The eCommerce fashion industry is thriving in Australia. Customers are increasingly shopping for apparel, fabrics, and textile online. And fashion brands are looking for faster and cheaper eCommerce fulfilment solutions.
According to Paul Zahra, the CEO of the Australian Retailers’ Association, next-day delivery is becoming the minimum standard for eCommerce.
As customers expect faster delivery, fashion brands adopt different strategies to keep up. One such strategy is fabric micro-fulfilment. This decentralised fashion order fulfilment strategy can help you with next-day and same-day deliveries. It also provides several other benefits for apparel eCommerce brands.
In this article, we will take a detailed look at how eCommerce brands selling apparel, fabric, and textile can use the micro-fulfilment strategy. We will also cover a step-by-step guide to help you adopt this strategy for your fashion eCommerce business.
Overview of Fashion Ecommerce in Australia
The fashion industry comprises 25.4% of the total eCommerce market in Australia. Online shoppers in the country spent $9.8 billion on fashion products online in 2022.
The fashion segment shows the highest revenue among all eCommerce consumer goods. The demand for fabrics, textiles, and apparel continues to grow. Fashion eCommerce is expected to reach $16.98 billion by 2027.
As the demand grows, so do customer expectations. Fashion eCommerce brands need to manage the shifting industry trends and customer satisfaction. Online shoppers in Australia show a preference for brands that offer faster delivery, free shipping, and easy returns.
These can put a lot of pressure on apparel eCommerce order fulfilment. This is where fabric micro-fulfilment strategy can help you.
What is Micro-fulfilment?
Micro-fulfilment is an order fulfilment strategy for eCommerce brands. In this strategy, you use small storage facilities called micro-fulfilment centres. These are located quite close to target markets. They are commonly situated in urban areas.
These micro-fulfilment centres can be warehouses, storage units, distribution centres, or retail outlets. You can use these places to store inventory, process orders, and ship products. However, these centres are not as large as traditional warehouses. So you can only store limited inventory at these locations. Consequently, you only process a certain number of orders through a micro-fulfilment centre. But, you can process and ship those orders faster.
In the micro-fulfilment strategy, you use these small units to deliver orders to your customers. These storage units are located closer to the customers. So they can deliver the goods faster. Micro-fulfilment is a decentralised version of the traditional eCommerce fulfilment model. Instead of using a large central distribution centre, you use several small micro-fulfilment centres.
4 Benefits of Using Micro-fulfilment for Fashion Ecommerce
Fashion eCommerce moves fast. Fabric micro fulfilment can help you keep up with the pace of customers’ expectations. The biggest advantage of this fabric and textile fulfilment strategy is that it brings the inventory closer to the customers. All of the benefits of this apparel fulfilment strategy stem from this attribute.
Here are a few important benefits of using a micro-fulfilment strategy for fashion, apparel, fabrics, and textile eCommerce brands.
The most obvious benefit of a fabric micro fulfilment strategy is that you can deliver the products faster. A micro-fulfilment centre is typically located in urban areas. These locations are quite close to the customers. This means that you can process and deliver orders within a day’s time.
Fashion order fulfilment at micro-warehouses is faster because of the compact space. Owing to space constraints, you can only store a few SKUs. This means the micro-warehouse has to organise and manage fewer items. Consequently, it is easier to find products for order fulfilment of fabrics in a micro-warehouse.
The faster you can process an order, the faster you can ship it. Apparel eCommerce order fulfilment does not require elaborate packing. You are only shipping products for last-mile delivery. So you only need to pack for utility. You can directly use standard packing formats like courier satchels.
This simplicity further speeds up the order fulfilment for textile products. Finally, you can courier the goods to your customers. In traditional textile order fulfilment, the product goes through multiple transport stages.
It would go from your warehouse to a distribution centre. Then it would go to a local courier facility. Finally, the product would go for last-mile delivery. There are several stages for textile warehouse management and fulfilment.
With fabric micro-fulfilment, you can directly ship the products for last-mile delivery. The micro-fulfilment centres serve as local courier facilities. If you are using a courier service, they can pick up the product from the centre. Then deliver it to the customer. All this can be done in a day.
Fabric and textile fulfilment with micro-warehouses is not just faster, but cheaper as well. This strategy helps you cut down the cost of fashion order fulfilment at several stages. The micro-fulfilment strategy makes logistics and distribution cheaper. It also helps you cut down the cost of shipping.
In a traditional fabric and textile fulfilment strategy, individual products travel longer distances. They also go through multiple transport cycles. In fabric micro-fulfilment, you ship the products in bulk to micro-warehouses.
