How to Make the Online Order Fulfillment Process Effective & Efficient

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Damien Bradford - ShipNetwork
Damien Bradford
Director of Operations
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Did you know that a third of consumers would never shop with an eCommerce store again if they had a bad order fulfillment experience? While that number may seem high to you, it shows just how important good order fulfillment strategies are to consumers. Even to consumers who don’t fully know what goes into the entire eCommerce process. 

In eCommerce, the products are important, the marketing is important, but the sales are most important. After the sale, what happens? The order must be processed and filled. Order fulfillment is a necessity in eCommerce. It’s how the order that a customer places gets to them. But it can be time-consuming and complex. And without the right systems and processes in place, it might be next to impossible. 

If you are looking for a way to improve your eCommerce fulfillment process, there are a few things to consider. You will want to look at your current fulfillment strategy and see what areas you might need to improve – do you need to speed up the process? Do you need to make sure the right things get in each box? If you do not have a specific area you want to improve and just generally want a more effective and efficient process, you can benefit from learning from the experts.

Whether you decide to keep online order fulfillment in-house or outsource to a 3PL fulfillment center, continue reading to learn all about how the processes used for fulfillment can benefit eCommerce stores.

What Is eCommerce Fulfillment?

Within eCommerce, fulfillment refers to the process that takes place after a customer places an order with your store. It’s more than just throwing the items in a box and slapping a shipping label on it.

eCommerce fulfillment includes a range of complex steps that make up the process, including:

  • Inventory regulation
  • Payment and address verification
  • Picking and packing
  • Shipping and delivery
  • Returns management

The order fulfillment process kicks off when a customer submits an order. It typically involves at least two different organizations (your store and the shipping carrier), but can also include a warehouse, fulfillment center, or dropshipper.

If something happens along the way, you will have a disappointed customer on your hands. That’s why it’s so critical that order fulfillment is done accurately, effectively, and efficiently. 

The Importance of Good Order Fulfillment for Your Customers

Your customers value good order fulfillment. They may not know it, but it’s one of the most important things to more than half of all consumers. More than 80 percent of people list free delivery as the most important factor, and more than half of Americans abandon their carts when they see the delivery costs.

Both of these factors that are important to your customers fall into order fulfillment. These numbers show you why you should prioritize your online fulfillment strategies, and get the process down to a smooth system so your customers can stay happy and come back for more.

What Is the Online Order Fulfillment Process?

The order fulfillment process is key to running a successful eCommerce business. You may have great ideas, but unless you have happy customers, then you won’t have a business for long.

So these five steps can help you satisfy your customers with quick and efficient orders:

1. First, you receive the order. This step is the very first thing that happens after the customer places an order. In your eCommerce platform and any warehouse or inventory management systems you have to communicate that an order has been received and a customer wants certain items.

2. Next up, the order is processed. A lot of this step is done automatically, with the technology you have in place communicating with each other. Payment is verified, the address is checked, and the inventory of each item in the order is validated. 

3. Then, once everything is verified and accurate, an order slip is printed out or created digitally and sent to your warehouse team. This group of people will manually pick each item in the order, checking to make sure the item is the right size, color, and variation according to the order slip.

4. After that, the warehouse worker will securely package the order. They will use a box or envelope sized for the order, using packing materials to ensure items are not damaged in transit. After it’s packed, they will seal the box or envelope and attach the correct shipping label.

5. Finally, the order is shipped by the carrier. The carrier takes receipt of the order and it begins the process of moving through the carrier’s network to its destination. Depending on the carrier, this could be via air, sea, or land. There may be expedited shipping options, for two-day delivery, or it may take a while for the customer to receive the order with economy shipping options. Tracking information is usually input into your eCommerce platform, so an email can automatically go out to the customer with the tracking number. This also will give you access to where each order is at in the process, if questions ever arise on a specific order.

Fulfillment Center Processes & Flow

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Aside from the five steps above, when you use a fulfillment center, there are additional steps to the process to ensure it flows smoothly.

