Order fulfillment is one of the most critical aspects of e-commerce. When a customer places an order, businesses need to ensure their order fulfillment process correctly files the order and ships it on time to the customer.
However, for small businesses that are just starting out in e-commerce, fulfillment can be a daunting task. But don’t worry, we’re here to help! In this blog post, we’ll explain what order fulfillment is and how you can make sure your business delivers on time every time. So read on to learn more!
What Is Order Fulfillment?
For most e-commerce businesses looking to improve their services, it is essential to know what is order fulfillment and why it is vital to run the business successfully. Order fulfillment is the process of receiving and processing customer orders. It involves everything from receiving and stocking inventory to packing and shipping orders.
The typical order fulfillment process steps start with a customer ordering an item from an e-commerce store and ending with them receiving it without any issues. However, order fulfillment manages the process if the customer wants to return an item.
Order fulfillment is a vital part of the eCommerce fulfillment process, and it’s essential to ensure that it runs smoothly to keep customers happy. There are a few things to keep in mind when managing order fulfillment.
First, you’ll need an excellent system for tracking inventory and keeping track of customer orders. Second, you’ll need to ensure your shipping process is efficient and accurate. Finally, it’s important to provide excellent customer service in case of any issues with an order.
Why Is It Important?
An efficient and effective order fulfillment process can help increase sales, improve customer satisfaction, and reduce inventory costs. An efficient order fulfillment system is important for several reasons.
First, an efficient order fulfillment can help to increase sales. Businesses make money by selling their products or goods to other businesses or directly to customers. Whether you’re a B2B or D2C company, the sales process is incomplete until the customer receives the product. Order fulfillment is how businesses can complete sales.
Second, it can help to improve customer experience. Customers who receive their orders promptly and as expected are more likely to be satisfied with their purchase and to continue doing business with the company.
Finally, an effective order fulfillment system can help reduce inventory costs. By ensuring that orders are filled accurately and promptly, companies can avoid the need to keep excess inventory on hand, which can save money.
The 6 Steps Of Order Fulfillment
The process of fulfilling an order often takes place in distribution centers. Usually, it involves receiving and processing orders, managing inventory and supply chain, quality control, delivery, and providing support for customers who want to make an exchange or return a purchased item.
Below is a detailed explanation of the six steps involved in order fulfillment.
Receiving
This is the first step in the fulfillment process. In the receiving stage, your company will physically receive the merchandise that your customers have ordered. This is a critical step in the process because it is your company’s first physical possession of the product.
The items may come from a third party logistics company, company warehouse, or another company department. Once you have received the merchandise, checking that everything is accurate is important. This includes comparing the items to the packing slip and invoices to ensure you received everything that was ordered and that it is all in good condition.
It is also essential to inspect the merchandise for any damage that may have occurred during shipping. If there is any damage, you will need to note it so that you can contact the supplier or the customer to arrange a replacement.
Storing Inventory/Inventory Management
Inventory management is one of the most critical steps in the order fulfillment process. After all, if you don’t have the products your customers want in stock, you can’t fulfill their orders!
An effective inventory management system will help you keep track of what products you have in stock, where they are located, and how many of each product you have on hand. This information is critical to quickly and efficiently fulfilling customer orders.
Additionally, ensure that products are organized in the e-commerce warehouse to reduce the time spent picking them up. The warehouse should have an optimized layout to increase fulfillment accuracy and speed. For instance, products with a high turnover rate should be kept close to the fulfillment section, while the lesser products can be kept behind.
There are a few different approaches to inventory management. “Just in time” inventory management, or JIT, aims to maintain only enough inventory on hand to meet current customer demand. This minimizes the amount of money tied up in inventory and reduces the chance of outdated products.
Order Processing
Once a customer places an order, you can start making preparations to convert their orders into a format that can be used by warehouse staff to pick, pack and ship the products. You can automate the process by adopting an order management system to work with your website’s shopping cart and automatically create a packing slip containing product details and any specifications the customer chooses.
The pick list usually includes information such as the quantity of each item that needs to be picked and any special instructions for picking the items (e.g., if they are fragile or need to be picked in a specific order). Once the pick list is created, it needs to be entered into the warehouse management system.
The system will track the order’s progress through the fulfillment process and update the customer and warehouse staff. The next step is for the items on the pick list to be picked from the shelves and packed into boxes or bags ready for shipping. This is usually done by a team of workers in the warehouse who use scanners to keep track of which items have been picked
Item Picking And Packing
Most businesses that sell physical products need to invest in some form of item picking and packing solution to fulfill orders efficiently. You can employ a picking team or use automated warehouse robots if you have a large inventory to pick items from the warehouse. Typically, the information on a packing slip may include sizes, product colors, number of units, and product location in the warehouse.
