Understanding the eCommerce Order Fulfillment Process

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Damien Bradford - ShipNetwork
Damien Bradford
Director of Operations
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ecommerce order fulfillment process - ShipNetwork

eCommerce business owners juggle a lot at work every day. Even if you work from home or a coworking space, rather than a store, you need to stay on top of your products and inventory, your website and eCommerce platform, your marketing and advertising, your bookkeeping, your customer inquiries, and your order fulfillment. It’s a never-ending job, even for eCommerce stores with a large staff. With customers all over the world, you may be getting orders and requests at all hours of the day. There are many competing priorities, and sometimes there is too much to do at any given time. 

If you are like a lot of business owners, you like to be involved in as many parts of your business as possible. Even if that means you just know what’s going on, a lot of people need to be involved. However, as your business grows, this can present a challenge. When it comes to the eCommerce order fulfillment process, it is time-consuming and possibly not the best use of your time. You can hire fulfillment staff to tackle this in-house. But at some point, you may outgrow that, too.

When the time comes, you should know about your options for an effective eCommerce order fulfillment strategy for your business. Learn about the different models for order fulfillment and how to select the right one as your business’s order volume increases.

What Is Order Fulfillment?

Order fulfillment involves a long process that starts when an order is placed by a customer and ends when the customer has received the item (and is happy with it). For many companies who handle this task in-house, it can be a very tedious process that takes too much time, directing employees’ focus away from other important tasks. When this process is outsourced, there are multiple people involved (including the retailer, the fulfillment company or center, and the shipping provider), but it reduces the time and stress on the business owner. 

With successful order fulfillment, you will have positive customer satisfaction. Happy customers will come back to buy again and tell their friends, family, and followers about your company. To have a successful eCommerce fulfillment process, you need to have three steps: receiving, processing, and shipping.

Whether you use a fulfillment partner or you do it in-house, each of these steps still needs to be followed. Let’s go a little more in-depth into this process.

eCommerce Order Fulfillment Process Steps

The eCommerce fulfillment process may sound simple, but it can be complicated and time-consuming, especially if you lack certain tools and technology. Below we break these steps down in more detail.

1. Receiving

With receiving, you need to get the inventory to wherever it is going to be shipped from. The warehouse, fulfillment center, or store will receive the items so that the entire process can be put into place. Once you have sent the products to where they will be stored before being purchased and shipped, that facility will need to receive them into their system.

This is the case even if you are the one doing your order fulfillment. You need to organize and store all of the inventory, and input it into inventory management and warehouse management systems. 

2. Processing

Once an order comes in, the processing phase begins. The eCommerce platform should be integrated with the warehouse management software so that as soon as an order is placed, a packing slip (printed or digital) is created so that the processing can begin. Processing starts with an automated process, where inventory is checked, the address is verified, and any potential issues are identified. Then, a warehouse or fulfillment staff member can take the packing slip to collect the items and prepare them for shipping.

After the items have been gathered, they are securely packed in a box or envelope with packing materials to ensure safe delivery. Orders need to be quickly and accurately processed, so customers get exactly what they ordered promptly. 

3. Shipping

Once the order has been processed, it needs to be shipped. Depending on which options the fulfillment center or your company offer and the shipping speed selected by the customer at checkout, the correct shipping label needs to be affixed to the package and the package needs to be picked up or dropped off with the carrier.

The shipping step does not end when the package is in the hands of the carrier, though. This step goes all the way through delivery. The tracking number is usually input into the eCommerce platform and an email with the information is sent to the customer. 

The order fulfillment process is only complete when the customer has received the items and is happy with it. Often, returns management is included with order fulfillment. If a customer is unhappy with their order if something is broken or the wrong size or color, then the order fulfillment staff, whether in-house or outsourced, will help with returns or exchanges.

What Function Does the Warehouse Perform in the Fulfillment Process?

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Within the fulfillment process, the warehouse can perform five main functions. These five functions are essential to a successful business and include:

  1. Warehouse setup
  2. Efficient intake of goods
  3. Proper storage of inventory, including temperature or climate-controlled storage.
  4. Picking and packing
  5. Inventory and warehouse management and logistics.

Let’s take a look at what each of these functions entails.

1. Warehouse Setup

If you are handling order fulfillment in-house, then you need to make sure your warehouse is set up efficiently. If you are outsourcing it, then you should make sure that the company you select to partner with has an efficient setup. This involves good storage space, relevant equipment (like pallet racks and forklifts, shelves or bins, packing tables, etc.), and technology like warehouse management software.

When you outsource, you also want to be sure the inventory and warehouse software uses can integrate with your eCommerce platform to streamline the entire process. 

2. Efficient Intake of Goods

With a well-organized storage area, efficiently intaking and storing the goods should be easy. Even with in-house order fulfillment, efficiently receiving and storing inventory will prevent pile-up, misplaced items, and inventory stock level errors. Have an area for inventory intake, so that you can make sure they are input correctly and placed in the proper area.

If you are outsourcing your order fulfillment and warehousing, be sure to understand the intake process so you can provide the proper documentation and ensure integrations are in place for the warehouse and eCommerce software.

