Expert Guide: Mastering eCommerce Fulfillment

The backbone of any thriving eCommerce business is its order fulfillment process—a complex yet vital system that orchestrates the movement of goods from the warehouse to the customer’s hands. 

As consumers increasingly demand a frictionless shopping experience, eCommerce fulfillment has become a critical battleground for brands to differentiate themselves and win customer loyalty. It is not just about getting the product to the customer’s doorstep; it’s about how it gets there and what that delivery experience says about the brand’s commitment to service and quality.

Explore the intricacies of eCommerce fulfillment, from its definition to selecting the perfect fulfillment partner, in this concise guide tailored for brands seeking efficiency and excellence.

What is eCommerce Fulfillment?

eCommerce Fulfillment is the process of ensuring that a customer’s order is completed in a timely and efficient manner. This includes several key steps:

1. Order Processing: Receiving and confirming the order details.
2. Picking: Selecting the correct items from inventory.
3. Packing: Carefully packaging the items to ensure they arrive in good condition.
4. Shipping: Coordinating with carriers to deliver the package to the customer.
5. Returns Management: Efficiently managing the return process, including the receipt, inspection, and handling of returned items.
6. Inventory Management: Monitoring and maintaining optimal inventory levels to ensure products are available for order fulfillment.

The eCommerce Order Fulfillment Process

For small retailers, eCommerce fulfillment often involves a more hands-on approach, with a focus on personalized customer service and flexibility. Most of them will manually manage inventory, pick and pack orders themselves, and rely on third-party logistics (3PL) providers for shipping. This allows them to closely control the quality of their fulfillment services while keeping operating costs low.

On the other hand, large-scale sellers typically have more sophisticated fulfillment operations. They may use advanced warehouse management systems (WMS) to automate inventory tracking and optimize storage. These businesses also tend to have established relationships with multiple carriers, allowing them to negotiate better shipping rates and offer faster delivery options.

We will discuss the entire eCommerce fulfillment process in the following.

1. Receiving

In step one, the eCommerce warehouse receives inventory from the manufacturers or suppliers. Staff at the warehouse will unload the trucks bringing in the inventory and log each SKU into the warehouse management system (WMS).

During the receiving stage, checking for any damaged items is important to help with inventory planning later. Additionally, always inform your 3PL by providing an advance shipping notice (ASN) to help with capacity planning and have your items unloaded and logged into the WMS in the shortest time possible.

2. Warehousing

After receiving the inventory, the next step is to store it in an organized manner within the warehouse. This process includes:

• Inventory Placement: Items are placed in designated storage locations within the warehouse. This can be on shelves, in bins, or in pallet racks, depending on the size and nature of the products.
• Organization: Proper organization is crucial for efficient picking later. Inventory is usually categorized and stored based on factors such as product type, size, demand, and turnover rate.
• Labeling: Each storage location is labeled and linked to the WMS, ensuring that staff can quickly find and retrieve items when needed.
• Stock Monitoring: Regular stock monitoring and cycle counts are conducted to maintain accurate inventory levels and ensure that items are stored in optimal conditions.
• Security: Implementing security measures to protect the inventory from theft, damage, or other risks. This includes surveillance systems, access control, and safety protocols.

Warehousing operations are also key to streamlining inventory management for your online shop by ensuring optimal inventory levels to meet customer demand while keeping costs low.

3. Picking and Packing

When a customer makes an order on your website, this request is sent directly to the WMS. A pick list is also generated to help the warehouse employees know what they are supposed to pick and which packaging to use. The picker proceeds to take the item off the shelf and packs it. The box is then sealed and the shipping label is applied.

Same-day picking and packing is highly recommended as it ensures the customer does not experience further delays during delivery.

4. Shipping

The processed orders move to the packing bay of the warehouse and are grouped according to the designated carrier and location ready for pickup. Once loaded on the right vehicle, the packages begin their journey to the customer’s address.

Choose the right shipping method and warehouse location to ensure a satisfying delivery experience for your customers.

