order management system. This is lighter than a database, but it still has problems with downtime because webhooks are unique events. If you miss one it’s gone, and now you need to synchronize the states.
An even lighter approach is setting up a polling middleware server. Basically all it has to do is make sure that the storefront and fulfillment house are consistent from time to time. Although this will also take time to implement, it removes the state from the middleware server. This has the added benefit of dealing with downtime. If your storefront or fulfillment house orders go dark, the middleware will synchronize orders as soon as it hears anything.
Just remember that downtime is inevitable. Whether it’s your server crashing because of some bug, or your storefront in inaccessible due to a massive DNS DDoS attack on cyber monday. They can happen, and they will happen; plan accordingly.
Shipping and Distributors
Shipping a product from one place to another is pretty easy. It’s the options, international orders, and sheer cost that become problems. So how do you deal with this? What are the choices?
If you’re planning on doing in-house fulfillment, then you’re going to have to deal with shipping. This may be simple enough for domestic orders, but it gets less ideal when things start shipping overseas. Not only will there be high international shipping costs, there are also going to be import tariffs that differ from country to country (sometimes as much as 2x the cost of the actual package!)
This may work for a company with low volume or highly customized sales, but more often than not it’s a headache. Your customer is going to be dealing with customs themselves, and this takes away from their experience.
Another thing to consider if you’re doing in-house fulfillment is distributors. Distributors will take your product and sell it in another country. The benefit of distributors is that you and your distributor deal with international charges, not the customer. However the downside is that distributors take a cut of the profit. It’s not cost effective to use distributors if your shipping costs are less than it would be to pay them.
If you’re using a fulfillment house, make sure to ask about distributors. Fulfillment houses often have warehouses overseas that they use for international distribution. If they do, see if there are any additional charges for international orders. If they don’t, make sure you understand that your customer will be dealing with customs.
Shipping and distribution is a tricky trade off between financial management and end user experience. Is one more important than the other? Maybe, it really depends on your customer and your wallet; keep those both in mind.
Selling something online is a process, not an ebay account. There’s going to be a lot of decisions made that are highly dependent on your timeline, business model, and finances. However taking a little time to set up a storefront and supply chain in the beginning will save you a lot of headaches down the line.
Just remember the big points from each part: Storefront - time to market Fulfillment - scale Middleware (if you need it) - murphy’s law Shipping - customer satisfaction
As always, if you have any questions, comments, concerns, or hate mail, feel free to contact me at firstname.lastname@example.org