So the majority of the distance is covered by bulk shipments. This means you get cheaper rates per unit owing to the volume. If an individual product covered the same distance. The cost per unit would be higher.
As the products travel the majority of the distance in bulk, they are also less likely to get lost or damaged. This saves you the cost of returns owing to damaged products. Shipping damages account for 20% of product returns.
The cost of replacing damaged products in traditional fulfilment can be up to 17 times the cost of fulfilment. Furthermore, you would lose a customer if you do not provide this service for free. Micro-fulfilment helps you reduce the possibility of shipping damaged products.
Owing to bulk shipments, you are also spending less on packaging material per unit. This cost would again be high if the product travelled the same distance individually. In traditional textile warehouse management and fulfilment, you would pack each product individually for shipping. This packing needs to be robust as the product has to travel long distances.
On the other hand, each product gets protection from bulk packaging. You only have to pack individually for last-mile delivery. Here you can use standard packing options for order fulfilment of fabrics. These include courier satchels and envelopes. These formats are cheaper than custom packing.
Finally, you also save money on last-mile delivery. In traditional apparel eCommerce order fulfilment, last-mile delivery makes up 53% of shipping expenses. However, you are only using local courier services in fabric micro-fulfilment.
The distance is less and the package is lighter. Owing to these factors you get cheaper textile order fulfilment. Overall, micro-fulfilment can cut down the cost of textile order fulfilment by up to 75%.
Flexible Fulfilment Options
Fabric micro-fulfilment strategy allows you to provide multiple fulfilment options to your customers. 93% of online shoppers say that delivery options influence their purchase decisions. You can facilitate your customers with fulfilment options like:
Same Day Delivery
Next Day Delivery
Click and Collect
Smart Locker Pick-up
Try and Buy
As eCommerce customers seek more flexibility, providing such apparel fulfilment options can improve conversions and customer satisfaction. 27% of fashion shoppers prefer store pick-up. While 21% show a preference for curbside pickup.
A micro-fulfilment centre serves several functions for fashion order fulfilment. It can be a distribution centre, fulfilment centre, a collection centre, and more.
Hence, this venue can serve your customers in many different ways. You can use it to courier products for eCommerce order fulfilment. The same location can facilitate self-fulfilment options to customers. The customers can purchase online and collect the products from the micro-fulfilment centre.
You can provide even more fulfilment options if you are using a retail outlet for order fulfilment of fabrics. The customer can place an order online and pick up the product from the store. They can also try the outfit at the store while purchasing. In this scenario, the retail outlet becomes a part of the omnichannel eCommerce strategy.
Flexibility in apparel fulfilment options creates a more convenient shopping experience. The customer has the freedom to choose their preferred fulfilment option. This flexibility also helps you reduce cart abandonment and improve conversion rates.
Reduce Cart Abandonment
A fabric micro-fulfilment strategy can help you resolve several cart abandonment issues. Ecommerce customers abandon purchases for several reasons. Many of these reasons are related to order fulfilment.
Let’s see how fabric micro fulfilment can help you resolve these issues.
Extra costs are the most common reason for cart abandonment. These charges include taxes, additional fees, and shipping costs. Micro-fulfilment helps you reduce the cost of fabric and textile fulfilment. As a result, you can offer cheaper delivery to your customers.
Reduced shipping expenses also help you make room for free shipping options. This fashion order fulfilment option can help you attract more customers. Free shipping has the highest influence on eCommerce purchase decisions.
Micro-fulfilment can also help you control the cost of reverse logistics. In traditional order fulfilment for fabrics, the product has to travel from the customer all the way to the warehouse. However, the product only travels within a city in a micro-fulfilment strategy. This helps you reduce the cost of product returns.
This allows you to offer faster returns and exchange options to your customers. Easy returns are another major purchase decision driver for online shoppers.
The other major cart abandonment issue resolved by micro-fulfilment is slow delivery. It accounts for 22% of abandoned purchases. With fabric micro-fulfilment, you can ship the orders within 48 hours or less.
Aside from cost and speed of delivery, customers also abandon carts because of a lack of fulfilment options. 90% of Australian eCommerce shoppers abandon purchases if their preferred delivery option is absent. These include self-fulfilment, next-day delivery, click-and-collect, etc.
Micro-fulfilment allows you to provide several different textile order fulfilment options. The customers can choose their preferred method of delivery. And you can complete apparel eCommerce order fulfilment through your micro-warehouse.
Fabric micro-fulfilment helps customers overcome several purchase barriers. It brings convenience to their shopping experience. Consequently, you get lower abandoned carts and better conversion rates.
