Starting an eCommerce store is definitely a hot topic and can be extremely rewarding. Despite that fact, many new online retailers tend to forget, or neglect, the most important process to selling online: order fulfillment! Starting small with an online store can be quite simple. However, what do you do when you start getting more orders, or when you want to expand?
We have your answers and solutions here. In this article, we’ll cover the eCommerce order fulfillment process. We’ll explain what it is, what to expect, and even provide fool-proof solutions. These solutions will ultimately be the tools that keep you afloat in the digital world.
What is Order Fulfillment?
If you’re unclear about what order fulfillment is, it may be relieving to know it’s actually simple (when explained). Ultimately, order fulfillment is the process of storing inventory, picking and packing products, and shipping online orders. Sounds simple enough right? Great! Let’s keep going.
Order fulfillment for eCommerce businesses can apply to both business-to-business (B2B) orders. It can also apply to business-to-consumer (B2C) where orders are shipped directly to your customer’s home.
Furthermore, order fulfillment can be completed in-house which is called self-fulfillment. However, another way is to outsource to a third-party logistics (3PL) provider! When choosing which strategy works best for you, it’s best to better understand the process overall.
Most likely, outsourcing your fulfillment process is a better route for several reasons. Keep reading to learn more about The Cost Savings of Fulfillment Services.
How To Do eCommerce Order Fulfillment
There are several order fulfillment strategies to choose from. While there are a few options, there’s no one right answer. Over time, how you choose to fulfill orders will probably change, just like every other aspect of eCommerce.
To better make your decision, it’s worth understanding the eCommerce fulfillment process. Figuring out the best strategy will be even easier once you understand the methods available.
Understanding The eCommerce Order Fulfillment Process
There are a lot of moving parts in the fulfillment process. If you are new to the order fulfillment world, you may not have given much thought to this; especially if you start off small. While you may be able to handle this on a small scale, it can be difficult to maintain with growth.
Ultimately, the process can be broken down into five steps:
- Receiving: To fulfill online orders, you of course need to have inventory. You have to make sure you can maintain your stock levels. This can lead to you predicting the amount of stock to order.
- Storing Inventory: Storing your inventory is also known as warehousing. Warehousing is the organization and storage of your products. Each unique product or SKU may need to have a separate dedicated storage location. With proper inventory storage you’ll be able to keep your products protected while giving you the visibility into what is available to ship.
- Processing Orders: This typically involves picking, or the retrieving items from where they are stored. Then, there’s the packing, or getting the order ready to ship. Oftentimes packing slips which note the quantities and storage locations of each ordered product. This is ultimately why warehousing can be crucial. Imagine scrabbling around trying to find products that you may or may not have?
- Order Shipping: After order processing, it’s time to ship! If you’re doing this in-house, the process could be very time consuming. Shipping may involve a run to the local post office or UPS Store.
- Processing Returns: If a customer returns an order, you must be prepared to process it. Depending on the product’s quality, return reason, and your returns policy, the product can either be restocked as available inventory or disposed of due to malfunction.
Order Fulfillment Process Challenges
Fulfilling online orders may not be as straightforward as it seems. Anything can happen whether you’re fulfilling in-house or with a 3PL partner. So, it’s worth keeping in mind the possible challenges you may face.
1. Fulfillment expertise in-house
Becoming a fulfillment expert is not typically the main reason that someone starts an eCommerce business, nor is it the best use of an individual’s time who already wears many hats.
Very few businesses have their distribution network as a core competency or have built out their own supply chain.
With all the complexities of shipping, understanding the ins and outs of it can be overwhelming. Many eCommerce teams find that they don’t want to be setting up and running operations in a warehouse — or even know where to start.
2. Being prepared for changes in volume (or the holidays)
Increasing sales volume is a common goal for growing businesses.
If you do intend to increase sales, you have to be prepared to handle them. However, it can be challenging to keep up with unprecedented demand. With that being said, it’s no secret that the fourth quarter of the financial year is typically the busiest. Sellers should be ready to ramp up operations during this time.
As more orders flow in, it’s expected to have more people, or efficient procedures, to help ship them out.
3. Focusing on strategic tasks
Self-fulfilling orders takes away your ability to focus on expansion; or even growth-oriented tasks that improve your business. Those tasks tend to be the crucial factor in scaling your business. Sometimes those tasks are also what is required to maintain your business success.
Therefore, you should want to make use of limited time. This way you can focus on the tasks that generate more sales and scale your business.
4. Competing with Amazon
Amazon Prime has made fast shipping a highly sought after commodity for online shoppers.