Shipping Methods

Choosing the right shipping method is crucial to meet your customers’ expectations. Some popular shipping methods include:

• Standard Shipping: Typically the most cost-effective option with longer delivery times.
• Expedited Shipping: Faster than standard shipping, often used for customers who need their orders quickly.
• Same-Day or Next-Day Shipping: Premium options for customers requiring immediate delivery.
• Registered Shipping: Provides proof of mailing and delivery, often including tracking and requiring a signature upon receipt, ensuring that the package is securely delivered to the intended recipient.

Warehouse Location

The location of your warehouse also plays a significant role in the shipping process. Strategically located warehouses can reduce shipping times and costs. Factors to consider when choosing a warehouse location include:

• Proximity to Major Markets: Closer to key customer bases to reduce delivery times.
• Accessibility to Transportation Hubs: Near airports, seaports, and major highways for efficient carrier pickups and deliveries.
• Cost of Operations: Balancing location advantages with costs such as rent, labor, and utilities.

By selecting optimal shipping methods and strategically placing warehouses, you can ensure efficient, timely deliveries that meet customer expectations. Also, during this process, it’s essential to implement a robust shipment tracking system to monitor the progress of each package. Reliable tracking not only helps in managing any issues that may arise during transit, such as delays or lost packages but also keeps both your team and your customers informed, providing a smoother and more transparent shipping experience.

5. Returns Management

Effective returns management is essential for running an eCommerce brand. According to the NRF survey, 17.6% or $247 billion of goods bought online were returned in 2023.

Depending on your store’s return policy, you can manage returns in various ways, such as having items shipped back to your headquarters, providing a refund without requiring the return of the item, using a third-party logistics (3PL) provider to handle returns, or hiring a reverse logistics warehouse.

Handling returns can be a chaotic process since they are not scheduled as is the case with receiving inventory. It is therefore advisable to work with an expert at returns handling to provide customers with a good returns experience and possibly recoup value from the returns process if possible. Additionally, evaluate the costs involved in managing returns. In some cases, it might be more economical to let customers keep the unwanted product and receive a refund, especially for low-cost items.

⁤The most disregarded stage in the eCommerce order fulfillment process is inventory management. ⁤⁤Maintaining ideal inventory levels helps to guarantee that products are always available for order fulfillment, therefore reducing storage costs and preventing stockouts. ⁤⁤To guarantee actual stock matches records, it calls for exact tracking of inventory quantities, effective reordering depending on demand forecasting and sales trends, and frequent audits.

⁤⁤Good inventory management guarantees seamless operations, fast order fulfillment, and great customer satisfaction, thereby enabling you to make wise decisions to maximize stock and lower expenses. ⁤

The 3 Most Common eCommerce Fulfillment Models

There are various approaches to managing eCommerce fulfillment. Many eCommerce businesses adopt different models as they grow, and some employ multiple fulfillment solutions simultaneously.

1. In-House eCommerce Fulfillment

When running an online store, you may opt to handle all the fulfillment functions in-house alone or with a team depending on the volume of orders that you receive. Many small-size online shops go down this route because it allows them to keep costs low and they can also personalize the delivery experience for their customers.

With in-house eCommerce fulfillment, the business receives inventory at its address, stores it, and then picks, packs, and commissions 3PLs to ship the items for its customers as orders come in. While this is the best solution for startup business, eventually this solution will be phased out as the business continues to expand.

2. 3PL eCommerce Fulfillment

3PL eCommerce fulfillment is a common type of outsourced eCommerce fulfillment that entails hiring a dedicated fulfillment company to handle the fulfillment process from start to finish, allowing you to focus on running and growing your business.

Most 3PLs charge a quota-based fee that will increase or decrease depending on how much volume your brand ships to customers monthly. The fee may cover the basic services but be exclusive of others including custom packaging. The specifics of this will vary from one provider to another.

Although separate from your business, 3PL order fulfillment services integrate seamlessly with your operations, ensuring that customers perceive a smooth and consistent delivery experience as if your business handled the entire process.

3. Dropshipping

Dropshipping is a popular eCommerce fulfillment trend in 2024 as this model doesn’t need online businesses to handle any inventory. Dropshipping is the most popular eCommerce fulfillment solution in 2024, as this model eliminates the need for online businesses to handle inventory. Businesses set up storefronts, and when an order is received, it is forwarded directly to the manufacturer, who then ships the product to the customer.

