A well-functioning logistics system ensures that products arrive at their destination on time and in optimal condition. This is true for all sorts of fulfillment - eCommerce orders, dropshipping, bulk orders, wholesale orders, and so on. Today let’s dive into what goes into successful wholesale fulfillment.
What is Wholesale Fulfillment?
Wholesale order fulfillment involves overseeing the entire lifecycle of wholesale orders. This is a complex process that requires precise coordination of several operational components. To put it simply - wholesale is the practice of buying products in large quantities and then selling them to retailers or other businesses. Retailers then package these goods in smaller quantities and sell them to consumers at an individual level.
Wholesalers are not manufacturers. Wholesalers distribute the end product after purchasing the goods from a manufacturer in bulk at a discount. Once the wholesalers send the products to retailers, retailers are able to mark up the goods at a price that reflects the cost of doing business.
Let’s use Costco as an example of this. A wholesaler would buy popcorn from the manufacturer/distributor, and then sell the popcorn in bulk to the retailer (Costco). Costco then sells the popcorn individually to customers. Ultimately, wholesalers are the middlemen between manufacturers and the rest of the supply chain.
Often wholesalers will store their product at a third-party logistics provider (3PL), so it’s up to the 3PL to ensure the wholesale fulfillment process is successful.
Steps to Fulfill a Wholesale Order
- Receive Inventory - Once the inventory arrives from the supplier or manufacturer, the quantities and product condition must be verified. The inventory then gets stored in the warehouse in anticipation of a wholesale order being placed.
- Process the Order - Once the order is placed, inventory levels will need to be checked and adjusted accordingly. All order details will be verified including quantities, shipping address, and any special instructions. This is usually done automatically through software such as a WMS (Warehouse Management System), but can be done manually at a smaller scale.
- Picking - Utilize pick lists (normally created in a WMS) to get the products needed from their locations in the warehouse. Having a pick list also helps warehouses follow any inventory management methods they have such as FIFO and LIFO.
- Packing - Packing is a crucial step in wholesale orders. Retailers will provide unique guidelines to how orders need to be packed and shipped. This can mean all of the pallets need to be a certain height, wrapped in plastic a specific number of times, and so on. Pay close attention to all of the requirements to avoid chargebacks.
- Labeling - Going hand-in-hand with specific pack out guidelines, there are often strict rules as to where labels should be placed on wholesale orders. Be sure to print all required labels and place them in the correct location on the wholesale order.
- Shipping - Wholesale orders need to be shipped on a fairly strict timeline. Transportation planning must be optimized to ensure that all contractual obligations are fulfilled. The inability to adhere to delivery windows and shipping standards can lead to chargebacks from the retailer.
Challenges of Wholesale Orders
- Compliance & Chargebacks - There are special requirements and standards set by retailers that must be followed in areas such as packaging, labeling, shipping, and product quality. Chargebacks are issued by retailers if these requirements aren’t met. For 3PLs, compliance is crucial for customer satisfaction, not to mention that chargebacks for non-compliance can add up quickly. If chargebacks do occur, they will have to be paid by either the wholesaler or the 3PL.
- Timely deliveries are a vital part of retail compliance. It is important to have wholesale orders ready to go during their ship window and arrive at the retailer in a timely manner.
- Demand Forecasting - It’s important to adapt to market changes and use historical data to predict customer demand and manage inventory accordingly. Incorrect demand forecasting can lead to overstocking, understocking, unnecessary storage fees, and overall dissatisfied customers.
- Complex Supply Chain Logistics - Fulfilling wholesale orders involves multiple suppliers, manufacturers, retailers, and transportation providers. Managing all of these elements without delays or disruptions can be challenging.
Strategies for Optimization
- Strong Relationships - Building strong relationships with reliable suppliers/manufacturers ensures consistent product quality and timely delivery. It’s also important to nurture relationships with retailers so that you can work together to attain retail compliance.
- Technology Integration - Wholesale fulfillment requires a number of technologies. EDI (Electronic Data Interchange) plays a crucial role in automating order processing and communication, ensuring accuracy and efficiency. EDI systems can be integrated with your WMS to ensure real-time data accuracy and overall compliance. There are also technologies such as RetailReady that assist with retail compliance and minimizing chargebacks.
- Inventory Management - Ensure you have up-to-date information on stock levels to avoid overstocking or understocking. Since wholesale orders tend to be large orders, it's important to have an accurate and adequately stocked inventory.
- Cost Analysis - It’s important to regularly review and analyze costs and incurred chargebacks to identify areas for savings and improvements.
Wholesale fulfillment can be complex, but it doesn’t have to be a challenge. Do you need help with your B2B wholesale fulfillment? Find out how Brandfox can not only help you with your fulfillment, but also minimize your chargebacks. Contact us to learn more and get your free chargeback audit today.