In order for an eCommerce business to be successful, it is crucial that they have a well-oiled order fulfillment process in place. This fulfillment process is what gets products from the warehouse to the customer's door. Because of this, third-party fulfillment companies play a critical role in the success of many eCommerce brands.
In this article, we will explain what order fulfillment is and walk you through the steps involved. We will also discuss the different types of fulfillment and provide tips for improving your order fulfillment operation. This will not only help you stay ahead of the competition but also ensure you are able to convey the value you offer to your customers.
So, whether you run a fulfillment center or you're a supply chain professional, read on for our full eCommerce order fulfillment guide.
What is eCommerce Order Fulfillment?
On a basic level, order fulfillment is the process of receiving, picking, packing, and shipping orders. When a customer places an order on an web storefront or eCommerce platform (Shopify, WooCommerce, ZenCart, etc.) the order goes through a fulfillment process before it arrives at their door.
The goal of order fulfillment is to get the right product to the customer's door as quickly and efficiently as possible.
When it comes to eCommerce businesses, there are a lot of different shapes and sizes, each with its own unique products and fulfillment needs. For example, a business that sells large appliances will have different fulfillment needs than a business that sells clothes. As such, there is no one-size-fits-all solution for order fulfillment.
However, all order fulfillment processes will generally follow the same basic steps.
The 6 Basic Steps Involved in the Order Fulfillment Process
The eCommerce order fulfillment process generally covers these several steps:
Receiving
The first step in the order fulfillment process is receiving. This is when products are delivered to the warehouse from suppliers. In most cases, products are received in large shipments and then stored in the warehouse until they are needed.
Organizing
Once products are received in the warehouse, they need to be organized. This usually involves putting products away in designated storage locations. For example, products may be stored on shelves, in bins, or on racks.
Picking
Once a customer places an order, products need to be "picked" from the warehouse and prepared for shipping. This involves retrieving the products from their storage location and readying them for packing.
Packing
Packing is the process of putting products into boxes or bags in preparation for shipping. This step is often done by hand, although some warehouses use automated packing machines.
Shipping
Shipping is the process of sending products from the warehouse to the customer. This is generally done using a shipping carrier like UPS, FedEx, or DHL.
Tracking
Once products have been shipped, it is important to track them until they are delivered to the customer. This helps ensure that products arrive on time and allows customers to track their order status.
Additionally, the processing of returns and exchanges is typically included in this process. Although, it is not always required for all businesses.
Different Types of Order Fulfillment
There are three main types of order fulfillment: in-house, third-party, and drop shipping. Let's consider each now.
In-House or Merchant Fulfillment
In-house order fulfillment is when a business handles all aspects of the order fulfillment process themselves. This includes receiving, picking, packing, shipping, and tracking orders.
In-house order fulfillment is generally only an option for smaller businesses with low volume or those with large warehouses and enough staff to handle the volume of orders.
Third-Party Fulfillment
Third-party order fulfillment is when a business outsources all or part of its order fulfillment process to a third-party provider. This can be a great option for businesses that do not have the space or resources to handle fulfillment in-house.
Drop Shipping
Drop shipping is a type of third-party fulfillment where products are shipped directly from the supplier to the customer. This can be a great option for eCommerce businesses that do not wish to own any stock of inventory at all.
When Should an eCommerce Business Choose Third-Party Order Fulfillment?
There are several situations when it makes sense for an eCommerce business to choose third-party order fulfillment. Let's cover a few of those now.
- If the business does not have the space or resources to handle fulfillment in-house.
- If they want to focus on their core business and outsource the receiving, picking, packing, and shipping to a fulfillment company that specializes in that.
- If they want to scale their business quickly and do not have the time or resources to set up their own fulfillment operation.
- If they need faster nationwide or international shipping. In this case, they may seek a provider with multiple fulfillment centers.
By providing fulfillment services that eCommerce businesses need, you'll be performing an important task while allowing them to concentrate on their core business.
Understanding The Role of an eCommerce Fulfillment Provider
eCommerce fulfillment providers are specialized companies tasked with handling the logistics of order fulfillment for other businesses.
