There is an integral part of ecommerce that many sellers don’t consider right away: order fulfillment. While receiving and shipping orders may not seem as exciting as creating a website or marketing your products, it is crucial to the success of your business.
Order fulfillment is the process of completing and shipping an order to a customer. It involves several steps: inventory management, picking and packing items, and shipping them out promptly.
A smooth order fulfillment process can lead to satisfied customers, positive reviews, and repeat purchases. On the other hand, a complicated or inefficient process can result in delayed shipments, unhappy customers, and negative feedback.
Read on to learn some critical strategies for efficient order fulfillment in ecommerce.
What Is Order Fulfillment?
So, what is order fulfillment? At a basic level, order fulfillment, or ecommerce fulfillment, means getting orders into customers’ hands.
There are a few methods of fulfillment, but we will primarily be discussing self-fulfillment and order fulfillment services.
Self-fulfillment or in-house fulfillment means the seller or employees pack and send the items to customers.
Order fulfillment services are third-party companies that handle shipping, storing, and order/refund processing.
Some businesses may use a combination of both methods. For instance, a company may handle its frequently purchased products by a third party and then use in-house processing for custom items.
Why You Need to Pay Attention to Order Fulfillment
One of the essential principles for ecommerce businesses is to stay on top of inventory. Store owners must regularly monitor their inventory and ensure that stock is always available. All it takes is one spike of holiday traffic for inventory to be exhausted quickly.
There needs to be a proactive approach to inventory management rather than waiting for it to run out before it is restocked. In fact, this can lead to a significant loss of customers if they regularly see "Out of Stock" on the store page.
Pay attention to the regular velocity of the product and order inventory well before it runs out.
For instance, if the store typically sells around five units a day and there are 200 units left, this means there are only about 40 days of inventory left. It is dangerous, as it can take up to 30 days to manufacture some products, let alone ship them to the warehouse.
Order Fulfillment Process Steps
The order fulfillment process goes through around five primary stages, from when products are made to when they reach the customer.
Inventory Sourcing
The first step is for the business to obtain its inventory, which could be from a manufacturer, supplier, or warehouse. The inventory needs to be counted, sorted, and inspected to ensure it is of satisfactory quality.
In the case of physical products, a SKU or barcode will be used to track the reception and storage of the product. This step can vary depending on the type of business, as they may make their products themselves or receive them from some other means.
Storing or Sending Inventory
The inventory will be ready to be purchased but must be stored somewhere. Some smaller businesses may store the inventory themselves, or it will be stored in a warehouse or fulfillment center.
In the latter case, the inventory must be sent to a distribution center, and reception must be confirmed. After this, it will go into storage.
Order Processing
Once the inventory is logged, stored, and live online, customers can purchase it. When a purchase is made, the order process begins. It involves picking the inventory and packaging it. A picking team or robots will do this in a distribution center. The SKU or barcode will be used to identify the correct product and then be packaged.
For a smaller business, this could be as simple as grabbing it from their garage and sending it off themselves.
Shipping
Then comes the final step in online order fulfillment: shipping it off to the customer. There are various carriers through which this can be done, such as FedEx, UPS, USPS, and more.
This is where a fulfillment service can be incredibly beneficial, as they typically have better rates with various carrier services. Small or independent businesses will have to cover all shipping costs, which can become pricey depending on their traffic.
Fulfilling Orders Yourself
Self-fulfillment is the traditional way of fulfilling orders, where businesses handle all steps themselves. While self-fulfillment can give you more control over the process, it also requires more time and resources from your end.
However, if you choose to fulfill orders yourself, there are some key strategies to keep in mind for efficient order fulfillment:
- Stay organized: It’s essential to have a system in place for managing your inventory, orders, and shipping. It could be using a spreadsheet, software, or any other method that works best for you.
- Streamline the process: Look for ways to streamline your order fulfillment process to make it faster and more efficient. It could include automating specific tasks or investing in technology like barcode scanners.
Using Order Fulfillment Services
Choosing order fulfillment services depends on the business size. Although self-fulfillment may appear cost-effective for small companies initially, it can become more expensive in the long term for larger enterprises.
Order fulfillment services offer several benefits that make up for their costs:
- Expertise and efficiency: Order fulfillment services specialize in handling large volumes of orders and have systems in place to streamline processes.
- Time-saving: Outsourcing fulfillment tasks allows businesses to focus on other operations, such as marketing and product development.
- Lower shipping rates: Fulfillment services often have negotiated lower shipping rates with carriers, saving businesses money in the long run.
- Scalability: As a business grows, so does the volume of orders. Fulfillment services can quickly scale up to handle increasing order volumes, saving businesses from the hassle and expense of expanding their in-house operations.
To exemplify an order fulfillment service, let’s look at Amazon. Amazon is a marketplace itself, but it also provides a fulfillment service. When selling on Amazon, sellers can fulfill orders themselves or use "Fulfillment by Amazon" or FBA. It means the seller will have inventory sent to Amazon, which will be stored in their warehouses.
