Disparate systems can cause all sorts of problems in every aspect of business, including the eCommerce order fulfillment process. Although it’s not exactly the most glamorous part of running an eCommerce store, it’s one of the most important parts as it directly influences your bottom line.
- 43% of consumers won’t shop at the same store within a month when they experience poor delivery services
- 24% of consumers cancel their orders due to slow delivery
Without real-time visibility into your operations, your business will suffer. Order fulfillment turns into this slow and fragmented process, resulting in back orders and further delays. Don’t fret. Most of these challenges will start to go away once you start unifying these technologies. However, you must first understand how order fulfillment works before you can hope to streamline this operation.
What Is Order Fulfillment?
Order fulfillment is perhaps the most important link in the supply chain as it significantly influences customer satisfaction. Your customers’ orders set the supply chain in motion. It is then your job to fulfill each of their orders efficiently and effectively. When done right, you end up with happy customers. However, there’s more to it than fulfilling orders.
It’s quite a complicated process, encompassing everything from inventory storage, picking the orders for packing, packaging these products, and shipping them to customers, without forgetting to notify them along the way to update them on their orders statuses.
Key Steps in the eCommerce Order Fulfillment Process
As consumers, we don’t often think about the many steps involved between the moment we press the “Confirm Order” button on the merchant website and the moment when the ordered items end up at our doorstep. Successful e-Retailers put a lot of energy, thoughts and money into the entire process to ensure you receive what you ordered within the promised time.
Here are some of the major steps in an order fulfillment process:
- Notify. Send customers a notification, informing them that their order has been received and is being processed. If possible, estimate how long it’s going to take to deliver the goods at their doorstep.
- Allocate the orders. You might not think too much about this part of the fulfillment process if you only have one single place where you hold your inventory but, if like many mid-size to large retailers, you have several warehouses/fulfillment centers, someone or some process will need to decide what is/are the best location(s) to fulfill the order. The concept of the allocation process can be deceivingly simple to understand but implementing an efficient order allocation engine can make the difference between a smooth and efficient system and a lethal one which can potentially bring your entire operation to a halt. We could go on an on at describing the many parameters that can lead to fulfilling an order from one location or another but let us just say that among other things, you might want to consider and prioritize the time it takes to ship the goods from one of more of your locations to the customer doorstep, the shipping cost, the inventory level available at each of your locations, etc…
- Pick. Once you have allocated the order, you need to let your staff, at the fulfillment location, know that they need to pick the ordered merchandise. You might also need to let them know about what shipper you want to use and how quickly you need to ship it. If your system is well designed, the pickers will have a tool at their disposal which will allow them to keep you updated on the picking process. This will be extremely useful, if you want to keep your customer service agents as well as your customers informed on the order status
- Pack. Once the items of an order are picked, you will need to pack them before shipping them. Depending on what you ship and where you ship, you can use packing various packing materials such as cardboard boxes, plastic or paper bags, poly bags, bubble wrappers and mailers, etc. Last but not least in this step is making sure to have an automated way of printing the correct shipping label which should, beside the obvious customer name and address, should include other information such as, the order number, your company name, your return address, the customer PO# if applicable, any specific care instruction to be given to the shipper, etc.
- Settle. Charge your customer for the items that they’ve ordered and for freight before shipping the package. Depending or your business process and rules, you may still have, at that stage, to make sure that the order has been paid for. Indeed, often when a customer places an order on line, the order amount is reserved on the customer’s credit card account but not charged. The retailer at that moment has a certain amount of time to process/fulfill the order before settling/charging the customer credit card account with the same amount that had been quoted to the customer when placing his/her order online.
- Ship. Depending of the shipment method selected for the order, you might simply end up going to the local post office or UPS store when you’re ready to ship a package, or You may ask one of your carriers to pick up the order from your office or one of your fulfillment locations. Again, now would be a good time to notify once more your customer that the merchandise is on its way and you should provide tracking information.