There are a few different ways to approach packing, and the right solution for your business will depend on factors like the size and type of your inventory, the number of orders you fulfill daily, and your budget. An automated storage and retrieval system (AS/RS) is popular. These systems can be very expensive to purchase and maintain, but they can be very efficient for businesses with extensive inventories and high-volume fulfillment operations. Another option is to use a conveyor system with pick-to-light technology.
This can be a more affordable option for small businesses and still be quite efficient if set up correctly. Finally, you could also do things manually with a simple shelving system.
Delivery of Products
The delivery of products is the final step in the order fulfillment. This is when the products are delivered to the customer’s doorstep. If you used a third party in creating your orders, they may ship it from their location or send it to yours to deliver the product.
Different transportation methods, such as trucks, vans, cars, trains, and drones, can do last-mile delivery. There are many factors to consider when choosing a suitable transportation method for last-mile delivery, such as cost, speed, distance, and weight of the products.
Customer satisfaction is the most critical factor when delivering products. The last-mile delivery must be done carefully to avoid any damages or delays. So, check the weight of the order to ensure the correct amount was recorded for the carrier. Also, review the carrier packaging rules to avoid any potential delay.
Many companies offer last-mile delivery services, each with advantages and disadvantages. It is essential to choose the right company for your needs.
Managing Returns and Refunds
Returns and refunds are a necessary part of any eCommerce business. Managing them effectively can help keep customers happy and reduce the time and money you spend on processing returns. It can also determine whether or not a customer will patronize you again. There are a few key things to remember when managing returns and refunds.
Make sure your return policy is clear and easy to understand. Customers should be able to find your return policy easily on your website or in your store. If customers are unsatisfied with their purchase, they have a right to request a refund. So ensure all orders you send out have a return label for customers to use when returning the package.
When you receive a returned package, ensure the product satisfies your return policy. Then, record the item and process the customer’s refund or exchange.
What Are The Types Of Order Fulfillment?
There are different ways to fulfill an order depending on your business’s capacity, the number of orders, customers’ preferences, and cost. Here, we take a look at the four types of order fulfillment.
In-house
Running a business is hard enough, but it can be overwhelming when you factor in logistics hassle. That’s where the in-house order fulfillment process comes in. in-house fulfillment process is when you make use of your employees to control the entire fulfillment process. In this model, the employees handle all process steps, including storing the product at the company’s warehouse, and sometimes use fulfillment software to make it easier.
This model is an excellent option for companies seeking end-to-end control over the entire process. Businesses with a small number of orders also use this model as a cost-effective option, and as they grow, they switch to the third-party or outsourced model.
Third-Party Fulfillment/ Outsourced
In this type of order fulfillment, a business outsources the storage and shipping of its products to a third-party provider. 3PL fulfillment can be an excellent solution for businesses that don’t have the space or resources to fulfill orders themselves.
In this model, the 3PL or outsourcing company employee manages the fulfillment process, from handling inventory to delivering customer packages. Third-party fulfillment can also be a cost-effective way to free up your time so that you can focus on other areas of your business.
Dropshipping
Dropshipping is similar to using a third-party logistics company or outsourcing unless there’s no inventory management. In this model, the retailer doesn’t keep the items to be sold in stock. Instead, when an item sells, the retailer buys it from a third-party supplier.
The third-party supplier can be the manufacturer or even a company that buys from the manufacturer and sell to the drop shippers.
There are a few important things to remember regarding dropshipping order fulfillment.
First, you’ll need to ensure your orders are shipped promptly and accurately. Second, you’ll want to track your inventory levels carefully to avoid overselling or stockouts. Third, consider using a fulfillment service to help with shipping and inventory management.
Finally, always be prepared to offer excellent customer service if there are any problems with an order. Dropshipping is a great way to start an online business with little up-front investment. But as your business grows, you’ll need to consider how to fulfill orders.
Hybrid Fulfillment
One solution that has gained traction in recent years is hybrid order fulfillment. This approach combines the best elements of traditional brick-and-mortar retail and online shopping, allowing businesses to offer their customers the best of both worlds.
With a hybrid order fulfillment, businesses can take advantage of local inventory and same-day delivery while still offering the low prices and broad selection that customers have come to expect from online retailers. Hybrid fulfillment also allows businesses to manage their stock levels better, as they can utilize inventory from both their physical and online stores to fulfill orders.
Challenges Businesses Face With Order Fulfillment Processes
While order fulfillment is an integral aspect of running an eCommerce business and ensuring customers are satisfied, it comes with its challenges, from choosing the type to use to tracking the delivery and planning logistics.
Explained below are the problems or challenges faced during the fulfillment process.
Capacity
The most common challenge is capacity. Capacity refers to the ability of a business to store inventory, fulfill orders, and ship products promptly.
Many businesses struggle with managing inventory levels and ensuring enough products to fulfill all customer orders. This can often lead to issues with backorders and delayed shipments.
Choosing Which Type Of Fulfillment To Use
The challenge businesses face with order fulfillment processes is that there are many different options to choose from, and it can be hard to know which is best for their needs. There are three main types of fulfillment: in-house, third-party, and drop shipping.
