A guide for 3PL fulfillment center operators and managers
E-commerce order fulfillment can be a complex process, but with the right guidance and tools in place, it doesn't have to be. In this guide, we will take a look at what eCommerce order fulfillment is and how to go about improving the process. We'll also discuss the importance of using WMS software like SphereWMS, which can help automate and optimize the fulfillment process.
So, if you're looking to freshen up your eCommerce fulfillment knowledge or just get a couple of new tips to improve your business, read on.
The Basics: What is eCommerce Order Fulfillment?
E-commerce order fulfillment is the process of receiving, processing, and delivering orders placed online. This can include tasks such as picking and packing items, shipping orders, and handling returns and refunds. This process can be handled by the eCommerce business or outsourced to a third-party logistics (3PL) provider.
A successful order fulfillment process is key to keeping up with customer demand, keeping customers happy, and ensuring that they will come back for more.
Different Types of eCommerce Order Fulfillment
There are three main types of eCommerce order fulfillment:
In-House or Merchant Fulfillment
The first type is in-house fulfillment. This is when the eCommerce business handles all aspects of the order fulfillment process itself. This can be done with a team of in-house employees at the business facility.
- Can be more cost effective than using a third-party logistics provider.
- May provide a higher level of customer service.
- Can be more flexible with shipping options and delivery times.
- Can require a significant investment in time and resources.
- May be less efficient than using a third-party logistics provider.
- Shipping costs may be higher than with a third-party fulfillment service.
Third-Party Logistics (3PL) Fulfillment
The second type of order fulfillment for eCommerce is outsourced fulfillment. This is when eCommerce businesses use a third-party logistics (3PL) provider to handle all or part of the order fulfillment process. Third-party fulfillment can be a great option for businesses that don't have the time, resources, or expertise to handle fulfillment in-house.
- Can be more efficient than in-house fulfillment.
- Allows eCommerce companies to focus on their core competencies.
- Providers may offer both inventory storage and inventory management services.
- May provide access to multiple fulfillment centers.
- Can offer a larger network of shipping options and lower shipping costs.
- Can be more expensive than in-house fulfillment.
- May result in lower levels of customer service if the process isn't optimized.
The third fulfillment solution is dropshipping. This is when an eCommerce business outsources the entire order fulfillment process to a third-party provider. The supplier or distributor will then ship the order directly to the customer.
- No need for an online store to carry inventory.
- Can be less expensive than in-house or third-party fulfillment.
- May result in lower levels of customer service.
- Can be less flexible with shipping options and delivery times resulting in dissatisfied customers.
- eCommerce companies must rely heavily on their suppliers.
- Lessens the ability to retain eCommerce customers since packaging and branding may not reflect the name or brand of an eCommerce store.
A Detailed Look at the eCommerce Order Fulfillment Process
With a third-party eCommerce fulfillment service, there are typically six main steps in the order fulfillment process. Let's look at these each here:
The first step in the eCommerce fulfillment process is to receive inventory from suppliers. This involves unpacking, inspecting, and counting the products as they enter the fulfillment center. This can be done manually, with the help of an inventory management system, or with an all-in-one WMS solution.
Once the inventory is received, it needs to be sorted and organized so that it can be easily accessed when orders come in. This is where proper inventory management comes into play. This process is best done with the help of a warehouse management system (WMS) with inventory management capabilities.
When an order is placed, the next step is to pick the items from inventory and get them ready for shipping. The picking process can be done manually or with the help of tools like voice picking or pick-to-light systems. Most companies will use barcode scanning to record that the correct item is picked and to update inventory levels automatically.
After the items have been picked, they need to be securely packed into boxes or bags. Packing is normally done at packing stations where items are weighed and measured for shipping. Packing slips are placed in or on the packaging.
The next step is to ship the orders out to customers. This process includes creating, printing, and affixing shipping labels. The orders are then loaded onto trucks or other shipping vehicles and sent out for delivery. Order tracking will follow the progress of shipments and provide delivery confirmation once customer orders are delivered.
Returns and Exchanges
The final step in eCommerce fulfillment is to handle any returns or exchanges. This is a necessary part of order fulfillment for eCommerce but can be a time-consuming and costly process. An efficient returns management system is essential to minimize the impact of returns on the business.
The Growing Importance of Reverse Logistics in eCommerce Fulfillment
Reverse logistics is the process of returning goods and materials back to their original manufacturers or suppliers. This process is often necessary when products are defective, damaged, or need to be recalled. But it also includes returns of unwanted or unsold products.
In recent years, the importance of reverse logistics has grown significantly in eCommerce fulfillment. This is due to the increase in online sales as well as the rise of eCommerce returns. In fact, the rate of eCommerce returns is now around 20%, which is more than double the rate of returns for in-store purchases.
With such a high rate of returns, it's essential for eCommerce businesses to have a reverse logistics process in place as part of their larger order fulfillment operation. This process should be efficient and cost-effective in order to minimize the impact of returns on the business.
Tips for Improving Your eCommerce Order Fulfillment Service
Now that we've looked at the process in detail, let's take a look at some tips for improving your order fulfillment for eCommerce:
Use a WMS
One of the best ways to optimize and automate the eCommerce fulfillment process is to use a warehouse management system. A WMS can help with tasks such as receiving inventory, organizing inventory, and picking orders.
Improve Order Picking
Another way to improve eCommerce order fulfillment is to focus on improving the order-picking process. This can be done by improving training as well as implementing pick-to-light or pick-to-voice technology.
