eCommerce Order Fulfillment Explained

With fast-paced online shopping as the norm, customers aren’t just looking for rapid delivery—they’ve come to expect it. This rising demand for quick turnaround times presents a complex challenge for sellers. Plus, dealing with the complexities of ecommerce order fulfillment is no easy feat.

Staying on top of fast, accurate shipping is likewise proving critical for businesses looking to improve client satisfaction. 53% of customers indicated that how fast you ship has an impact on whether they’ll order from you, and many shoppers will avoid shopping with a business entirely if they’ve had a bad delivery experience. 

The backbone of all this? An effective ecommerce order fulfillment process.

"Ecommerce order fulfillment is a critical component of online retail, combining efficient logistics, advanced technology, and strategic planning. It's the process that directly impacts customer satisfaction by ensuring timely and accurate delivery of each order,” said Rick Nelson, CEO, The Fulfillment Lab.

In this blog, we’ll provide a general overview of ecommerce order fulfillment, the most popular types of order fulfillment on the market today, a step-by-step guide to the process, and how working with a third-party logistics provider (3PL) can help take all the stress out of this process.

What is eCommerce Order Fulfillment?

eCommerce order fulfillment focuses on the effective management of bulk goods, storing SKUs (Stock Keeping Units), processing orders, and ensuring timely delivery. This process involves several key stages:

1. Strategic sourcing: This is when you select the right suppliers to ensure quality and cost-effective products.
2. Inventory management: Here, you keep track of stock levels to meet customer demand without overstocking.
3. Supply chain management: Coordinate the entire flow of goods from suppliers to customers.
4. Order processing: Handle customer orders promptly and accurately.
5. Quality control: Make sure products meet certain standards before shipping.
6. Customer support: Address customer inquiries and resolve issues.
7. Shipping: Delivering products to customers efficiently.

The Types of Order Fulfillment Services for eCommerce

Let's break down the four major types of order fulfillment, each tailored to different business needs and growth stages.

In-House Order Fulfillment

With in-house fulfillment, your team handles everything from storage to shipping, right on-site. It's a perfect fit for businesses that value end-to-end control, from established companies to budding home-based startups.

Outsourced (or Third-Party) Order Fulfillment

Simplify your logistics by outsourcing to a 3PL partner. They take care of storing, shipping, and handling orders and refunds. No warehouse? No problem. It's an excellent choice for companies short on space or manpower.

Dropshipping

Streamline your retail business with dropshipping. Say goodbye to inventory headaches—just order from a third-party when a sale is made, and they ship it directly. This is ideal for e-commerce and startups looking to minimize upfront investments.

Hybrid Fulfillment

Embrace flexibility with hybrid fulfillment. Combine the best of in-house, outsourced, and dropshipping. Handle custom orders yourself while outsourcing or dropshipping the rest. It's the ultimate solution for businesses scaling up or dealing with a variety of product types.

Now let’s take a look at what your order fulfillment process might look like, especially when you rely on a trusted 3PL partner.

A Step-By-Step Guide to the eCommerce Order Fulfillment Process

eCommerce order fulfillment is a complex but essential process, consisting of several key steps—beginning with an efficient receiving process, all the way through to effective returns management.

1. Receiving

Kickstart your ecommerce success with efficient receiving - the crucial first step in order fulfillment. Imagine this: dedicated bays buzzing with activity as workers swiftly offload and log merchandise, a scene of organized efficiency.

Each item's journey begins with an Advance Shipping Notice (ASN), a critical document ensuring everything is accounted for. Checking shipments against ASNs is a necessity and protection against inventory mishaps, safeguarding against damaged goods and SKU discrepancies.

But beware common pitfalls. Pallets lingering on docks spell inventory delays, and products missing from inventory can mean missed sales opportunities. The ideal fulfillment service takes care of this seamlessly. 

2. Warehousing

Warehousing serves as a dynamic hub where products move fast, ensuring quick turnover and constant flow. In the heart of your fulfillment warehouse, you’ll find shelves meticulously organized, aisles clearly labeled, and every SKU assigned a precise spot in the Warehouse Management System (WMS).