Dropshipping fulfillment has enabled many people to start their online businesses easily because of the minimal capital involved in setting up an online store. However, there is little that a merchant can do when an issue arises with a delivery except contact the manufacturer. This disconnect between the brand and the delivery process often leads to a bad customer experience. Implementing effective dropship tracking can help mitigate these issues by providing real-time updates and transparency throughout the delivery process.

Benefits of Outsourced eCommerce Fulfillment

Outsourced eCommerce fulfillment is a must-have in today’s eCommerce landscape. Here are a few key benefits that other order fulfillment models can’t match.

Cost Efficiency

Leveraging the services of a 3PL provider in eCommerce order fulfillment is the most efficient way to keep your logistical costs down. The fulfillment partners free your business of the need to hire warehousing space that you may not fully utilize and expensive machinery involved in fulfillment. Additionally, your business does not need to hire warehouse staff to pick and pack orders.

With 3PL eCommerce fulfillment, your business only needs to pay an agreed fee and access all these resources plus convenient warehouse locations that help to keep shipping costs low. 

Expert Services

For most eCommerce merchants, order fulfillment and logistical operations are not their strengths. Focusing on these tasks takes up much time without yielding the results that a specialist would if outsourced to them.

Selecting a reliable eCommerce fulfillment company ensures that each step is handled with expertise and efficiency. These companies routinely train their employees, keeping them informed about the latest fulfillment trends and best practices, so you receive the best eCommerce order fulfillment services.

Flexibility and Scalability

As opposed to handling fulfillment functions in-house, working with a 3PL gives your business much flexibility to increase and decrease inventory as market forces dictate without a significant increase in cost. Additionally, your business can easily add new product lines, switch suppliers, and expand to new markets because they have an expert partner who can help them handle the fulfillment process conveniently.

Enhanced Customer Experience

Fulfillment companies enable eCommerce businesses to enhance customer experience by providing fast and convenient deliveries. When an online shop partners with a 3PL with multiple locations, fulfilling orders to customers within one or two days is possible, which delights them and contributes to a positive delivery experience.

Delighted customers are more likely to return to your online store and make additional purchases or speak positively of their experience to friends and family, which may attract additional customers in the long run.

How to Select an eCommerce Fulfillment Partner

The right eCommerce fulfillment partner will spur your brand’s growth and success. It is, therefore, critical to choose one carefully. Consider the following four crucial elements when searching for premium eCommerce fulfillment services.

Consider the geographic location of the eCommerce fulfillment center. Strategic placement can dramatically minimize transportation times and costs, resulting in speedier delivery and more customer satisfaction. The proximity of key shipping hubs and your primary client base can improve logistical efficiency.

Evaluate the order fulfillment partner’s service offerings. Kitting, custom packaging, returns handling, and international shipping are all services that can significantly benefit your business. A partner with a complete range of services can help you satisfy your unique business needs and create a better post-purchase experience for your customers.

Ensure that the fulfillment partner employs cutting-edge technology that works flawlessly with your eCommerce platform. This integration should allow for real-time inventory tracking, order processing, and shipment updates. A strong technology infrastructure will simplify operations, eliminate errors, and improve the entire customer experience.

Choose a partner who can grow alongside your company. The fulfillment partner should be able to handle higher order volumes and seasonal increases while maintaining service quality. Scalability ensures that as your company grows, your fulfillment procedures stay efficient and dependable.

Besides these four key elements, the cost and customer support of your eCommerce fulfillment partner are also vital. Always remember the one that suits you is the best.

FAQs on eCommerce Fulfillment

• What is order fulfillment in eCommerce?

Order fulfillment is receiving customer orders, picking and packaging products, and shipping them to the customer’s address. 

• When should an eCommerce business consider a fulfillment partner?

eCommerce businesses should partner with a fulfillment company when their order volume and fulfillment needs exceed what they can handle cost-effectively in-house

• What is the difference between eCommerce and fulfillment?

eCommerce is the practice of selling goods to customers online, while fulfillment refers to the essential processes of picking, packing, and shipping those goods to complete the transaction.

• What is the difference between fulfillment and shipping?

Fulfillment involves inventory management like picking and packing, and the shipping process while shipping specifically refers to the transportation of packages to their delivery addresses.