Streamline the Returns Process
Another way to improve eCommerce order fulfillment is to streamline the returns process. This is done by organizing an efficient returns process and proper training of your team.
Communicate with Customers
As an eCommerce fulfillment provider, it's important to communicate with customers throughout the entire process. This can be done by integrating with the retailer and sending tracking information and updates on the status of their orders.
Focus on Continuous Improvement
Finally, it's important to always be focused on continuous improvement. This means constantly looking for ways to improve the eCommerce fulfillment process and making changes as needed.
The Importance of Having a WMS for Fulfillment Services
As retailers continue to harness new eCommerce sales channels, the need for eCommerce fulfillment companies with optimized operations has never been greater. A well-run warehouse is what enables a fulfillment company ability to meet customer expectations for on-time delivery, accurate orders, and low shipping costs.
That's why more and more businesses are turning to warehouse management system (WMS) solutions to help them run their warehouses more efficiently. WMS solutions offer a number of benefits related to order fulfillment, including the ability to:
- Optimize space utilization
- Improve labor productivity
- Reduce inventory levels
- Increase accuracy
- Improve customer satisfaction
SphereWMS for eCommerce Fulfillment Services
SphereWMS is a great option for businesses that are looking for a comprehensive WMS solution. Our fulfillment software is designed to help businesses optimize their warehouse operations and improve order fulfillment accuracy.
Some of the features that make SphereWMS a great option for any third-party fulfillment provider include:
- Real-time inventory visibility
- Flexible order management
- Powerful reporting and analytics
- Support for multiple shipping carriers
- Ecommerce shopping cart integration
If you're looking for a WMS solution that can help you improve your eCommerce order fulfillment, SphereWMS is a great option to consider.
To learn more about our WMS software, or to request a demo, get in touch with us today.
Omnichannel and Multichannel Fulfillment
The terms omnichannel and multichannel fulfillment are often used interchangeably, but there is a difference between the two. Omnichannel fulfillment is when orders placed through any sales channel (online, in-store, mobile, etc.) are fulfilled using a single inventory pool. This allows for a consistent customer experience and eliminates the need to maintain separate inventories for each sales channel.
Multichannel fulfillment, on the other hand, is when each sales channel has its own inventory. This can lead to stock-outs and overselling if there is no visibility into other sales channels' inventories. However, multichannel fulfillment can be necessary for businesses that sell through multiple channels and have different product assortments for each channel.
Challenges Faced by eCommerce Fulfillment Centers
As the eCommerce industry continues to grow, so does the demand for fulfillment centers. If you're in the fulfillment business, you need to be prepared for the challenges that come with it. Here are some challenges you may face:
One of the biggest challenges you'll face is increased competition. With the demand for fulfillment centers higher than ever, you need to make sure your center is stand out from the rest.
Managing Seasonal Fluctuations
Another challenge you'll face is managing seasonal fluctuations. This means having enough staff during peak season and ensuring that your center is prepared for sudden spikes in orders.
Keeping Up with Technology
Finally, you need to keep up with technology. This means investing in a warehouse management system (WMS) and using shipping software to automate the shipping process.
How to Stay Competitive in the eCommerce Fulfillment Center Business
The eCommerce industry is booming and as a result, the demand for fulfillment centers is higher than ever. If you're in the order fulfillment service business, it's essential to stay competitive. Here are some tips on how to do just that:
Use Technology to Your Advantage
One of the best ways to stay competitive in the eCommerce fulfillment center business is to use technology to your advantage. This means investing in a warehouse management system (WMS) and using shipping software to automate the shipping process.
Offer Same-Day or Next-Day Shipping
Another way to stay competitive is to offer same-day or next-day shipping. This can be a game-changer for eCommerce businesses, as it allows them to get their products to their customers faster than the competition.
Offer Value-Added Services
Another way to stay competitive is to offer value-added services. This could include things like gift wrapping, order customization, and even same-day shipping as we mentioned.
Offer Competitive Pricing
Another way to stay competitive is to offer competitive pricing. This means offering discounts for bulk orders and being transparent about your pricing structure.
Focus on Customer Service
Finally, it's important to focus on customer service. This means providing tracking information and updates to customers throughout the order fulfillment process. It also means coordinating with the retailer and having a clear and easy-to-understand returns policy.
Tips for Business Growth as a Fulfillment Provider
The eCommerce industry is growing at a rapid pace and as a result, the demand for fulfillment providers is higher than ever. If you're in the business of providing order fulfillment services, it's useful to focus on growth.
Here are some tips on how to do just that:
- Invest in Technology: As we mentioned, technology is one of the most important things to keep up to date with. Investing in technology is also one of the best ways to grow your business. This means investing in a WMS to better manage and automate the fulfillment process.
- Expand Your Services: Another way to grow your business is to expand your services. This means offering additional value-added services like gift wrapping, order customization, and faster shipping.
- Focus on Quality: Finally, it's important to focus on quality. This means ensuring that your warehouse is clean and organized and that your staff is trained and efficient. It also means investing in high-quality packaging and shipping materials.
If you're in the business of running a 3PL or eCommerce fulfillment center, it's important to be prepared for the challenges that come with order fulfillment. With the demand for fulfillment providers higher than ever, you need to make sure your business stands out from the rest. How do you do this? Start by using technology to your advantage, offer additional services, and focus on customer service.
SphereWMS software is a great way to automate your warehouse or fulfillment center and improve efficiency. With its user-friendly interface and comprehensive features, it's the perfect solution for any eCommerce order fulfillment operation.
Contact us today to learn more about our WMS software or request a demo. We're here to help you grow your business.