Order fulfillment is one of the most basic and necessary ingredients to have a successful ecommerce business. But broken down, it is a process with a lot of complicated pieces that all have to work together flawlessly to keep the most important aspect of the industry satisfied - customer satisfaction.
In order to break down the order fulfillment process, it is important to understand how it’s defined. The basic definition of order fulfillment refers to the steps involved in receiving, processing, and delivering orders to the end customers. This process can differ in a number of ways based on your company’s order volume, if you are a B2B or B2C company, or if you choose to drop-ship your orders. This leads us into the next part of the post where we break down the different order fulfillment options.
Order Fulfillment Options
As mentioned above, the order fulfillment process can vary depending on your needs. So what are the options, exactly? The most common types of order fulfillment are merchant fulfillment, drop-shipping, and outsourcing fulfillment to a third party.
- Merchant Fulfillment is essentially in-house or self-fulfillment. This means that the seller is in charge of completing the entire process on their own from order to delivery. This is a great option for those just starting out or smaller companies. It allows for control over supply chain. However, as your company starts to grow, this becomes less ideal and considering a different solution may be necessary.
- Drop-shipping refers to the process by which the inventory is produced, stored, and shipped by the manufacturer. The manufacturer has control over the entire process, and items are shipped directly from their warehouse. This can be a good option for some, but considering most manufacturers are overseas, you may run into trouble with slower delivery times and higher shipping costs.
- Third Party Fulfillment is outsourcing all fulfillment aspects to an external partner. The external partner in this situation is responsible for managing all of the order fulfillment process. 3PL companies have logistics expertise that can be extremely beneficial to your company and have the capacity to ship larger order volumes. They also stay on track with current delivery and shipping trends which keeps customers happy and returning to your business.
The Order Fulfillment Process
Now that we have an understanding of what order fulfillment is and the different options that are available, we must learn how the process actually works. The order fulfillment process is comprised of 3 phases: receiving, processing, and delivery.
- The first phase, the receiving phase, begins when the inventory from the suppliers or manufacturers is received. There are 6 basic steps involved in this phase of the process:
- Count all inventory to ensure everything matches what has been ordered and nothing is missing
- Check all items for damage
- Input the data into your WMS to have the access to track location, counts, and sales numbers for each item
- Add SKU or barcode if the items aren’t already labeled properly
- If the item requires ready-to-ship kit packages, assemble them
- Store the items by SKUs and as close to the packing stations as possible to maximum efficiency.
- The next phase is the processing phase. This is where pick and pack of the items takes place. You should make sure you have integrated your fulfillment software with the shopping cart software to receive orders automatically as they are placed in order to begin processing them. Once you have received the order, it goes through the picking phase. After the items have been packed, they are moved to the packing area where they are checked for quality and packaged with appropriate materials. Packing slips and other necessary inserts are placed, and the package is sealed and moved to the shipping station.
- The package has reached the final phase of order fulfillment known as the delivery phase. Once the package arrives at the shipping station, it is weighed and the best delivery option is chosen. Generally, the delivery option has already been handled by the customer when the order was placed, but on occasion things may have to be altered. Once the package is ready to go, the shipping station will update the order status to make sure the customers can track their orders up to delivery.
Though it may seem like a simple concept, order fulfillment is a very vital piece of the puzzle for ecommerce companies. Now that you have a better understanding of how this process works and what options are available to you, you can make an informed decision to ensure that the customer gets the best experience possible.