Having the best product in the world, an engaging website, or a sales process that guides your customer quickly to the checkout is in vain if your e-commerce fulfillment isn’t running effectively. Order fulfillment is one of the most crucial aspects of your online business and is a surefire way to enhance business.
What Is E-commerce Fulfillment?
All e-commerce businesses — from the smallest online vendor to large enterprises engage in e-commerce fulfillment. It’s that part of the supply chain responsible for receiving bulk materials, storing stock-keeping units (SKUs), picking and packing orders, and shipping goods to customers.
It also includes returns and exchanges. One of the most important order fulfillment criteria on which orders are frequently evaluated is the time taken to complete an order.
To complete the order fulfillment processes, digital commerce companies can either develop their own dedicated order fulfillment service or rely on third-party vendors.
Steps in the E-commerce Fulfillment Process
The process of fulfilling an order starts with the receipt of the order and ends with delivery, refunds and exchanges. The five steps involved in order fulfillment are mentioned below:
1. Receiving Inventory
Fulfillment warehouses have special receiving bays where delivery trucks unload goods. You need to give warehouses an advance shipping notice (ASN) detailing the contents of your shipment and the expected arrival date.
The warehouse makes sure that teams are on hand to rapidly unload your cargo and record it into the warehouse management system (WMS). Ideally, each SKU has a designated shelf location mapped in the WMS.
Next, the shipment’s contents should be checked against the ASN as a best practice. The best place to discover goods damaged in transit or SKU inconsistencies is at the receiving step.
Robust inbound procedures reduce the likelihood of inventory errors. Security is another important aspect of warehouse storage. Modern warehouses have strong security systems, including 24/7 security and camera coverage of the whole facility.
2. Inventory Management
Inventory management is the process of ordering, storing, using and selling a company’s inventory. It keeps track of your products from the time they enter the warehouse until they are purchased.
You can actively manage your inventory by spotting trends as they emerge and by planning ahead for stocking specific products. For instance, if you run a business that sells supplements for exercise and see that your protein blend is doing well, ensure your inventory for the coming months includes adequate stock of the product.
Inventory management also allows you to predict shortages and give you enough time to keep adequate quantities in stock.
You can notify your customers of the shortage and inform them about when the order is expected. Inventory management also involves making sure that the goods that a company stocks for its customers are safe and treated carefully.
2. Processing the Order
When a customer places an order the software sends it to the WMS, which generates a pick list or a packing slip. The picking staff uses this list to put everything for one order in one bin.
These bins are taken to the packing station, where workers select the appropriate box size, fill it with cushions to prevent things from moving during shipping, seal the box and attach the shipping label. Choosing the right packaging material is an important part of order processing.
Pick-and-pack backlogs make it challenging to meet customer expectations since they give the impression that shipments are being delayed. You can send orders quickly and accurately using efficient pick-and-pack software and good inventory management.
Orders are shipped to the customer by the outbound dock or shipping station. Here the shipping labels are verified and the packages are kept in bays. The handoff from fulfillment to the delivery business is supervised by shipping personnel, who typically employ the services of UPS or the post office to deliver products.
Alternatively, carriers can pick up orders from the fulfillment facility. Most fulfillment firms collaborate with a variety of carriers, allowing you to select the delivery options that will serve your customer needs.
Once the order is shipped you will receive the tracking information that you can share with clients, so that they can monitor the delivery status.
The location of the warehouse is important as shipping from remote areas might be expensive and can take longer than shipping from more accessible areas. You can alternatively select a third-party fulfillment partner with warehouses that can deliver products to all or the majority of your client base in two days or less.
4. Returns and Exchanges
Returns are inevitable in online shopping and your fulfillment strategy depends on how you handle them. In e-commerce, return fulfillment includes receiving, assessing and processing returned items into the stock that is already available.
The laborious process of inspecting and refurbishing electronics and adequately refolding garments makes the return process expensive and time-consuming. But having a proper return policy in place is essential as e-commerce buyers frequently make a purchase decision without having tried the goods personally, generating a greater return rate than brick-and-mortar retail.
Some fulfillment services allow returns to be delivered directly to the e-commerce company rather than the fulfillment center, offer pre-paid return labels, share return tracking data and support interfaces that proactively text the return and refund updates to customers.
E-Commerce Fulfillment Options
E-commerce fulfillment can be handled in many ways. Firms use different strategies at different e-commerce development stages and some use multiple fulfillment options simultaneously. Below are some e-commerce fulfillment options:
Many e-commerce businesses start with in-house fulfillment, particularly those that start small and bootstrap growth. Order packing inside your facility or in a garage are both examples of in-house fulfillment.
Here, you have complete control over picking and packing your items, so you can make sure the quality is up to par. You can also include personalized touches like a thank-you note, a discount, promotional items or a gift.
Outsourced order fulfillment
By outsourcing your fulfillment to a third-party logistics (3PL), you gain the expertise of logistics specialists who work with numerous businesses and can assist you in optimizing your order fulfillment procedures. This will allow you to dedicate more time on product development and marketing. Companies frequently discover growth in their business when they work with the best 3PLs for their brands.
Dropshipping is when products are sent to customers straight from a manufacturer or wholesaler. Through the use of its website, a third-party shop makes drop delivery accessible.
A buyer purchases the item on the merchant’s sales platform and the retailer pays for the inventory. This business model places the onus of warehousing and e-commerce fulfillment on the manufacturer or distributor rather than the merchant.
Hybrid fulfillment refers to any fulfillment approach where you combine all or some of the above-described fulfillment methods, to reach more customers or to reduce costs. Many online retailers distribute orders from various sources using this option.
The most typical hybrid setup combines a 3PL with an internal fulfillment. For instance, if you’re currently self-fulfilling orders and struggling to handle demand, you can choose to have some of your products drop shipped.
E-commerce fulfillment is nearly invisible to your customers when done correctly. They believe your brand is dependable and trustworthy when their orders arrive on time and when the picking and packing are flawless. That’s why focusing on order fulfillment is vital to develop an e-commerce brand.