Fulfillment providers have the facilities, staff, and experience to efficiently pick, pack, and ship orders. They also have relationships with different shipping carriers and can typically get discounts on shipping rates.
In some cases, businesses will outsource their entire fulfillment operation to a third-party provider. In other cases, they will use a fulfillment provider for certain steps in the process, such as pick and pack or shipping.
The type of business, product, and volume of orders will all play a role in determining whether or not an eCommerce business uses a fulfillment provider.
Advantages of Using Third-Party Fulfillment Services
Aside from what we've just mentioned, there are specific advantages to using third-party fulfillment services. Here are a few of the most important ones:
Cost Savings
When an online store uses a third-party fulfillment service, it's able to take advantage of its economies of scale. This can lead to significant cost savings for the retailer.
Flexibility
Using third-party fulfillment also provides the flexibility to scale up or down as needed. This can be a great option for businesses that are growing quickly or have seasonal fluctuations in customer demand.
Focus on Core Business
By using a third-party fulfillment service, an online retailer can focus on its core business and leave the fulfillment to the provider. This can free up their time and resources to focus on what they do best.
Why Order Fulfillment is So Important for eCommerce Businesses
There are numerous reasons why order fulfillment is so essential to eCommerce businesses. Here are some of the top reasons:
- It provides customers with the products they ordered in a timely manner.
- It helps to build trust between the customer and the business.
- It helps businesses with inventory management. This helps ensure that they always have the products that customers want in stock.
- It can help businesses save money by reducing shipping costs.
- It can help businesses improve their relationships with suppliers.
Order fulfillment is a complex process, but it's one that can be managed with the help of a fulfillment service. A fulfillment service can take on the task of receiving, processing, and shipping orders for online retailers. This allows them to focus on other aspects of their business.
Common Misconceptions About eCommerce Fulfillment Services
Fulfillment services are sometimes misunderstood by those new to the eCommerce space. This can leave potential clients hesitant to partner with fulfillment providers. Here are three of the top misconceptions along with the facts.
Misconception: Ecommerce fulfillment services are only for large businesses.
This is not true. Ecommerce fulfillment services can be used by businesses of all sizes. In fact, they can be especially helpful for small businesses that do not have the space or resources to fulfill orders in-house.
Misconception: Ecommerce fulfillment services are expensive.
Again, this is not necessarily true. Ecommerce fulfillment services can be very affordable, especially when you consider the cost savings that they can provide.
Misconception: Ecommerce fulfillment services are complicated.
While eCommerce fulfillment can be complex, using a service does not have to be. A good eCommerce fulfillment service will make the process easy to understand and manage.
By dispelling these misconceptions, you'll help potential clients see the value in working with your business. You can help them save time and money, fulfill orders more efficiently, and allow them to focus on their core business.
Specialized eCommerce Fulfillment Services
Within fulfillment, there are also specialized services that fulfillment centers may offer. Here are a few of the most common:
- Inventory management services: these services help businesses keep track of their inventory levels and ensure that they always have the products that customers want in stock.
- Returns management services: these services help businesses process returns and exchanges.
- Supply chain management services: these help businesses manage their relationships with suppliers.
As you can see, there are several types of eCommerce fulfillment services available. Each specialized service can help businesses in different ways.
Tips for Improving Your Fulfillment Service Operations:
If you are looking to improve your fulfillment service operation, there are a few things you can do.
- Invest in a good warehouse management system (WMS). Implementing a powerful system like SphereWMS can help you automate and optimize your entire fulfillment process.
- Make sure you have a clear understanding of customer expectations. This will help you design a fulfillment process that meets their needs.
- Focus on streamlining your process to make it as efficient as possible. This will help you save time and money.
- Make sure you have a good tracking and reporting system in place. This will allow you to see how your process is working and where there are opportunities for improvement. Start to track your orders from start to finish to identify any problems with your fulfillment process and make necessary changes.
- Make sure that your warehouse is organized and efficient. This will help to reduce picking and shipping times.