5 Steps to Design a Micro-fulfilment Strategy for Fashion Ecommerce
While a micro-fulfilment strategy offers several benefits, it can be challenging to set up and manage. You need accuracy at each stage of logistics for effective fabric micro-fulfilment. The most important factors to consider for this strategy include:
1. Target Markets Analysis
2. Logistics and Distribution
3. Warehousing and Inventory Management
4. Fulfilment Strategy
5. Performance Analysis and Optimisation
Each factor also helps you plan and execute your strategy. Let’s understand this five-step process of designing apparel eCommerce order fulfilment using micro-fulfilment centres.
1. Target Market Analysis
The effectiveness of fabric micro-fulfilment relies on distance. The goal is to reduce the distance between inventory and the customers. Hence, it is imperative to identify the target markets. You need to understand where the majority of your customers are located. You also need to consider the size of the target audience in each location. Based on this you can identify the locations for micro-fulfilment centres.
Things you need to analyse for fabric micro-fulfilment strategy:
Product (SKUs) Demand
Estimated Sales Volume
Prefered Fulfilment Methods
Estimated Product Returns
You need to understand these factors for each target market. This will help you define the inventory management strategy for your fulfilment centres. Customers in different cities may show a preference for different products. You need to supply the right SKUs to each location for fabric and textile fulfilment.
Another crucial aspect to analyse is seasonality. Fashion eCommerce is governed by seasonal trends. These trends can drastically change product demands and sales volumes. You need accurate demand forecasting for efficient fashion order fulfilment.
You can use market reports and your past-sales data to forecast future demand. You will need to estimate the demand for each SKU in different target markets. This information will govern your supply chain logistics and distribution strategy.
2. Supply Chain Logistics and Distribution
Fabric micro-fulfilment is dependent on your overall eCommerce supply chain. You need to align several aspects of the supply chain for efficient apparel eCommerce order fulfilment. All the decisions should be based on market analysis data.
Here is how you can set up the supply chain for the micro-fulfilment strategy:
1. Define inventory requirements for target markets based on demand forecasts.
2. Place orders for inventory with your suppliers based on demand forecast and estimated supply lead time.
3. Identify locations for micro-fulfilment centres (MFCs) in target locations.
4. Define criteria for MFCs based on the customer’s preferred fabric fulfilment methods.
5. Define a distribution strategy to supply inventory to MFCs.
6. Create SOPs to manage inventory at the micro-fulfilment centre.
7. Establish inventory supply cycles for each MFC based on demand forecasts.
8. Define SOPs for different apparel fulfilment methods.
9. Use local courier services for last-mile delivery.
You can use a variety of logistics and distribution strategies to run your supply chain. You will need to set up logistics for the following movements of inventory:
Stage 1: From suppliers to the distribution centre
Stage 2: From distribution centre to micro-fulfilment centre
Stage 3: From the micro-fulfilment centre to the customer
Each of these stages has unique requirements. The logistics strategy for these stages depends on several factors. These include the number of suppliers, available logistics resources, location of distribution centres, locations of MFCs, and so on.
You will need to define a streamlined strategy to move the inventory from the supplier to the customer. You can look at supply chain management examples in your niche to gather ideas. However, your supply chain strategy should cater to your specific business needs.
3. Warehousing and Inventory Management
Micro-fulfilment strategy requires inventory management at two levels. First, you will need to store and manage inventory received from the supplier. Second, you need textile warehouse management and fulfilment at the micro-fulfilment level.
The processes at these levels are dependent on one another. The first level is the central storage for the entire inventory. Here you store all the SKUs received from the supplier or manufacturer. The inventory requirements at this level depend on the collective demand of all the target markets.
This warehouse also serves as the distribution centre. This warehouse receives the inventory in bulk. Then you sort the received inventory for distribution to different regions. The sorting of inventory is based on the demand in individual markets.
The second level is the micro-fulfilment facility. This facility receives the inventory from the central warehouse. Each micro-warehouse receives inventory based on regional demand. The inventory requirements at this level can change based on the target market.
Micro-fulfilment centres operate in limited space. Hence, they also receive limited inventory. Textile warehouse management and fulfilment at this level depend on speed and efficiency. You need to organise the inventory for quick retrieval. This will help you with faster order fulfilment for textile products.
4. Fulfilment Strategy
This is the final stage of the fabric micro-fulfilment strategy. Here you process the received orders and ship them to the customers. You can either develop a fleet of vehicles for apparel eCommerce order fulfilment. Or you can use local courier services to ship the orders.