3. Proper Storage of Inventory

If you sell sensitive or perishable items, you need to make sure that the warehouse is equipped to handle the storage of these items. You may need to find temperature or climate-controlled storage facilities so that everything can be kept in good condition before it is sold to customers.

You should also consider any requirements for federal regulations that you have to adhere to so that you can find a warehouse that will not make it harder to follow any rules or laws that apply to your business.

4. Picking & Packing

Ensuring that products are accurately picked, securely packed, and quickly shipped is all that customers care about (even if every function and step is important to make this happen). From a customer perspective, this is the only thing that happens with order fulfillment. Therefore, having a skilled team of order pickers who can quickly but accurately gather all the items in an order is important to a good customer experience.

During the busy season or holiday rush, organization and experience will help staff make sure they can pack with speed and accuracy. 

5. Inventory & Warehouse Logistics

No matter if you handle order fulfillment in-house or if you outsource it to the experts, the warehouse can help with managing inventory and logistics. By utilizing warehouse management systems, you can have better insight into how your business is operating.

The WMS can show inventory levels and give you a heads-up on projected busy seasons, so you can ensure appropriate stock levels for popular items ahead of time. Warehouses can also help with projecting supply chain challenges so you can get ahead of them or plan for them as needed. You will also be able to view the order accuracy numbers, so you can set goals to improve (or maintain) those levels.

In short, a warehouse can give you greater access to the important data you need to operate your business and grow over time. 

The 3 eCommerce Fulfillment Models

Now that you understand a little bit more about the order fulfillment process and the functions that the warehouse can play, you should decide on the best eCommerce fulfillment model for your business. There is no right or wrong answer here, as every business is different and even your main competitor may have a different solution to their fulfillment needs. 

There are three models of order fulfillment, and the one you select will depend on your unique needs. When you are deciding between your options, consider the following:

  1. What type(s) of products you sell.
  2. The average volume of orders per month.
  3. Your current inventory management system.

1. In-House Order Fulfillment

Also known as self-fulfillment, in-house fulfillment is when you handle this all yourself with your team. This is common for businesses just starting, or for small businesses with lower order volumes. A lot of times, this is done at home when you are a small business without a storefront. This method can be time-consuming and challenging, especially as you grow. It is lower cost and can be done by just about any business, but it can be complex and it can require both space for inventory storage and order fulfillment software. 

2. Third-Party Fulfillment Services

After a company has grown too much that in-house order fulfillment is a challenge that is more work than it is worth, they often outsource to a third party. Third-party providers (also known as 3PL logistics providers) handle everything from storage in a warehouse to packing and shipping each order to even handling the returns when necessary. This gives business owners more time to focus on other parts of their business, while still giving them the peace of mind that order fulfillment will happen on schedule.

Many 3PLs (like ShipNetwork) can offer multiple carriers with discounted shipping rates, in addition to filling the standard order fulfillment process. However, this comes with a cost that only makes sense for businesses with a certain level of inventory and order volume.

3. Dropshipping

This fulfillment model happens when you do not manufacture or store your products yourself. They are shipped directly by the manufacturer once an order is placed online. This takes your company out of it altogether, but that also means that you and your customer are more reliant on the dropshipper. You become just a seller of the product in this case. It often reduces your overhead cost but limits customization and quality control as well.

In most cases, a 3PL provider would be the ideal fulfillment model, but there are unique situations where dropshipping could work for some businesses.

Which Fulfillment Model Is Right for You? 

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As mentioned above, each fulfillment model has its pros and cons. You can do different things within each, but as you grow it is normal to change models to fit your expanding business operations.

The things you will want to consider as you decide which fulfillment model is right for you are:

  • Where are your customers? Do you need international shipping, or are your sales more regional to one area?
  • What shipping methods are important to you? Do you want to offer two-day or free shipping for your customers?
  • How much inventory do you have? Does the warehouse have space for the number of products you store at any given time?
  • Do you have special requirements? Are any of your products customized, kitted, or otherwise need some sort of special attention before shipping?
  • What software do you use for eCommerce, inventory, or other things? Can the warehouse integrate into your existing technology? 

Once you have an idea of answers to each of these questions, you can begin researching your options. Different order fulfillment service providers will have different capabilities and integrations, so finding one that meets your needs is critical to a successful partnership.

If you are on Shopify, Magento, eBay, WooCommerce, or some other platform, be sure to keep that in mind as you find a fulfillment company. This is because, without the right integrations, this can create more challenges rather than solving anything.

Challenges With eCommerce Order Fulfillment

As with anything, many businesses experience challenges during the eCommerce fulfillment process. There may be issues out of your control, like supply chain issues or weather conditions impacting transportation. There may be issues that you can control, like accurate inventory management or rate negotiation with shipping carriers.

However, when you outsource your fulfillment needs to a 3PL some of these challenges can be solved.

Demand Planning

You may find yourself with too many or too few items come certain times of the year. Logistics software utilized by fulfillment warehouses can help reduce the cost of storing inventory as items sit unpurchased or let you know when certain seasonal trends predict an increased demand for certain items.

