- Author By Miva |
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Ecommerce fulfillment is not just about getting orders into the hands of customers—it involves meeting customer expectations and providing an accurate and efficient delivery experience. Studies show that 53 percent of shoppers won’t purchase an item online if they don’t know when it will arrive. A strong fulfillment process is key to staying relevant, competitive, and profitable in the current ecommerce climate.
With customer loyalty on the line, you need to make sure your fulfillment strategy is dialed in. In this article, we discuss what you need to know about ecommerce fulfillment and provide strategies for you to accelerate your operations and meet customer demand.
What is Ecommerce Fulfillment?
Ecommerce fulfillment includes the end-to-end procedures, workflows, and systems that allow businesses get products to customers. As an online seller, you are responsible for managing your inventory, packing the right products, and shipping to your customers in a timely manner.
What Are Ecommerce Fulfillment Services?
Ecommerce fulfillment services encompass the processes and logistics involved in each stage of the fulfillment journey. This can refer to services that are handled in-house by a business or outsourced to a third-party provider. Some examples of ecommerce fulfillment services include:
Order management refers to the back-end system of fulfilling online orders. Once an order is submitted on a website, it needs to be processed, entered the fulfillment cycle, and routed for shipping.
Order fulfillment is the end-to-end journey of delivering a product to a customer. The fulfillment process includes picking, packing, shipping, and delivering.
Before fulfilling orders, sellers need to have inventory—whether it’s held on hand or outsourced to another provider for management. Inventory management involves storing, organizing, recording, restocking, and forecasting.
Ecommerce shipping refers to the different delivery methods that sellers use to ship products. Shipping methods will depend on the types of products sold, the distance between fulfillment centers and customers, and the technology required to streamline backend processes.
Also known as inventory storage, warehousing is the organization and storage of physical products before they are fulfilled for the customer.
Drop shipping is a fulfillment model wherein a business doesn’t physically hold the products that they sell—instead, they relay any orders to the drop shipper, who ships directly to the purchaser.
Returns management refers to the process for handling customer returns, facilitating product transport, and entering returns back into inventory.
Freight shipping involves the physical transporting of goods, merchandise, and commodities by land, sea, or air.
This refers to the infrastructure, systems, and processes required to fulfill recurring orders at the frequency chosen by the purchaser.
How Does Ecommerce Fulfillment Work?
Ecommerce fulfillment is about more than just shipping products. The process involves multiple moving parts and workflows:
- Inventory: Inventory is ordered and delivered to the fulfillment center.
- Storage: The storage provider receives, records, organizes, and manages the stored products.
- Packing and shipping: After an order is placed, the order is picked from inventory and packed, labeled, transported, and delivered to the purchaser.
- Returns processing: If a return is made, the product is shipped back to the fulfiller and must be reintegrated into the inventory.
The most successful businesses have a fulfillment strategy that allows them to seamlessly move products, introduce speed and agility when needed, and minimize expenses and risks. In the next sections, we’ll take a deep dive into some best practices for optimizing your fulfillment process.
Step 1: Plan Out Your Fulfillment Strategy
Here’s the truth: shoppers will turn to your competitors if they can’t get the speed and delivery that they want from you. Your fulfillment process is directly related to your ability to create trust with customers. A well-executed fulfillment strategy allows you to meet customer expectations, grow your business, and achieve success.
To have a smooth and accurate fulfillment process, you’ll need to take time to secure the infrastructure, processes, and teams you need. Consider aspects like the locations of your fulfillment centers, shipping zones, shipping integrations with your ecommerce platform, and your customer-facing shipping and delivery options to ensure timely fulfillment of your products.
You’ll also want to consider your fulfillment model. Online sellers commonly use one of three different ecommerce order fulfillment options: in-house fulfillment, drop-shipping, and third-party logistics. The best fulfillment model will depend on the size of your business, order volume, proximity to customers, and your overall online demand.
What is an Ecommerce Fulfillment Center?
Ecommerce fulfillment centers are the facilities where orders are shipped. Many online merchants outsource their warehousing and shipping to third-party fulfillment centers. These centers relieve sellers of the necessary physical space and operational capability required to store products and manage inventory.