When you partner with an order fulfillment center, you gain access to industry professionals who have more tools and technology at their fingertips than most eCommerce businesses do.

They stay on top of the best practices and are trained in making sure those five steps above are done accurately and quickly. But to get to those steps, a few things need to happen first.

Before an order can even be placed by a fulfillment center, they need to receive your inventory. This happens when your business sends goods from wherever they are manufactured to the fulfillment center. You don’t want to send too much, though, so only send as much as could reasonably be sold in a set amount of time to reduce your storage and carrying costs. 

After your inventory has arrived at the fulfillment center, it can be input into their inventory management system and cross-checked with the information you shared on what you were sending. Then, they will store these items in a designated area of the warehouse – on shelves, bins, or pallets that are assigned to your business so fulfillment center staff can easily find what they need to fill each order.

Once an order is placed, the fulfillment center will follow the five steps of the order fulfillment process listed above. But they have some additional benefits on top of just filling the order. The warehouse management system employed by many fulfillment centers ensures that the process is quicker and more accurate than an eCommerce store can often do on its own. They have tools like forklifts, pallet lifts, and conveyors to expedite the process.

Fulfillment centers may have preferred shipping partners, and they may even have negotiated better rates for their clients. This means you can get the benefits of negotiated pricing without having to do the negotiating or building those relationships yourself. You may be able to expand your shipping footprint to other areas of the country (or even the world) or offer expedited shipping services you may not have been able to give your customers otherwise.

Your fulfillment center might even be able to handle returns. When you have a 3PL to take care of returns management, you may be able to automate the process for your customers and ease your peace of mind. 3PL software can give you insight into returns trends, so you can identify issues with specific products or manufacturing lots. Returned inventory to the fulfillment warehouse will be handled in whatever way you identify as the best route for your products (destroyed, quarantined, or other methods).

And finally, a fulfillment center usually has inventory management built into their software and processes, so that you have an accurate reading of what is in stock at any given moment. If the warehouse system can talk to your eCommerce platform, you may even be able to reflect live inventory levels on your website so that out-of-stock items show as not available automatically. This can improve the customer experience and cut down on the frustration for both you and the customer when you have to send the “sorry, that item is no longer available” email.

While order fulfillment seems simple on the surface, as you can see it is quite complex. That’s why finding the right partner who has the tools and expertise to make it an easy process is key to your eCommerce business’s success. However, there are a few ways you can go about doing this.

So now let’s take a look at different order fulfillment models and strategies employed by eCommerce stores around the world.

Order Fulfillment Models

eCommerce businesses follow three main models when it comes to order fulfillment: in-house by the merchant, outsourced to a 3PL, or dropshipped. There are pros and cons to each of these, and there is not a single right answer regarding what is right for your business.

Your needs may change over time, and so may your fulfillment model. Let’s look at each of these and some considerations as you decide which model to go with for your business right now.

In-House Order Fulfillment by Merchant

Filling an order in-house means that you are doing it yourself. You may hire a team to fill orders or you may decide that the order volume is small enough that you can do it all on your own (or with the help of family or your business partner). This is a common fulfillment strategy for eCommerce businesses just starting, as it can be complex the larger you get.

However, no matter how small or large you get, you want to have good CRM software to help keep track of customer information, inventory management software to track how much you have in stock at any given time, and a shipping system to ensure orders are accurately filled promptly.

Aside from the technological systems you need, you want to have warehouse space and skilled people (even if that’s just you) to fill orders so they are done right and done on time. 

Order Fulfillment Outsourced to a 3PL

As you saw above, there are a lot of steps involved in the order fulfillment process. As your monthly order volume grows, you will need more personnel and more tools to fill orders quickly.

This is where a 3PL often comes in. These businesses can help with a range of logistics needs for eCommerce stores just like yours. They can help with warehousing your inventory before it’s sold. They can support you with accurate inventory management, forecasting, and other data to help you predict upcoming inventory needs. They can help negotiate shipping rates and develop relationships with other partners for better deals. They can handle returns and step in when you need a little extra support with customer service. And obviously, they can help you pick and pack orders quickly and accurately.