- Return. Retailers do not necessarily think about that last point but, not all their orders will be accepted by their customers as is. For whatever reason, customers may decide to ship their orders back to a fulfillment provider or to you. Depending on the quality of the item, their reason for returning it, and your return policy, the product can either be restocked, sent back to the manufacturer, destroyed, etc. In all these cases, you will hopefully have a system which efficiently help you refund your customers or issue them a store credit.
Tips for Creating an Effective Fulfillment Strategy
Establish a sound fulfillment strategy that will make your business flourish. If you want to take your business to the next level, come up with a great plan to ensure the success of your operations.
Here are a few points you need to consider when creating a fulfillment strategy:
1. Set up a fulfillment center where you process orders.
Given that consumers value affordable as well as fast shipping options, you must do what you can to optimize your fulfillment operations based on where your target market resides. One thing that you may want to do is to spread inventory across multiple locations near common shipping destinations. This way, you can take advantage of ground shipping, which costs far less than air shipping.
You can also consider making the most of urban fulfillment centers. These let you ship orders quickly at an affordable cost to consumers from big cities.
2. Connect all your disparate systems.
Integrated solutions, such as our PortalMX platform, improve operations by connecting disparate systems. They let you oversee orders across various channels without having to worry about replicating data entries in various systems.
Connecting these disparate systems gives you access to real-time, accurate data. You can monitor inventory across all fulfillment centers. This makes it easier for you to avoid stock-outs as the system informs you when you need to purchase new inventory.
3. Think about offering cheap or free shipping promos or options.
Consumers love fast shipping services. That’s partly why two-day and same-day shipping services are on the rise. Apart from gaining customer satisfaction, you can keep transit times down by offering such promises.
eCommerce Order Fulfillment Models
There are many ways you can carry out the order fulfillment process, each of which depends on a number of factors—your products, order volume, and willingness to oversee the operation to name a few.
Find out the best order fulfillment method for your business.
In a self-fulfillment model, you perform every step of the fulfillment process by yourself. That means you won’t seek help from a dropshipper or even a third-party logistics provider.
- Gain 100% control of the entire process.
- Maintain relatively low costs.
- It’s time-consuming
- If you have a large volume of orders to fulfill, you MUST consider deploying a fully integrated fulfillment system
- It can become costly and/or complex to manage as your business expands if you have not well integrated your various systems.
Let someone else carry out the order fulfillment process for you. Hiring a fulfillment center can work wonders for your business if they have the knowledge and expertise to get everything done effectively and efficiently.
- You keep focusing on the areas of your business that will drive its expansion and you let the fulfillment/shippers professionals handle the fulfillment order process.
- Third-party fulfillment companies can make or break customer satisfaction
- Good and well tuned fulfillment centers can be expensive
In this fulfillment model, if it is applicable to your business and if you do not manufacture your sellable inventory items yourself, you may make a deal with your goods manufacturer to pick, pack and ship your customer orders directly to your customers.
- Avoid operational expenses such as warehousing.
- You may test the viability of new markets for your products.
- Focus on what you do best: running your business.
- You can’t offer custom products.
- You can’t oversee quality control, but you remain accountable for all your products.
- It’s difficult to gain a competitive edge over other companies.
If applicable to your environment, you may consider a hybrid approach which combines part or all of the fulfillment models described above. There is no one-way to implement an optimized and cost-efficient fulfillment system within a retail organization. Often, depending of type of products you sell, your geographical location, your industry segment, it may make sense to use a mix of the models described above.
To satisfy customers and meet their expectations, you must know the entire eCommerce order fulfillment process like the back of your hand. You need to implement a fulfillment model that fits your business. Regardless of the fulfillment model that you choose, trying to seamlessly integrate your various platforms will go a very long way to your business ability to expand smoothly while keeping your customer satisfaction at its peak and your customer service agents’ peace of mind at its best.
As your business continues to grow, you will have to adapt your fulfillment strategy over time. Just remember the simple concepts announced above and you will be on the right track to make the right decisions.