If your customers are like most consumers today, they expect a fast turnaround for deliveries. Additionally, if customers can find similar products on their marketplace with faster shipping, they’ll most likely shop there.
The challenge here lies with being limited to fulfilling orders out of a single location. You can’t offer affordable options for all customers as Amazon does. The online retail giant uses their fulfillment centers across different cities and regions.
So, if you want to be able to compete, this challenge has to be tackled!
What eCommerce Order Fulfillment Strategy Is Great For You?
Now that we’ve covered the order fulfillment process, now it’s time to cover the methods! As previously mentioned, the method you choose can change overtime. So if you’re starting out small or have the team to do it, you may be okay with in-house fulfillment.
Nonetheless, let’s look at all of your options.
Also known as self-fulfillment, in-house fulfillment is when a business conducts the order fulfillment process within its own facilities.
Additionally, when conducting fulfillment in-house, you would be utilizing labor and assets without the aid of a third-party logistics provider. This can look like going into the backroom to grab the customers online order; followed by packing, weighing, labeling and shipping it out via USPS.
It’s common for merchants that are just starting out to manage inventory and ship orders in their home. However, fulfilling orders this way typically takes up valuable time. That time could otherwise be spent on acquiring more customers, developing new products, and other marketing campaigns.
- Easy to implement
- Low startup costs
- Custom packaging
- Control over entire process
- Difficult to scale
- Limited storage
- Limited labor
- No shipping discounts
You may have heard of dropshipping already. Nonetheless, dropshipping is an order fulfillment strategy that can practically take place without your involvement. Orders from your online store are forwarded from your website to your supplier. From there, your supplier will pick, pack, and ship the order to your customer on business’ behalf.
While it sounds attractive, dropshipping has its drawbacks. With dropshipping, the shipping process is completely in the hands of the manufacturer. This means that your customers might have to wait for a product. Depending on where your manufacturer is located, that could mean waiting for weeks.
- Only pay for what you sell
- Startup costs are lower
- The cost of inventory is lower
- Lower order fulfillment costs
- Easy to update inventory
- No control over shipping and handling
- Reliant on supplier stock and customer service
- Lower profit margins
- Shorter lead times
Third Party Logistics (3PL)
Third-party logistics or 3PL is a service you hire to manage the various functions of your supply chain. This can be anywhere from warehousing to packaging and shipping orders. Additionally, partnering with a 3PL yields many benefits that dropshipping and in-house fulfillment can’t.
This is because 3PLs offer a variety of insights and services that you can use to your advantage. Furthermore, 3PLs work with many sellers and typically operate a number of fulfillment centers. They also have the logistical expertise, capacity, and even the ability to negotiate bulk shipping rates from carriers.
Each 3PL is unique and has their own services that will vary depending on your needs.
- Leverage industry expertise
- Reduced operating costs
- Optimized shipping, handling and returns
- Improved data insights
- Ability to scale
- Not all 3PLs are good
- Relinquish some control over shipping, customer service, and returns
- The supply chain relies on third-party vendors
Choosing Your eCommerce Order Fulfillment Strategy
While there isn’t a one-size-fits-all strategy, there are a few solutions to consider for your online business.
The most common fulfillment method is outsourcing to a third-party logistics provider (3PL). You can also use self-fulfillment, or dropshipping. As previously discussed, each strategy has its own strengths and weaknesses.
Ultimately, choosing the strategy that offers many solutions and has the expertise would be the best decision. This way you’ll be able to handle any obstacles and accomplish any goals. So, the best way to do this is with a 3PL.
How Can A 3PL Fulfillment Partner Help
Third party logistics providers (3PLs) are able to streamline and automate business operations. This can include inventory management, managing packaging, shipping, delivery, and even returns.
As your business grows so should your sophistication. A great 3PL is able to meet delivery expectations for your customers. They also provide warehousing and inventory management. With a 3PL, you’re able to scale operations efficiently and fast.
Businesses often turn to 3PLs for better optimization as their business grows. Ultimately, sellers seek this expertise when tasks become unmanageable; and they no longer have the bandwidth or space to fulfill orders productively.
Final Tips For Successful eCommerce Order Fulfillment
Now that you know the fulfillment services options that are available, it’s time to decide which one is the best choice for your online business. You should keep in mind what you can afford to invest in. However, you should also be mindful of your business goals. If scaling and increasing your sales is one of them, finding a 3PL partner would be ideal.
A 3PL such as Print Bind Ship can handle everything from warehousing to shipping and distribution. Moreover, Print Bind Ship can even assist with marketing and other fulfillment solutions; which is great for those who want to scale their business.
Find out how we can help you and what solutions we can provide. Take advantage of our free consultations and contact us today.