Order fulfillment is a luxurious way to explain how people get the product they paid for. It is one of the final but most important stages in the sales process, and a poorly planned order fulfillment strategy can cost you a customer.
What is Order Fulfillment?
The order fulfillment process involves processing and completing the customer’s order and ensuring its delivery. This includes receiving the order, picking the item from inventory, packing it, shipping it, and delivering it. It is a critical aspect of e-commerce operations and directly affects customer satisfaction.
Why Does Order Fulfillment Matter?
It is crucial for any e-commerce brand to master order fulfillment. With a well-crafted strategy in place, you will benefit from: lower costs, improved customer service, scalability, and other benefits.
How Does the Order Fulfillment Process Work?
Order fulfillment processes vary depending on the type of fulfillment strategy you use. But to give you a rough idea, here’s what the order fulfillment process looks like for an e-commerce seller:
1. Receive inventory from suppliers and store it in a warehouse or distribution center.
2. A customer places an order through your e-commerce store.
3. The fulfillment team receives the order details.
4. They prepare the order and pack it with a shipping label and return form.
5. The package is shipped to the customer’s address.
6. If a return process is initiated, the customer uses the return label to send the package back to the warehouse. At this point, the fulfillment team inspects the product and processes the return (if eligible).
6 Tips to Improve Your Order Fulfillment Process
Now that we know how the order fulfillment process works, let’s take a look at how to streamline your fulfillment process and get products to your customers faster.
1. Optimize Inventory Management: Speed is everything in the order fulfillment process. The quicker you can get the order into the customer’s hands, the happier the customer will be. Optimize your fulfillment process by localizing inventory. Shopify makes it easy to manage and fulfill orders through our platform by providing an intuitive order management system. It integrates with retail outlets to allow for faster fulfillment options.
2. Double-check Products Before Shipping: What if you received a package with the wrong product? Not only will you be unhappy because you received the incorrect product, but you’ll also have to return the item and wait for a replacement. You don’t have time for that. A robust order-picking strategy reduces the risk of this happening for your customers. It is a guaranteed way to match inventory with customer orders so that the wrong product isn’t shipped to the wrong customer. “Always check that the products you are shipping match the customer’s order,” says Bernie. “Even if you have the best customer service and can resolve the issue quickly, it’s still a waste of time and money between resolving customer issues and shipping the new order.” Not only is product selection important, but so is how they are packed. As Laura Whittaker, founder of Wildcraft, says, “Ensuring that products are well and securely packed guarantees that nothing will break during shipping and that the customer will have a great experience when receiving their products, whether it’s their first time or the tenth.”
3. Improve Your Relationship with Shipping Companies: Shipping companies play a significant role in the speed of delivering products to your customers. Build relationships with them to receive preferred rates and higher priority when addressing customer service issues. This could involve accurately estimating shipment sizes and maintaining ongoing communication with shipping companies to find out if there’s anything you can do to make things easier for them, such as delivering orders earlier in the day. Let them know when things go well. These compliments contribute to relationship building.
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Use data to make decisions: Leverage data to enhance your order fulfillment process. Identify products that move more slowly than others by analyzing inventory turnover rates, improving demand forecasts, and optimizing safety stock levels using this information. Implementing a better packing strategy works for our busy warehouse. The receiving team inspects new inventory at the beginning of their shift so that we can have a clearer picture of the items available for restocking. However, due to the high activity in the warehouse with many people picking and packing orders, the receiving staff often waits until the end of their shift to restock inventory levels. By restocking inventory at specific points during the day, we can maintain higher inventory levels for order pickers.
5. Automate wherever possible: Human error can cause many issues in the fulfillment process. From misreading packing slips to fulfilling the wrong orders, customer experience is at risk when order accuracy is low. “I have often seen small businesses manually sending a list of orders every day, which increases the risk of doing something wrong and requires more time and labor,” says Elliot Davidson, an e-commerce consultant at Parcel Master. “The best solution is to leverage automation through integration, where data is automatically sent to your service provider without needing to be touched.” Smart ways to automate the order fulfillment process include using order fulfillment software to route orders to the fulfillment center closest to the customer, using barcode scanners to locate inventory in a busy warehouse, and sending a tracking link to the customer so they can get real-time tracking information such as location and estimated delivery time. As Laura Whittaker from Wildcraft states: “Fulfillment takes a lot of time and is costly when done wrong. Between replacement products, extra shipping labels, and wasted time, costs can add up significantly.”
