Establishing a business that sells products to customers requires a lot of planning. You need to determine who you’ll be serving, where they are, and how to get the products to them. Order fulfillment relates to the process by which the order placed by your customer reaches them. With more customers having a low attention span, a glitch in your order fulfillment system can raise your order cancellation rate and affect your revenue.
Many business owners do not have the facility and capacity to handle their order fulfillment needs. This can push them into finding a reliable distribution center to handle their needs. In the next part of this resource, you’ll find more about order fulfillment and how it works.
What is Order Fulfillment?
Order fulfillment is the process an order passes through between the seller and the customer. This process often involves products received from the seller, picking, packing, and shipping to the customer. In the past, business owners often handled this process themselves. However, many are now outsourcing it to save money, cut down their workforce, and ensure customer satisfaction with faster delivery times.
With the right order fulfillment partner and process, business owners can keep their customers happy with faster delivery times. They can also save more money on in-house employees and storage space for their products.
It is important to note that not all businesses choose third-party logistics and order fulfillment partners to work with.
Types of Order Fulfillment for eCommerce
There are three main types of order fulfillment options that businesses can choose from. They include;
In-house Order Fulfillment
This type is also known as self-fulfillment. This involves the company handling its order fulfillment process on its own. This process will often involve setting out a department or hiring hands to handle everything from picking to packing and shipping. In most cases, the company may also handle local deliveries while partnering with shipping and delivery brands for nationwide and international deliveries.
While this option works for most businesses, it is characterized by some disadvantages, including an increased labor force which costs the company more money. The company may also face overwhelming orders that its limited resources may not cater to.
In addition, companies handling their order fulfillment in-house will need to secure storage space to hold their products pending when they are shipped to the customer. This storage space can add to their overall overhead costs.
Third-party Fulfillment Partners
This becomes necessary when a company begins to handle more orders than it can process within the organization. Ecommerce businesses often outsource their order fulfillment requirements to these businesses that have the tools, resources, network, and technology to handle their order fulfillment needs.
With third-party logistics and fulfillment companies, the stress of picking, packing, and shipping is eliminated. The business owner can then focus their strength more on providing more products while also cutting overhead costs.
Most order fulfillment partners have temporary storage solutions and inventory management technologies that keep the seller updated while tracking the product delivery timeline to the customer.
This process saves cost, reduces labor force, reduces storage requirements, allows the business owner to focus more on production, and keeps the customers happy with faster delivery timelines.
Hybrid Fulfillment
This involves outsourcing just a part of the order fulfillment process to third-party logistic partners while handling the rest in-house. This is often common in businesses that serve local, national, and international customers. Such companies may handle their local demand and order fulfillment needs while outsourcing the rest to experts.
With the hybrid fulfillment system, businesses get to keep their workforce small while also catering to the needs of a wider customer base.
The Elements of an eCommerce Order Fulfillment Process
There are six important elements in an eCommerce order fulfillment process. They include;
Receiving inventory: This is where the manufacturer or business owner sends the product inventory in. Every shipment is checked to ensure compliance with the logistics partner’s rules.
Warehousing and inventory management: Logistics partners often have a temporary warehouse where the supplier’s goods are held. They also manage the supplier’s inventory to ensure they’re kept abreast of the inventory level at each time.
Picking and Processing: This happens when an order comes in for a product. The logistics partner picks the order, processes it out of the inventory, and passes it on for packing.
Packing: The order gets packed here with delivery destination information attached.
Shipping: The product leaves the order fulfillment center and heads out to the customer’s address.
Returns management and after-sales care: Customer order cancellations are managed by the logistics company. They reverse the process and return the item (after careful check) to the warehouse. If the order purchase was completed, aftercare in the form of reviews or feedback would be initiated.