But don’t forget: Inventory management is a key component of effective warehouse management. It's a delicate balance, maintaining just the right stock levels while optimizing cash flow. Constant adjustments are the norm, with a lean inventory approach minimizing storage costs.

Here’s where a third-party logistics provider (3PL) can help: The right partner makes sure that all of your products are handled correctly and securely, working with efficient picking practices.

3. Picking and Packing

Once an order is received, it's entered into the WMS, which generates a detailed pick list or packing slip. This list guides pickers through the warehouse, enabling them to collect the specified items for each order and place them into a designated bin.

These bins are then transported to the packing stations. Here, packers take over, selecting the right box size for the order. They ensure each item is securely placed in the box, often adding infill material to prevent movement and damage during transit. Once packed, the box is sealed and a shipping label is applied, readying it for dispatch.

In larger warehouses, efficiency is key. Orders might be grouped by SKUs or warehouse zones, allowing for batch picking, which significantly speeds up the process. For smaller warehouses, individual order picking is common, where each order is picked one at a time.

4. Shipping

The shipping process begins at the outbound dock or station. Here, the prepared orders make their final stop before heading out to customers. The staff checks each package's labels for accuracy. Once verified, they place the boxes in designated carrier bays, ready for dispatch.

The location of your warehouses greatly impacts the efficiency of your shipping process. Warehouses centrally located can drastically reduce both shipping times and costs. Therefore, choosing a fulfillment partner with strategically placed warehouses is essential.

How Should I Handle Returns Processing?

To effectively handle returns processing, working with a 3PL, which is already familiar with the products, is an incredible asset.

The right partner effectively separates damaged goods from those that are simply unwanted by the customer. This distinction allows for like-new items to be returned to inventory, often accompanied by photographic records.

Otherwise, you have several options for managing returns. One approach is to ship the returned items directly to the company's headquarters.

Another strategy, growing in popularity, is issuing refunds without requiring the actual return of merchandise. This approach can improve customer satisfaction and reduce logistical challenges, but it needs to be balanced against the risk of loss.

The Steps in Outsourced eCommerce Order Fulfillment —at a Glance

How to Improve Your eCommerce Order Fulfillment Process

Maintaining customer satisfaction with high, accurate delivery rates is achievable for any business. It’s all about improving the way you do business.

1. Make Data-Driven Decisions

Data analysis, particularly regarding inventory turnover, is pivotal for accurate forecasting. Employing a top-off strategy helps maintain optimal inventory levels. Remember, efficient order fulfillment is a cornerstone for achieving high client satisfaction and repeat business.

2. Double-Check Products

Accuracy in shipping the correct items is essential. It minimizes customer frustration and reduces the likelihood of returns. Adopting a strategic order-picking approach can greatly reduce errors, and proper packaging is crucial to ensure product safety during transit. This step is key in maintaining high customer satisfaction levels.

3. Optimize Inventory Management

In the world of order fulfillment, speed reigns supreme. To achieve this, localizing inventory can significantly reduce delivery times. Platforms like Shopify offer seamless order management integration, streamlining the process.

4. Don’t Be Afraid to Automate

Implementing ecommerce automation tools and fulfillment software, like bar code scanners, can help improve your operational efficiency. Automation also enables real-time order tracking for customers, adding to the transparency and reliability of the service.

Focus On Your Business—We’ll Handle Your Order Fulfillment

With over 11 years of expertise in ecommerce order fulfillment, we've honed our process to near perfection—an impressive 99.95% order accuracy rate. Our expansive network includes 2 domestic warehouses and 12 international locations. Your products are within reach of customers across the globe.

Imagine the peace of mind knowing that every order arriving before noon is guaranteed to ship the same day, thanks to our streamlined operations.

But that's not all. We understand the importance of fast delivery in today's market, which is why we offer a 99% 3-business-day shipping solution to your consumers. With over 12 million orders received and shipped, The Fulfillment Lab is the partner you need to scale your business without the operational headaches.

Contact The Fulfillment Lab today to get started. We’ll handle your order fulfillment so you can focus on what you do best – growing your business.