Before making a choice, it’s essential to understand each type of fulfillment and how it fits your business goals, targets, and size. For instance, in-house fulfillment might be your best option if you’re just starting because it’s more cost-effective than other types. If you have to deal with a large number of orders daily, then consider using the third-party or outsourcing fulfillment option.
Delivery Tracking
Visibility during order fulfillment is essential to know the exact location of a package at all times. Businesses that rely on delivery services to send out their products face a unique challenge when tracking orders.
Unlike other businesses that can use barcodes or other identification methods to track inventory, deliveries must be tracked by delivery date and time. This creates a challenge for businesses that need to know where their products are at all times, as well as for customers who may need to track their orders.
Managing Customers And Returns
Return and customer management are critical aspects of every business. Satisfying a customer’s needs is a top priority; sometimes, they may request a return on purchased items. Many eCommerce businesses face the challenge of managing customers and returns regarding ordering fulfillment processes.
Therefore, it is essential to understand your return policy clearly. This will allow you to communicate with your customers and set expectations clearly. It is also essential to have a system in place for tracking returns so that you can keep track of which products are being returned most often
Inventory Management
One of the biggest challenges with inventory management is knowing what products are in stock and where they are located. This can be difficult to track, especially if products move around the warehouse frequently.
Another challenge is keeping accurate records of inventory levels. This includes knowing how much of each product is on hand and what has been sold or shipped. If there are inaccuracies in these records, it can cause problems when trying to fulfill orders.
Logistics Planning
When fulfilling an order, most businesses face logistics planning challenges. There are many factors to consider, such as product availability, shipping costs, and delivery timeframes.
To complicate matters further, customer expectations constantly evolve, making keeping up with the latest trends challenging. As a result, businesses must carefully plan and execute their logistics strategies to stay competitive, which poses a considerable challenge in most cases.
Tips For A Successful Order Fulfillment Process
Automate
An automated order fulfillment can help you streamline your operations and improve your bottom line. It can automate the process of tracking orders, managing inventory, and processing payments.
Additionally, an automated system can provide real-time visibility into your operations, so you can make informed decisions about improving your process.
Use Tech Solutions To Track Order Fulfillment
Technology can be a helpful tool in tracking order fulfillment and ensuring that all orders are fulfilled correctly. Several software programs can help businesses keep track of their inventory levels, orders, and shipping information.
Using technology to track the order fulfillment process can help businesses save time and money by reducing the need for manual data entry and allowing businesses to automate their shipping processes.
Create A Strategy That Accounts For The Unexpected
There’s no such thing as a perfect order fulfillment strategy. But there are ways to create a strategy that accounts for the unexpected and sets your business up for success.
The first step is to understand your customer. What do they want? What do they need? When do they need it? Where are they located? Answering these questions will help you determine the best way to fulfill their orders.
Next, you need to understand your product. What are its dimensions? How much does it weigh? How fragile is it? Knowing these details will help you choose a suitable shipping method and packaging materials. Finally, you need to stay organized and plan for when things go wrong. That way, you can quickly adapt and keep your customers happy.
Metrics for Measuring Order Fulfillment Performance
Several metrics are used to measure the success level or performance of your order fulfillment. They’re explained below.
Order cycle time
Order cycle time refers to the time, on average, it takes for a customer to receive an item after ordering it. This time often includes the delivery time. This information is necessary for improving fulfillment speed.
Order accuracy rate
When an ordered item is delivered timely, without damage, and to the right customer, the order can be said to be accurate. Knowing the accuracy rate can help in addressing key performance areas.
Order fill rate
Order fill rate is used to measure the total percentage of orders that have been filled. The metrics from order fill rate can give businesses an insight into product demands, operational efficiency, and relationships with suppliers. It can also be used to identify areas for improvement in packing time, unloading stocks, and product-buying decisions
Return rate
A high return rate often leads to a loss in revenue and cost. The metrics can be used to identify where the problem in the fulfillment process lies. Did the package arrive in time? Is anything broken? Or the package has an issue. Once the problem is identified, you can quickly find a solution.
Order fulfillment visibility with Detrack
Order fulfillment is completing an order for a product or service. This includes receiving and processing the order, picking and packing the items, shipping them out, and dealing with any returns or complaints.
Many different types of order fulfillment processes are available, depending on your needs. You can choose to have your products shipped from a warehouse near you or use a drop-shipping service to take care of all the shipping for you.
However, visibility is often an issue regardless of the type of order fulfillment you choose. Having proper visibility during order fulfillment is essential in building trust between your customer and improving your overall service. This is where Detrack comes in!
Our delivery management software can help automate your entire fulfillment process, allowing you to track a package until it gets to the customer. That way, you gain visibility, deliver packages on time, and offer top-notch service. Try Detrack Today and solve the visibility problem while fulfilling an order.