Outsourcing might seem scary at first, but it opens you up to a whole new world of opportunities for business growth.

eCommerce Dropshipping for Order Fulfillment

Some eCommerce stores do not manufacture anything themselves, and in that case, dropshipping can be a good option for order fulfillment. This only occurs when you are an eCommerce merchant selling products manufactured and stocked by someone else.

When the order comes in, the manufacturer handles the shipping for you. eCommerce stores are middlemen in this scenario. If you make your own products, then this option will not work for your business.

Deciding on a Fulfillment Strategy

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If you are not sure which fulfillment strategy to choose, that’s okay! Remember that it can change over time. What works for you now may not work as you grow, so remember to be adaptable in your order fulfillment just as you are in every other area of business.

Here are the things you need to consider when deciding on a fulfillment strategy:

  • Average monthly order volume.
  • How many items your business sells and stocks.
  • Where you sell (marketplace vs eCommerce store)
  • What eCommerce platforms and software you use.
  • What inventory management software you currently have, if any.
  • Where your customers are located (domestic vs international).
  • Customization needs for your business (gift wrapping, kitting, made-to-order, etc.).

How to Improve Order Fulfillment

No matter which order fulfillment method you use, there are a few key tips that can improve your order fulfillment process overall. 

Automate as Much as Possible

If you can automate as much as possible, then you will be able to drastically reduce the amount of time it takes to handle tasks. At a fulfillment center, a lot of the tasks might already be automated – but if you are handling fulfillment in-house, then you should investigate the cost of automation.

When you automate inventory management and order processing, you reduce the risk of human error and help to decrease long-term operational expenses. 

Have Complete Product Descriptions

This can reduce confusion for customers, allowing them to shop for exactly what they want. It also helps with storage, packing, and shipping, speeding up order fulfillment.

Having all the information as to dimensions and weights in the details of your product can speed up the buying process. This also includes how long it takes to select the box or envelope, calculate postage, and determine storage.

Classify Inventory

When you classify your inventory, you are organizing the warehouse space in a way that makes sense for how fast each classification moves. Your best sellers are stored in an area that is easy to access so that you can easily get them to package orders. This will also help to restock inventory as needed for those fast-moving items.

Overall, classifying inventory can reduce the time it takes to process an order, which can make the entire process more efficient.

Understand Your Fulfillment Cycle

Every business runs on a different fulfillment cycle. Once you can come to understand yours, you will be better prepared for the fluctuations that happen on a seasonal basis.

You will know when your business gets busy, when certain items sell out, and when your packing materials are bound to run low. By knowing the cycle in advance, you can get ahead of the rush and restock all supplies and inventory so that you will not run into any challenges or delays.

This speeds up the order fulfillment process and reduces frustration from a delayed shipment.

Why Business Owners Outsource Order Fulfillment

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This may all sound like a lot, especially to a busy eCommerce store owner who is juggling many aspects of the business. When logistical challenges happen, they can severely impact your business. However, outsourcing to a third party you trust can reduce the impact that supply chain issues, inventory management challenges, and shipping delays can have on your store.

Here are four main areas where outsourcing to a third party can help solve common challenges:

Inventory Regulation

Having a good idea of exactly what is in stock at any given moment will allow you to make decisions on what needs to be restocked, what can go on promotion, and what you may want to phase out.

Challenges with inventory mean that you may run out of certain items or you may think you have some in stock and continue selling them, only to realize later that it has been out for days.

When you partner with a 3PL, the technology warehouses use to track inventory helps to reduce the risk of out-of-stock inventory by alerting you when items are getting low.

Demand Planning

As we talked about with the fulfillment cycle, warehouse technology can give you insight into the demand your industry can expect. You want to be prepared for fulfillment cycle fluctuations and holidays, but you don’t want to drive up carrying costs by preparing too early.

