The biggest challenges in e-commerce come when turnover and the number of orders increase – businesses have to figure out how to manage the flow, where to store the goods, how to package them well and deliver them on time. The fast-growing service offered by international parcel company Venipak a few years ago not only saves money, but also allows you to focus on sales promotion and business development.
One-stop shop principle
“An annual turnover of half a million euros could be a benchmark for thinking about how processes such as storage, preparation, packaging or delivery will be organised. If the turnover is not high, the e-shop can also be serviced on its own – for example, by storing the goods at home or in the garage,” says Mantvydas Kaukėnas, Head of Comprehensive Order Fulfillment at Venipak.
Full Order Fulfillment is a service exclusively tailored to e-commerce businesses, where a one-stop shop takes the hassle of warehousing, picking, logistics, packaging off the customer’s shoulders, while at the same time providing real-time management of stock levels and sales performance.
According to the interlocutor, full order fulfilment service is rapidly gaining popularity in Lithuania, but often businesses confuse it with traditional third-party-logistics (3PL) service, which is limited to warehousing of goods.
“This service includes full order fulfilment – from the customer’s goods being taken to the warehouse, warehousing, preparation, packaging according to the customer’s requirements, for example, for the shipment to be scented or a flyer to be placed inside, to delivery to the recipient by the chosen method – to the front door or the post office, and reporting,” adds M. Kaukėnas.
Avoids fixed costs
According to Venipak’s representative, as e-commerce business grows, the number of transactions increases and a common dilemma arises: is it worth investing in renting premises, hiring employees and building infrastructure on your own, or is it better to turn to a partner who will only pay you for the number of transactions you make that month?
“A full fulfilment service helps avoid fixed costs,” says Kaukėnas. – For example, in e-commerce, it often happens that order volumes drop in certain months. If a business rents space for warehousing, hires staff, it will always incur fixed costs regardless of sales.”
Meanwhile, outsourcing all operations to a partner can be almost a fifth cheaper. “We recently started working with one client who had a complete warehousing and transport infrastructure in place, but eventually realised that working with an intermediary was almost 20% cheaper than managing all the processes in-house,” says Kaukėnas.
Dominated by customers offering high turnover goods
He adds that the service is particularly popular with high-volume e-commerce players, whose assortment is dominated by beauty and fashion products.
E-commerce players considering working with an intermediary are often concerned about the smooth handover of processes and the quick, efficient transfer of goods that does not disrupt business as usual and does not compromise quality and customer experience.
According to Kaukėnas, in practice, the whole process, from coordination to order fulfillment, seems much simpler and takes about a week, and the final price of the service is always quoted taking into account all aspects.
Estonians have already taken to the service, while Lithuanians and Latvians are just discovering it
“Comparing the three Baltic countries, e-commerce business trends in Latvia are very similar to those in Lithuania, the service is still being discovered, while in Estonia e-commerce is more advanced, and the timeframe for completing a full order is better known,” says M. Kaukėnas.
According to a report by Grand View Research, the global fulfillment market was worth more than USD 109 billion in 2023 and is forecast to grow by 14% by 2030.
“We are discussing automation and service efficiency solutions that would allow us to expand our service without raising fixed fees. We are also looking at expanding our basket of services and introducing a cross-selling solution that allows customers to trade each other’s products.”