- Invest in good quality packing materials. This will help to ensure that products arrive at the customer's door in one piece.
By following these tips, you can improve your fulfillment service operations and provide a better customer experience.
How Fulfillment Services Can Improve Customer Satisfaction
Customer satisfaction is important for any business, but it's especially important for eCommerce businesses. Since fulfillment services are integral to the success of many online retailers, they play a large role in determining how satisfied customers are.
Here are some of the ways fulfillment helps meet customer expectations:
- Helps ensure that products are delivered on time or ahead of schedule.
- Helps reduce shipping costs which can result in lower prices for customers.
- Helps ensure that products are well-packaged and arrive in good condition.
- Helps businesses keep track of inventory levels and make sure that the products customers want are always in stock.
- Helps provide businesses with the opportunity to focus on their core business. This includes making great products and often providing customer support.
By using an order fulfillment service, businesses can improve customer satisfaction and focus on their core business. This will allow them to provide a better experience for their customers.
Choosing the Right WMS for Fulfillment Centers
The odds are that you are already familiar with what a warehouse management system is. Just in case, a WMS is a powerful tool that can help any business improve organization and efficiency in their warehouse operations. With WMS software, you can optimize stock levels across multiple locations while streamlining your inventory control processes - creating an environment of organizational success! It can be used to track inventory levels, automate picking and packing processes, and generate reports.
There are different types of WMS software on the market. However, not all of them are created equal. When choosing a WMS for your fulfillment center, there are a few things you should keep in mind:
- Ease of use: SphereWMS is easy to use and intuitive. This makes it easy for employees to learn how to use it.
- Flexibility: SphereWMS is flexible enough to accommodate your specific needs.
- Scalability: SphereWMS is designed to grow with your business.
- Reporting: SphereWMS provides you with the ability to generate reports that will help you improve your operations.
SphereWMS was developed with eCommerce fulfillment centers in mind. We provide the functionality and scalability supply chain businesses require. Give us a call to learn more about our WMS today.
Wrapping Up
As you can see, fulfillment providers play a critical role in the success of many eCommerce businesses. Smaller online retailers and those with the space and resources may choose to perform fulfillment in-house. For many other businesses, however, partnering with a third-party provider is the smart choice.
Hopefully, this guide has helped you to better understand the fulfillment process as well as be able to convey the value of third-party fulfillment to your customers.
If you are looking for a WMS to help manage your fulfillment center, look no further than SphereWMS. Our software was designed specifically for supply chain businesses. Contact us today to learn more about our features and how we can help you improve your operations.
FAQs
How Does E Commerce Order Fulfillment Work?
Ecommerce order fulfillment is the process of receiving, processing, and shipping orders placed by customers online. This process can be done via in-house fulfillment (by the merchant), by a third-party fulfillment center, or through a drop shipping arrangement.
What is eCommerce Order Processing?
Ecommerce order processing is the first step in fulfilling an online order. This involves receiving the customer's order information, verifying that the items are in stock, and then preparing the order for shipping.
What is eCommerce Order Shipping?
Ecommerce order shipping is the process of sending the prepared orders to the customer's specified address. This can be done via a variety of shipping methods, such as USPS, UPS, FedEx, or DHL.
How Can I Improve My Ecommerce Order Fulfillment?
There are a few things you can do to improve your eCommerce order fulfillment:
- Use a warehouse management system like SphereWMS to help automate and optimize your operations.
- Partner with a third-party fulfillment center that can help you scale as needed.
- Keep your inventory levels up to date and accurate to avoid oversells and stockouts.
- Use shipping software to automate the shipping process and get the best rates from carriers.
- Implement tracking numbers and confirmations to keep your customers updated on the status of their orders.
- Offer multiple shipping options to give your customers flexibility.
- Provide excellent customer service to ensure a positive experience for your customers.
What is involved in the eCommerce fulfillment process?
The eCommerce fulfillment process includes receiving, processing, and shipping orders placed by customers online. This process can be done in-house or through a third-party fulfillment provider. The goal is to efficiently deliver the right product to the customer.
