eCommerce Fulfillment—Detailed Guide
Updated · May 08, 2022
eCommerce order fulfillment can be a daunting task for any business, large or small. There are a number of factors to consider, from product storage and inventory management to shipping and delivery.
Plus, with the ever-changing landscape of ecommerce, it can be difficult to keep up with the latest trends and best practices.
In this blog, we’ll give you a rundown on ecommerce fulfillment, from the basic process to the various types, and finally factors to consider when setting yours up.
What Is eCommerce Fulfillment?
Ecommerce fulfillment is the process of preparing and shipping orders to customers after they have been placed through an online marketplace or other ecommerce order process platform.
This involves a wide range of activities, including packaging orders, printing labels, and coordinating with carriers to ensure that orders arrive at their destination on time and in good condition. Moreover, handling returns and exchanges is another necessity.
Because ecommerce fulfillment requires such a wide range of skills and logistics, it is often performed by specialist companies or dedicated teams within larger organizations.
Regardless of who performs it, however, the goal remains the same: to provide fast, dependable service that keeps customers coming back again and again.
With that in mind, let’s take a look at the three main types of order fulfillment, as each one will require special considerations.
When it comes to fulfilling orders for your online store, there are a number of different options that you can choose from.
Depending on your business model and the scale of your operations, you may decide to pursue one type of fulfillment over another.
Each will involve different costs, and different levels of effort.
In-house fulfillment is the most basic and sees you, or your staff, managing the job from start to finish.
Typically, this includes managing inventory, packaging items, and shipping orders yourself.
Digital fulfillment also falls into this category but is a bit easier. This fulfillment model applies to products like gift card codes, and ebooks.
You’d normally fulfill these orders directly through your website in the form of an emailed link that customers can reuse, or by placing the download links in a section of their account. Email marketing platforms can be configured toward this end.
Third-party fulfillment is where you store your inventory with a third party, which then takes care of packaging and shipping after receiving orders from your website.
It’s probably the most expensive option, but it offers convenience for you, and quick turnarounds. These operations normally perform on a large scale, meaning a lot of workers, and regular delivery routes.
There are a lot of fulfillment processing services out there. An increasingly popular one is Fulfillment by Amazon. With this, Amazon stores your inventory and dispatches it. It has the added benefit of allowing you to have a store on Amazon, for easy selling.
Dropshipping is a unique form of ecommerce fulfillment. With it, you sell items directly from manufacturers to buyers, and so they take care of the fulfillment. You just have to maintain your storefront, and manage orders.
A downside to this model is a lack of control over the quality of your products and the particulars of fulfillment, seeing as it’s mostly “hands off.” Learn more about it here.
The Basic eCommerce Order Fulfillment Process
Now that you know about the three main types, let’s take a look at the general process of ecommerce fulfillment.
It involves a number of steps that are integral to proper fulfillment.
eCommerce Store and Fulfillment Center Integration
First up, you need to integrate your ecommerce store with your fulfillment center. This applies regardless of the type of fulfillment model you make use of.
Whether you are fulfilling orders in your basement or a third party is doing it, the details of the orders your customers submit must reach your fulfillment zone so that they can be carried out.
This is pretty simple if you’re following an in-house fulfillment strategy. You can simply note the details or print the order form and follow it.
With third party and dropshipping, you’ll need to configure your ecommerce store to automatically send the details to your partners, so that they can fulfill the orders.
This is most commonly done through automatic email notifications that will be sent to fulfillment centers when an order is placed and paid for.
Of course, you can’t have any orders dispatched if the fulfillment center doesn't have any stock.
The next step in fulfillment logistics, therefore, is stocking items in your fulfillment center of choice.
This will ensure that customers can get their items as quickly as possible. You’ll need to personally send stock to the fulfillment center. If you’re in-house, you just need to order stock from manufacturers to your location.
If you’re going through a third party, you must arrange for the manufacturer to deliver the items to the fulfillment center.
This step is not necessary with dropshipping, because the manufacturer is handling fulfillment, and they produce the stock.
This leads to the third part of ecommerce shipping fulfillment, which is inventory management. This is a key factor in running a successful ecommerce business.
Accurate inventory records need to be maintained in order to ensure that customers always have access to the products they want, and carriers are able to fulfill orders accurately and in a timely manner.
In addition, effective inventory management can help businesses identify trends and make strategic decisions that support long-term growth.
Ultimately, an integrated system that allows for easy tracking of inventory across all areas of the business is essential for keeping everything running smoothly.
This will include practices like product matching, to ensure accuracy and optimization.
The main event, the actual e-fulfillinment.
If you’re in-house, you’ll have to package the order, and organize its delivery. Take note of any special instructions, and pass them on to the courier service.
Going the third party lets you skip the packaging and dispatch, but you’ll still have to ensure all the information is correct, pass it along, and be able to track the package on its journey to the customer.
When you’re fully in the swing of things, most of this should be automated and go smoothly, but problems can always arise, which brings us to the final step.
eCommerce Returns Process
Most businesses will encounter returns at some point.
Whether it's a customer who wasn't happy with a purchase or a product that arrived damaged, order returns are a fact of life for many businesses.
Returns processing is crucial to keep customers happy. Although you’re effectively losing a sale, a good experience will increase customers’ trust in your brand in the future.
You need to make it easy for the customer to return the item. For this, include a return label.
Then, if you’re going through a third party or dropshipping, figure out whether you’ll be charged a restocking fee.
To cut the cost of restocking, you can configure your fulfillment methods so that returns are sent directly to you.
Some platforms, like Amazon, also offer returnless refunds. Consider the pros and cons there if need be.
Picking a Fulfillment Method
When picking a fulfillment method, it comes down to your specific needs as a business.
Dropshipping is great for starting out and testing products, but in-house saves money.
A third-party offers the most utility but is also the most expensive.
Here are some things to think about.
Think about where your ecommerce fulfillment center will be located.
A central location is best for getting orders dispatched quickly.
All the same, consider where your customers are generally from. Perhaps you target a market outside of your own country.
Ultimately you need to do your research and pick the best place to make the center of your fulfillment.
Fulfillment centers can have different specialties.
If you’re selling something durable, like clothing, you can be less discerning.
However, if you’re selling bottled items like perfume, paint, and so on, you should look for a service that can transport fragile goods well.
Figure out which online order fulfillment service will give the best turnaround time.
Fast is always best when it comes to dispatching orders.
If customers must wait too long, they can become impatient, negatively affecting their view of your brand.
Consider too what method will give the best customer service.
For example, you should find a third party that has friendly workers and transparency such as online live order tracking.
Finally, you need to calculate the price.
You must make the most of your budget, and so you may have to start out in-house, or with dropshipping.
Later, when you’ve built up capital, you can make use of a big third-party, or even upgrade your in-house capabilities.
There you have a condensed guide to ecommerce order fulfillment.
There’s a lot to consider, but order fulfillment is central to ecommerce.
It’s, therefore, a necessity to get it right.
So, whether you’re going in-house, dropshipping, or making use of a third-party ecommerce shipping fulfillment service, make sure to do your research, and figure out what’s best for you, and your customers.
Garan is a writer interested in how tech reshapes the environment, and how the environment reshapes tech. You'll usually find him inoculating against future shock and arguing with bots.