6. Be transparent with customers: Unfortunately, there are still things that go wrong in the order fulfillment process, and not all are under your control. But that doesn’t mean you can completely ignore accountability. According to our survey, 45% of active shoppers are looking to shop with companies that clearly display expected delivery times. For this reason, nearly half of brands invest in transparent delivery practices. Put this into practice: let’s say you promised delivery of orders within two days to shoppers in the United States, but a delay in receiving inventory affects your order fulfillment process. Customers will be disappointed with an order delivered in four days instead of two. Mitigate the impact on customer satisfaction by informing the customer of the delay as soon as you become aware of it, apologizing for the delay, and providing a brief explanation of why their package is late.
How to determine your e-commerce order fulfillment strategy?
Before we look at the different fulfillment solutions you can use for your e-commerce business, make sure to choose the right strategy by doing the following three things: defining your sales volume, understanding your strengths, and identifying the location of your customers.
1. Define your sales volume: The number of products you sell determines whether you should keep order fulfillment in-house or outsource it to a third party. Look at each sales channel and the order volume across each channel. Order accuracy will start to decline if you rush to process more orders than you can reasonably handle in-house. “We process several hundred orders daily and offer same-day shipping if ordered by 3 PM,” says James Brands, director at LimaLima. “A good order fulfillment process means we can meet this promise while ensuring that our customers receive the correct item they ordered.”
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Knowing Your Strengths: If you lack execution and logistics skills in the company, it’s better to delegate the execution process so you can focus on sales or production, or both. Jessica Postiglione follows this approach in the order fulfillment process for Bonny. The company uses a third-party service for order fulfillment, but “for the samples sent to editors and influencers and other special customers, I fulfill those packages myself as the brand owner, as they contain handwritten notes and other personalized materials.”
3. Identifying Your Customers’ Locations: The location of your customers is important, as it can lead to increased shipping costs and delivery times. Shipping from New York to San Francisco will be much cheaper and faster if shipped from Los Angeles instead. “We look at where our customer orders are coming from. The way we respond is by placing inventory near those cities to reduce the total distances those packages travel,” says Jason Wong, CEO and founder of Doe Lashes. If you have a large customer base far from your headquarters, consider delegating order fulfillment to a service provider that has a warehouse close to them. “The Shopify fulfillment team helped me understand the opportunity we had by opening a fulfillment center on the East Coast,” says Elizabeth Grujian, founder of Baloo Living. “The team even runs historical reports and analytics that helped us see how much of our customer base is located there. By shipping products from the East Coast, we can reduce delivery times to customers by almost half and save a tremendous amount in shipping costs, not to mention reducing our carbon footprint.”
Order Fulfillment Options That Suit You
There are three types of order fulfillment strategies you can choose from: merchant fulfillment, dropshipping, and third-party fulfillment. Each one suits different types of e-commerce stores, depending on shipping volume, customer locations, and team capability.
1. Merchant Fulfillment: Best suited for small e-commerce businesses with low sales volume. Merchant fulfillment happens when you complete the order fulfillment process yourself. This is one of the most common options: statistics indicate that 90% of all retail orders involve at least some store participation in fulfillment. “If you handle fulfillment in-house, it’s a great opportunity to create a more personalized experience for your customers. Add a handwritten note or a sample of a product you think they might like! The more you can create a human connection, the better the experience will be” – Laura Whittaker, founder of Wildcraft.
2. Dropshipping: Best suited for entrepreneurs starting a business on a budget. Dropshipping is an order fulfillment model where the entire process is taken off your hands. Businesses can choose, pack, and ship inventory to their customers without touching (or seeing) the inventory physically. “You can start without a budget. You don’t need to buy inventory or pay for storage fees because it will be purchased when the customer pays for it. Inventory management is taken off your hands, as items are purchased when the customer pays for them. It saves time to work on other areas of the business, like marketing” – Laura Whittaker.
3. Third-Party Fulfillment: Best suited for growing e-commerce startups with increasing sales volume. A third-party fulfillment company, also known as third-party logistics (3PL), takes the entire order fulfillment process off your hands. The service’s job is to provide inventory, print packing slips, and ship the item to the customer’s home – all without any involvement from you. “Working with a logistical fulfillment service has really changed my life. It not only frees up extra time to work on other aspects of my business, but also allows me to take vacations without worrying about delayed orders or shutting down my store” – Valerie Aclley, owner of Brennan Candle Co.
