Large eCommerce brands like Amazon have changed the landscape with their order fulfillment practices. Expectations have risen as customers are able to get their goods as fast as the next day. Now, online brands must be proactive with their eCommerce fulfillment to gain ground in this competitive industry.

eCommerce fulfillment is more than just delivering orders to customers. It is an emerging aspect of business that determines customer satisfaction and affects your brand’s operational efficiency and overall reputation. 

This article will introduce you to the concept of fulfillment in online shopping, the types available, and the process. We will also share tips on selecting the right fulfillment partner for your brand.

What is eCommerce Fulfillment?

eCommerce fulfillment is a process that involves receiving a customer’s order, picking it from a shelf, packing it appropriately, and shipping it to the customer’s address.

The eCommerce Fulfillment Process

Like any other business process, there are many steps and substeps that help to make eCommerce fulfillment operations successful. These steps include the following.

1. Receiving

In step one, the fulfillment or merchant’s 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

With the items received, they are stored according to laid out rules and their location mapped out in the WMS to help with easy access. Most eCommerce fulfillment warehouses will use barcodes that assist pickers to easily pick an item off the shelf and record the same with WMS.

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. Optimal inventory management is crucial for an eCommerce business, with 26% of online shoppers admitting to abandoning their carts because a product was out of stock.

3. Picking and Packing

When a customer makes an order on your website, this request is sent directly to the 3PL 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 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.

Ensure you pick the shipping method that meets your customers’ expectations and give the 3PL clear instructions. This extra precaution ensures minimal confusion during the shipping process, and that orders can be delivered on time.

5. Returns Management

Effective returns management is essential for running an eCommerce brand. In 2023, Shopify estimates that 17.6% of all goods bought online were returned. 

Depending on your store’s policy, you can handle returns in various ways, including having the items shipped back to your headquarters or giving a refund without receiving the unwanted item back. Some online merchants prefer using their 3PL to fulfill returns or hire 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 a good returns experience and possibly recoup value from the returns process if possible.

Additionally, consider if the costs involved in managing returns are worth the hassle or if it would be better for your customers to keep the unwanted product and get a refund.

Forklift handling eCommerce fulfillment orders in a warehouse.

3 Most Common Types of eCommerce Fulfillment Models

Choosing the right eCommerce fulfillment strategy for your business allows you to satisfy your customers by meeting their expectations. Furthermore, it is crucial for boosting your brand’s operational efficiency and ensuring fulfillment is not a costly endeavor that eats into your profit margins.

The following are the three most popular models for order fulfillment that online shops opt for.

In-House eCommerce Order 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 ships the items for its customers as orders come in. Although some household brands do in-house order fulfillment, it is not a viable option for most because of the costs involved as the business expands. 

Outsourced eCommerce Order Fulfillment

Also known commonly as third-party logistics (3PL) eCommerce fulfillment involves hiring a dedicated company to handle the fulfillment process from start to finish as you 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, outsourced order fulfillment services help you operate seamlessly such that customers never notice your business is not the one that delivered the product to their doorstep.

Dropshipping

In dropshipping, online merchants run eCommerce brands without actually handling any inventory. They set up storefronts, and when an order is received, it is sent directly to a manufacturer who ships the product to the customer’s address. The profit from the sale is split between the merchant and the manufacturer.

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.

Benefits of Third-Party eCommerce Fulfillment

Third-party fulfillment partners are a must-have in today’s eCommerce landscape. Brands that partner with 3PLs get to enjoy the following benefits.

Cost Efficiency

Leveraging the services of a 3PL in eCommerce 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.

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.

Fulfillment companies specialize in all the processes involved in eCommerce fulfillment, ensuring that each step is handled as expertly as possible and done with a level of efficiency that would be impossible for most brands to achieve in-house. They also routinely train their employees, ensuring they are informed about the latest fulfillment trends and best practices.

Flexibility and Scalability

As opposed to handling fulfillment functions in-house, working with a 3PL gives your brand much flexibility to increase and decrease inventory as market forces dictate without a significant increase in cost.

Additionally, eCommerce brands can easily add new product lines, switch suppliers, and expand to new markets because they have an expert partner that can help them handle the fulfillment process conveniently.

Outsourcing fulfillment functions to 3PLs allows brands to focus on product development and selling, two core functions driving growth.

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 post-purchase 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 Choose 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. The tips below provide a roadmap for selecting a 3PL partner with the best eCommerce fulfillment services.

Order Processing

When selecting an order fulfillment partner, consider your brand’s shipping policy and compare it against the company’s order processing timelines and procedures. The right fulfillment partner should enable your business to process orders in the shortest time possible, ideally on the same day. This lets you ship orders at the earliest convenience, improving chances that they will be delivered to the customer on time.

Inventory Management

Fulfillment partners should provide a means for your business to connect its systems to their warehouse management system (WMS) for effective inventory management. By monitoring how much inventory is available, your business can streamline its operations to minimize risks of stockouts while ensuring inventory costs do not escalate.

Shipping Options and Costs

3PLs that allow you to work with carriers that offer various shipping options and affordable rates are the best options to partner with. Moreover, it is important to consider the fulfillment service provider’s warehouse locations. Multiple locations close to your customers in different locations ensure you can keep your shipping costs to and from the warehouses within a reasonable range while offering customers the most convenient delivery option.

Returns Management

Reverse logistics are predictable and can be quite expensive if not handled properly. Selecting a fulfillment partner that handles returns management for your brand ensures you can keep customers satisfied in the post-purchase phase and easily execute your return policy.

FAQs on eCommerce Fulfillment

  • What is order fulfillment in eCommerce?

Order fulfillment is receiving customer orders, picking and packaging products, and preparing them for shipping 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 increase beyond a level they can handle in-house cost-effectively.  

  • What is the difference between eCommerce and fulfillment?

eCommerce is the process of offering goods for sale to customers online, while fulfillment refers to the steps involved in managing inventory and preparing online orders for shipping to the customers’ destinations.

  • What is the difference between fulfillment and shipping?

Fulfillment involves selecting, packing, and attaching shipping labels to customer orders in a warehouse. On the other hand, shipping is the process of transporting the packages to their respective delivery addresses.

The TrackingMore team shares insights on logistics tracking technology, industry trends, and e-commerce logistics solutions to help businesses streamline shipment tracking and enhance customer post-purchase experience.

linkedin trackingmore-official
TrackingmoreService Facebook
TrackingMore9 Twitter
Share this article

Transform Your Shipment Tracking Today

#1 TrackingMore Shipment Tracking API and Webhook