When an item is purchased, Amazon handles shipping the product to the customer and any returns. This makes it easier for the seller, but it also means they will pay Amazon a fee for every product sold.
Using Order Fulfillment Software
Order fulfillment software is an excellent way for businesses to keep an overview of their order processing.
This software connects sellers to the warehouse or ecommerce fulfillment center they are working with. It will provide real-time information regarding order tracking, inventory levels, tracking key performance indicators, forecasting, and more.
Such software also allows sellers to achieve automated order fulfillment, provided everything runs smoothly and inventory stays replenished.
Dropshipping for Order Fulfillment
Dropshipping is another ecommerce method that has gained traction over the years.
Dropshipping is kind of like ecommerce fulfillment services, except there is no bulk inventory to handle. Instead, when a customer purchases a product from the website or online store, the seller will then buy the product from a supplier.
This product will then be directly sent to the customer. Suppliers can be the manufacturer of products or a company that purchases bulk products to sell to drop shippers. All orders and shipping are handled by the supplier of the product, which means the ecommerce seller only pays for sold products.
Wrap-Up: Frequently Asked Questions on Order Fulfillment
Order fulfillment is an essential part of running an ecommerce business. It may not need much attention in the company’s early days, but this doesn’t mean it can be neglected.
Ecommerce sellers should establish a solid fulfillment strategy or work with a fulfillment center as their business grows to keep orders flowing.
Before we wrap up, let’s explore common questions about order fulfillment to ensure a smooth and efficient process for both customers and businesses alike:
Why Is a Standardized Order Fulfillment Process Important?
In the modern age of ample ecommerce, customers have come to expect fast shipments of their orders. Standardized order fulfillment solutions will help businesses keep up with order traffic and ensure customers stay happy with the results.
What Is the Best Method of Ecommerce Order Fulfillment?
There is no best fulfillment method, as it depends on the size and type of business. However, it is recommended that a business begin working with a fulfillment service when scaling up its traffic. Otherwise, it may become more challenging to fulfill orders on time.
Is Self-Fulfillment Cheaper than Fulfillment Services?
Yes and no. In the case of a smaller business with low traffic, it is much cheaper to ship those few products themselves.
However, self-fulfillment can add up quickly when orders regularly come in and go out. While it may sound as simple as paying the shipping costs, more costs go into self-fulfillment, including:
- Packing supplies like bubble wrap or peanuts
- The packaging itself, such as boxes, poly mailers, etc
- Transportation costs back and forth to the carrier
- Loss of time
- And more.
For a few trips, these costs aren’t that bad. But, they add up when it becomes a daily task or even multiple times daily.
What Are the Benefits of a Fulfillment Service?
There are several benefits to using a fulfillment service, as it can help businesses:
- Manage product storage
- Track orders and manage inventory
- Manage customer communication and relations
- Obtain transparency over the order and shipping line
- Entice customers with quick and affordable shipping
- Handle processing and returns
- Scale as traffic grows.
No right or wrong answer exists on whether a business should use a third-party service for their orders. Realistically, it depends on their business model, traffic, and ability to keep up with orders.
It may be easy to handle orders internally when first starting, and there isn’t much traffic. However, as the business grows and more orders start coming in, they may need to hire a third-party service to keep up with increased traffic.
Ready to Start Your Own Ecommerce Store?
If you have been thinking about starting your own ecommerce store, then Ecwid is here to help. Our platform offers a variety of features and integrations to make selling online more straightforward, including options for order fulfillment.
No matter how you decide to fulfill your orders — yourself, via fulfillment services, dropshipping, or by connecting your online store to the fulfillment software of your choice — Ecwid has you covered.
When fulfilling orders yourself, you’ll appreciate Ecwid’s tools that make order fulfillment easy — like new order notifications, buying shipping labels from your Ecwid admin, order search and filters, tax invoices, and more.
Ecwid integrates with popular shipping providers so that you can offer your customers various shipping options at checkout. You can also set up real-time shipping rates to ensure accurate pricing for your customers.
If you prefer a fulfillment service, Ecwid provides apps that allow you to send orders to third-party fulfillment services like Shipwire or Amazon FBA. It will enable you to outsource the packing and shipping of your orders while still managing everything from one central location.
Finally, if you already use a specific software for order fulfillment, don’t worry! With Ecwid’s customization services, you can integrate your order fulfillment software.
Plus, Ecwid connects to various dropshipping services so that you can offer a wide range of products without the hassle of keeping inventory. Simply connect your store to one of our dropshipping partners, and they will take care of everything from warehousing to shipping.
But why stop at just selling on your website? With Ecwid’s multi-channel selling options, you can expand your reach by selling on social media platforms, as well as marketplaces like Amazon and eBay. Best of all, you’ll manage all products and orders from one straightforward dashboard.
So why wait? Start selling everywhere today with Ecwid!
The post Top Strategies for Ecommerce Order Fulfillment first appeared on Ecwid | E-Commerce Shopping Cart.
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Anastasia Prokofieva, Khareem Sudlow