This is often something that businesses need, but do not always have access to if they are doing fulfillment in-house.

Logistics Planning

When the busy holiday shipping season arrives, carriers get overwhelmed and more expensive. However, a 3PL often has relationships with carriers that can help offset some of the frustrations business owners see that time of year. 3PLs can help with resolving slow or missed deliveries and broken items or damaged packages, because of their relationship with the carrier.

Keeping open lines of communication between the carrier, the fulfillment partner, and your business can help to improve customer service.

Supply Chain

The supply chain impacts so many parts of eCommerce shops, from where you get your products and parts to the boxes the fulfillment warehouse uses to ship orders and even to the employees you have and the ones at the warehouse. Supply chain interruptions happen, as we have all seen more and more over the past few years. If you have a good strategy in place to handle these challenges, you may see smoother business operations.

Fulfillment partners often have technology that allows you to know where items are coming from and where they are going, as well as providing insight into your inventory management, order management, and logistics software to reduce supply chain challenges.

Benefits of Outsourcing the eCommerce Fulfillment Process

ecommerce fulfillment process - ShipNetwork

Aside from solving some of the most common challenges eCommerce businesses can face, outsourcing fulfillment also brings other benefits. When you are using the do-it-yourself in-house approach, you hit a point in monthly order volume that it becomes unsustainable to keep up.

When it is the right time to find a better method for order fulfillment, a 3PL can bring these benefits to your company.

Experienced & Knowledgeable Staff

When your team handles order fulfillment in-house, your staff needs to be knowledgeable about the best practices, process orders promptly, and stay on top of all of their other tasks. But when you use order fulfillment services, your team can focus on your products and growing sales, without needing to package orders every day.

Order fulfillment staff at a warehouse have the experience and skills necessary for effective and efficient order fulfillment for your business, and they have regular training on the latest trends and technologies for eCommerce order fulfillment.

Secure & Fast Shipping

Keeping your customers happy is probably one of the most important things for your business’s success. To make that happen, they need to get their purchases in good condition and as fast as possible. In the world of free shipping and two-day shipping, having a speedy turnaround and quick shipping is almost a necessity for an eCommerce business to survive.

With an experienced fulfillment partner, items will be packed safely and securely, getting to customers quicker and at lower shipping costs with their network of shipping carriers. 

Efficient & Accurate Processes

With technologies and processes built into their normal days, fulfillment centers understand the best practices of how to efficiently and accurately process orders. This helps your business run smoothly and keeps your customers happy with their orders arriving on time and in good condition.

You may even be able to provide better customer service, as orders can ship faster and communication can be improved with automated processes for tracking or order delay information.

Increase Profits With Better Order Fulfillment Processes

You may even be able to increase your company’s profits with outsourced fulfillment processes. While logistics has an upfront cost and ongoing monthly fees, you will be able to find new ways to work, help cut costs in other areas, and negotiate pricing for your logistics needs.

One way to do this is to offer faster shipping at a lower cost. When your customers are used to the eCommerce giants offering free, two-day shipping, it can be hard for the smaller businesses to keep up. But 3PLs often have a network of warehouses you can distribute your inventory between, which can cut down on shipping time no matter where your customer lives. They also usually negotiate better shipping rates for their clients, so businesses like yours can have lower costs for shipping items. This means you may even be able to offer more shipping options to your customers for expedited shipping needs.

You will also see higher accuracy rates in order fulfillment. Mistakes happen, but when you use a 3PL, errors drop dramatically. The order fulfillment staff has the tools and expertise to get it right – from picking the correct size and item, to labeling boxes with the right shipping label. While speed is important to customers, accuracy is just as important, so getting it right can be the difference between a repeat customer and someone who writes that negative Facebook review. Better accuracy will also reduce the costs associated with returned orders.

Logistics are a necessary evil for many eCommerce business owners. They are time-consuming, challenging, and confusing. You may love your business and your products, but just like many others, you do not love logistics. Outsourcing the logistics, including fulfillment, will give you more time back in your day to develop new products, train new employees, and grow your business.

Even though you know there may be an added cost by bringing on a new business partner in a logistics company, you can save time and headaches with more accurate order fulfillment, inventory management, and business insights.

Hire a 3PL for the eCommerce Order Fulfillment Process

order fulfillment - ShipNetwork

If you have outgrown the in-house order fulfillment and have a higher order volume than your team can keep up with, it may be time to outsource the eCommerce fulfillment process. ShipNetwork, formerly Rakuten Super Logistics, provides order fulfillment with a 100 percent order accuracy guarantee, giving you access to our network of warehouses and carriers. These services mean your customers still get what they ordered, but often more efficiently and quickly, without adding additional strain to your team’s workload. 

ShipNetwork warehouses are located across the country, so you can offer faster shipping at lower costs for your customers, no matter where they live. Our experienced staff will help keep every customer happy, with the right order at the right time. Growing businesses need the right partner to succeed, and we want to be that for you.

To learn more about our fast, accurate, and cost-effective order fulfillment services, get a quote from us today.

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