The first option is resource intensive. It also limits your capacity for fabric and textile fulfilment. The demand for textile products can greatly fluctuate depending on the season. Your resources may be over utilised or underutilised based on the demand.
The second option allows you more flexibility in terms of shipping volume. You can use the resources of the local courier facility for order fulfilment of fabrics. This allows you to process more orders. It also allows you to fulfil apparel orders from distant regions. You do not have to manage any resources. And you only pay for the services you use.
In either case, you need a streamlined strategy for textile order fulfilment. This involves order processing, picking, packing, and shipping. The fashion order fulfilment process begins when you receive an order.
In the fabric micro-fulfilment strategy, the order is directed to a facility based on two factors. These are the availability of the ordered SKU and customer location. The micro-fulfilment facility picks the order from the inventory and packs it for dispatch. The packed order is dispatched through a vehicle fleet or courier service.
They deliver the order to the customer and collect proof of delivery. This concludes order fulfilment for textiles.
5. Performance Analysis and Optimisation
The fashion industry moves fast and changes even faster. You need to constantly analyse the performance of your micro-fulfilment system at all levels.
The fabric micro-fulfilment strategy involves the rapid rotation of SKUs. You need to keep measuring inventory levels at each fulfilment centre. This strategy may require frequent inventory replenishment. You can use the insights from demand forecasting to define a replenishment schedule for the micro-fulfilment centres.
You also need to define the replenishment schedule for the central distribution centre. This schedule is based on the supplier’s lead time and the collective demand of micro-fulfilment centres.
You also need to measure the overall cost of fulfilment with this strategy. The cost of fabric and textile fulfilment should be measured at two levels. The first is the micro-fulfilment level. The second is the overall supply chain level.
At the micro-fulfilment level, you measure the fulfilment cost of individual regions. And at the supply chain level, you measure the collective cost of fulfilment for all target markets.
Simultaneously, you also need to consider the speed of shipping. Same-day and next-day fashion order fulfilment may have a significant impact on sales. 65% of eCommerce customers are willing to pay more for faster delivery. You need to factor in this competitive advantage when you analyse the performance of your fabric micro-fulfilment strategy.
Adopt Fabric Micro-fulfilment for Customer Satisfaction
Fabric micro-fulfilment is gradually becoming a necessity for fashion eCommerce brands. Customers desire faster and free delivery with the option for easy returns. Micro-fulfilment makes these offerings viable and cost-effective for online retailers.
However, you need an expansive network of micro-fulfilment centres for apparel eCommerce order fulfilment. PACK & SEND already has a network of fulfilment centres across Australia and abroad. You can tap into this widespread logistics network with our micro-fulfilment solutions.
Our technology-enabled logistics solution integrates with your eCommerce website and marketplaces. Then we can handle the entire fulfilment process. This includes inventory management, order processing, and shipping.
You can utilise our network for apparel, fabric, textile, and fashion order fulfilment. And your customer can enjoy the benefits of fast delivery.
Frequently Asked Questions (FAQs)
What is micro fulfilment for fabrics?
Micro-fulfilment for fabric is a decentralised order fulfilment strategy for fashion eCommerce. It uses micro-warehouses to ship products. These micro-warehouses are located close to target markets. Owing to the reduced distance, this strategy allows for faster fashion order fulfilment. Fashion brands can offer same-day and next-day delivery with a fabric micro-fulfilment strategy.
What makes fabric fulfilment different?
Fabric fulfilment differs from other eCommerce segments in several regards. Fabric fulfilment is highly dependent on the trends in the target market. It also deals with numerous SKUs within a product category.
The demand for fast delivery and easy returns is also high among fashion shoppers. All these factors can make fabric fulfilment challenging. The entire fulfilment process needs to be fast and efficient.
How to manage seasonality in fabric fulfilment?
The best way to manage seasonality in fabric fulfilment is to use past data and market trends to estimate future demands. You need to evaluate customer preferences and shopping behaviours during high-demand seasons.
These include product preferences, sales volumes, customer locations, and delivery lead times. You also need an accurate estimation of supply lead time during peak seasons. Based on this information you can align your supply chain to manage seasonality in fabric fulfilment.
Does fabric fulfilment require special packaging?
Packaging for fabric fulfilment depends on the shipping distance. If you are shipping locally, you can use simple packaging formats. These include courier envelopes, satchels, and pouches. However, you need sturdier packaging for domestic or international couriers.
How are returns handled in fabric fulfilment?
The process for product returns in fabric fulfilment depends on your distribution strategy. With a micro-fulfilment strategy, you can easily use local courier services for product returns. The courier service can pick up the product from the customer’s address. Then they deliver it to your micro-fulfilment centre.