With demand planning from warehouse management software data, you can plan for the right timing of certain items so your inventory can be restocked right on time.

Supply Chain

By now, it’s not news that there are some ongoing challenges with the supply chain. Depending on your industry, you may be feeling hit harder than others right now. We have seen shortages of computer chips, baby formula, toilet paper, cleaning supplies, and many more over the past few years.

While these supply chain issues have received a lot of attention, there are often smaller issues that pop up. The supply chain for your business covers where your products or parts come from to the boxes your orders are shipped in and the transportation that gets orders to their final destination.

Whether it’s a severe storm causing flooding or a global interruption to the supply chain, logistics partners can help you identify and navigate solutions to common (and uncommon) supply chain interruptions.

Logistics Planning

Your logistics partner can help you handle logistics challenges like missed deliveries or lost packages. It happens, especially when shipping carriers get busy. Even during the holiday season, when shipping is at an all-time high, speed and accuracy are important despite the challenges that time of year.

But with the right partner, it doesn’t fall on you to solve these shipping and logistics nightmares. The fulfillment center has a relationship with each carrier they work with, so communication between the carrier, the logistics provider, your eCommerce store, and your customer can all be improved.

Benefits of Using 3PL for Order Fulfillment 

If having a partner to help you navigate those challenges sounds appealing, here are the three main benefits that you can get with a 3PL. Each benefit helps to solve the most common challenges that order fulfillment faces.

Despite having an upfront cost, you can save so much money in the long run by taking advantage of these benefits. They included improving the customer experience, saving on rented (or owned) warehouse space and staff, and adhering to all regulations and best practices for your industry.

Speed & Accuracy

Let’s face it – consumers want their items fast. So many people are used to free two-day delivery, and your business just may not be able to move that quickly. But with a 3PL, your customers may have access to expedited shipping.

The technology employed by fulfillment centers helps manage inventory, automate fulfillment tasks, and fill orders quickly and accurately, so your customers get exactly what they ordered as quickly as possible.

Regulatory Navigation

Some industries have to adhere to certain rules and regulations. If you are dealing with international shipping, some regulations must be followed. With a 3PL, your business will have access to experts who understand the laws around certain goods and international shipping, so that all documentation and storage are handled correctly.

If things change with the laws, the 3PL is aware and adjusts to the changes so that your business stays in compliance.

Industry Expertise

You know your product, your customer base, and your industry. You don’t have to know logistics, too. That is where the 3PL comes in. Fulfillment workers stay on top of all of the industry news and best practices so you do not have to.

They can help negotiate rates as things change, adjust to new regulations, and implement new processes for efficiency.

Selecting the Right 3PL for Your Order Fulfillment

If you think it’s time that your business works with a 3PL for order fulfillment, you need to find the right one that can help you grow.

These five things will help you in finding a fulfillment partner who can meet your needs now and into the future.

  1. Know Your Requirements

How much space do you need? 

Do you need specialized services? 

Do you offer kitting (or do you want to)? 

  1. Know Your Technology

What is your eCommerce platform?

Do you sell on marketplaces?

What inventory management software do you use?

  1. Know What They Offer

What reporting do they have?

What integrations can they provide?

What pricing model do they use?

  1. Know Your Integrations

What software do you use that needs to be integrated?

Does your eCommerce platform offer integrations?

  1. Know Their Locations

Where are their warehouses?

Where are your customers?

Where are your manufacturing facilities?

Improve Online Order Fulfillment Services by Outsourcing to a 3PL

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If now is the time to move your online order fulfillment service to a third party, ShipNetwork, formerly Rakuten Super Logistics can help. We can integrate into the most common eCommerce platforms, like Shopify, WooCommerce, Magento, and more, making order fulfillment easy for your store!

With our network of warehouses across the country, we can provide fast, accurate shipping for all of your customers. With 100 percent order accuracy guaranteed, we are proud of our fulfillment team's dedication to customer experience.

Request a quote today to learn how we can help improve order fulfillment for your store.