Step 2: Step Make Considerations for Peak Time
Efforts to limit the spread of COVID-19 have accelerated demand for online shopping and increased competition to new levels. To thrive, you need a fulfillment process that can be counted on both today and tomorrow and provide the agility to ramp up at any given time.
Your website needs to integrate seamlessly with your fulfillment systems and empower you to challenge disruption, meet customer needs, and automate time-consuming aspects. During this period of higher demand, you won’t have the time and resources to be bogged down by issues like rising overhead costs and monolithic systems. A strong ecommerce ecosystem allows you to focus on what matters: getting products to customers and turning purchasers into lifelong customers.
Step 3: Practice Inventory Management and Reduce Fulfillment Costs
Inventory management is the process of monitoring your goods on hand before they are fulfilled to customers. Since it involves ordering, restocking, and storing products, inventory is one of the biggest costs for online merchants—the average cost to fulfill an order is 70 percent of the average order value. Having the right amount of inventory on hand helps you to balance costs with opportunities to generate sales on your website.
To cut costs and improve your bottom line, you’ll want to practice effective inventory management. Consider optimizing your supply chain, measuring customer demand, reducing excess inventory, and offering subscriptions to automate the reordering process and save time and money. This increased efficiency helps to organize your fulfillment process and make it easier to find and package goods for your customers.
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Step 4: Speed Up Shipping and Elevate Your Brand
Ecommerce moves fast, so your fulfillment strategy needs to be able to keep up pace. An organized and well-structured fulfillment workflow enables you to get products quickly to customers and reduce your lead time.
Depending on your order volume, you may need to expand your fulfillment centers to reach customers faster or partner with a third-party fulfillment provider to expand your shipping and delivery options. You could also consider a click and collect strategy that relies on retail locations for pickup and fast fulfillment. This could lower purchasing friction, drive sales and profit, and create more convenience for your customers.
Shipping speed is only part of the fulfillment experience. You’ll also want to take advantage of opportunities to enhance your customer service. Clear communication, real-time updates, convenient return policies, and branded packaging materials are effective ways to communicate your brand offerings and elevate the experience.
Bonus: Consider Fulfillment Needs by Your Industry
The best fulfillment strategy will also depend on the market in which you’re selling. Here are considerations for some of the major ecommerce industries.
Fashion and Apparel
If you sell clothing, you’ll want to make sure your warehousing and inventory processes are streamlined, especially for handling a wide range of styles, sizes, colors, and clothing types. Since the sizing and fit of apparel can vary, you’ll also need to be prepared for a high return rate from customers. Make sure your fulfillment process is able to handle returns effectively to boost your customer service and build loyalty.
With hard goods like furniture, toys, and appliances, you’ll want to carefully consider the size and weight of your product to determine the best ways to store, pack, and ship them. You’ll also need to take into account seasonality so you can accurately predict inventory and make sure your fulfillment centers can accommodate.
Perishables and Food
When selling perishables and food items, you need to take shelf life into account. This means making sure products are properly packaged and safely shipped to customers in a timely manner. Make sure you have a solid fulfillment strategy and reliable shipping partner so you can communicate delivery times with accuracy and transparency.
For those that sell temperature-controlled goods, it’s critical to make sure products remain in good condition upon delivery to the customer. This necessity impacts every part of the fulfillment process, from transporting and storing to packaging and shipping. Sellers also need to take into account shipping routes, delivery timing, and climate hazards.
Creating the Best Ecommerce Fulfillment Experience
While a website is essential for growing your business, your ordering, delivery, and post-purchase experiences are what leads shoppers to revisit your business for future purchases. Failure to have an effective fulfillment strategy can cause dissatisfaction among shoppers and hurt your business in the long run. An organized, accurate, and efficient order fulfillment process allows you to deliver on your promise, meet the expectations of today’s shoppers, and secure a long-term customer base.
Is your online shopping experience up to par? Give your store a quick checkup to see how it measures up and discover ways to improve.