Challenges
Order Fulfillment
Now that you understand the order fulfillment process, let’s take a look at some potential challenges to consider. Understanding these challenges can help you prepare better and ensure that orders are shipped and delivered on time.
1. Inaccurate order information: For more than a third of companies, the biggest logistical challenge is the pressure to fulfill more orders faster and at a lower cost. For this reason, Erin Mastobietro, co-founder of Dope Dog, recommends ensuring that there is a good record of product deliveries and other aspects. “If you don’t have a good record, you could be bouncing between databases and get quickly confused. This can increase confusion for your customers, making the entire experience negative for them.”
2. Supply chain issues: It’s no secret that the global supply chain is in turmoil. From labor shortages to political instability, 43% of brands are changing shipping strategies to lessen the impact of global shipping delays. The sad reality is that customer expectations are increasing in the opposite direction. Major e-commerce brands like Amazon have paved the way for one-day or same-day shipping. But when dealing with an imbalanced supply chain, fulfilling that promise is impossible. Localizing inventory can help shorten already delayed delivery times. Just ensure that you are always transparent when you don’t meet your fulfillment promises.
3. Seasonal and event fluctuations: The popularity of some products spikes at certain points in the year. These fluctuations in shipping volumes can make order fulfillment challenging. If you typically process 100 SKUs a day and that jumps to 350 before Black Friday, for example, a labor shortage could mean you’ll fail to meet your two-day delivery promises because you don’t have enough staff to fulfill the orders. This is where order fulfillment outsourcing shines. These companies have expertise in handling seasonal orders and often hire temporary workers during peak sales periods. There aren’t significant impacts on order fulfillment times.
4. International shipping: The beauty of e-commerce is that customers can order anything from anywhere. However, international shipping does affect customer expectations for shipping. It’s your responsibility to get the order packed and shipped to the customer as quickly as possible. “Order fulfillment must support all the energy the customer brings to the purchase process and not hinder it,” says Noah Chamberburg, founder of Heatonist. Again, localizing inventory helps mitigate this issue. By storing inventory in an international warehouse located near your customers and automatically routing orders there, the goods will have already cleared customs.
How to Choose the Right Order Fulfillment Service
There are clear advantages to outsourcing order fulfillment. However, with so many fulfillment service providers to choose from, it can be challenging to know which one is best for your business.
Factors to consider when deciding on which order fulfillment service to use include: experience, cost, technology, location, speed, customer service, and ethics.
The Shopify fulfillment network meets all of these criteria. Merchants can use the fulfillment service to store, pick, pack, and ship inventory from warehouses across the United States. If that’s not enough, you’ll also save time and money by printing discounted shipping labels when fulfilling orders. Streamline your order fulfillment operations.
MasterOrder Fulfillment Processes
Order fulfillment should be a top priority for any e-commerce brand. Whether you outsource fulfillment or keep it in-house, your fulfillment process needs to be robust. Loyal customers are at risk if you fail to meet their speedy expectations.
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Order Fulfillment FAQs
What does it mean when an order is in the fulfillment stage?
When an order is in the “fulfillment stage,” it is in the process of picking and packing from the merchant’s warehouse. It is the stage before shipping the order to the customer’s location.
What is the order fulfillment rate?
The order fulfillment rate is the percentage of all orders marked as “shipped.” For example, if you have 100 pending orders and 30 of them have been shipped, your order fulfillment rate will be 30%.
Does order fulfillment mean the same as order logistics?
Order logistics is another term for the order fulfillment process. It is how inventory is stored, packed, and shipped to the customer once it is ordered through your e-commerce site.
How can I start an order fulfillment business?
To start an order fulfillment business, you will need a place to store orders, such as a warehouse or storage room. Look for e-commerce brands that will pay to store inventory there. Then, ask them to direct order confirmations to your warehouse so you can pick, pack, and ship the orders.
How does an order fulfillment company work?
Order fulfillment companies, also known as third-party logistics providers, store inventory for businesses and handle the picking, packing, and shipping of orders to customers after a sale. They provide a scalable solution for businesses to manage logistics and delivery without needing to invest in their own warehouse space and fulfillment team.
What is the difference between order management and order fulfillment?
Order management is the process of tracking and managing the order journey from the customer’s purchase point to delivery, including customer service, processing, and analytics. Order fulfillment is a part of order management, focusing specifically on
Source: https://www.shopify.com/blog/order-fulfillment
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