Best Practices for Optimizing Online Order Fulfillment
Online order fulfillment is more complicated than the name suggests. It encompasses much more than tossing a product into a box and dropping it in the mail.
An effective online order fulfillment strategy is critical to your success and sustainability as an eCommerce business. Without an efficient and well-organized order fulfillment process, your business may be doomed from the start.
In this post, we’ll take a look at some of the various elements that are collectively referred to as the online order fulfillment process, and how you can build out the best approach for your business.
What is Online Order Fulfillment?
Order fulfillment describes the process of receiving and delivering goods to your customers. This can include inventory management, order processing, shipping, and return intake, among other facets of your operation.
In simple terms, online order fulfillment is the process of making sure customers receive goods they purchase over the internet. Packing, labeling, and shipping are all part of the process. That said, fulfillment actually starts long before the sale, and continues after merchandise delivery.
Maintaining inventory falls under the umbrella of order fulfillment, as does handling returns and restocking. This makes sense; merchants can’t ship orders for items they don’t have in stock. And, when customers return merchandise, someone must log it back into the inventory to be sold again.
The online order fulfillment chain is actually more of a circle, and fulfillment managers must wear many hats.
Thanks to Amazon, Walmart, and other gigantic online retailers, today’s customers expect more than ever when it comes to these processes. According to one report, 53% of shoppers say that delivery speed is an important consideration when it comes to online orders. Another study shows that 38% of shoppers who’ve had a bad delivery experience will never shop with that retailer again.
Steps in the Online Order Fulfillment Process
There is no single fulfillment strategy that will work for every business. However, there are some steps that are common to nearly all processes:
This includes receiving, labeling, tracking, and otherwise maintaining stock, plus managing the inventory system. You have the choice of attempting to manage inventory in-house (using specialized software), or outsourcing to a 3rd party.
In-house fulfillment managers are also responsible for merchandise storage. You’ll need an appropriately sized warehouse that can keep goods dry, secure, and accessible. Whatever your tracking system, it should make items easy to find, and maintain a running tally of inventory.
This is when the merchandise ordered is located and retrieved (or “picked”) from the warehouse and moved to a packing station. Here it is inspected for quality control before being packaged (along with other items in the order, if appropriate) and shifted to a shipping station.
The shipping method could be determined by any combination of factors. For instance, package size or weight, customer requests for speedier or less expensive delivery, standardized methods, or specifics of the order (fresh food that must be shipped the next day, for example).
Order fulfillment software typically has the ability to print customized packing slips, receipts, shipping labels, and more. Most are designed to create shipping labels based on the requirements of major carriers such as FedEx, UPS, and USPS.
Handling returned goods completes the online order fulfillment circle, connecting the delivery process back to inventory management. Once an item is returned, it must be inspected to ensure no damage occurred in transit. Depending on the condition you either dispose of the item or added back into the available inventory, then update your inventory to reflect this.
Order Fulfillment Missteps Can Lead Directly to Chargebacks.
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Order Fulfillment: In-House or Outsource?
When it comes to online fulfillment, there are essentially three models used by eCommerce merchants: dropshipping, in-house fulfillment, or fulfillment through a third party.
Dropshipping: Pros and Cons
With drop-ship fulfillment, you don’t purchase inventory until after a customer places an order. After the sale, your send the order to the vendor or manufacturer, along with the customer’s name and address. This enables the vendor to ship directly to the consumer. While this can be a great fulfillment model, there are some downsides, as well:
|Requires little-to-no start-up capital.||Lower-than-average margins.|
|Means less day-to-day hassle for you.||Limited supply chain oversight/control.|
|Minimal overhead and warehouse space necessary.||Potential for unreliable vendors.|
|Virtually unlimited number and type of product offerings.||Greater number of players, which complicates customer service.|
|Easily scalable.||Increased risk of fraud, particularly with overseas vendors.|
In-House Fulfillment: Pros and Cons
We recommend looking for a software solution that can help optimize the order fulfillment process if you choose to keep management in-house. Today’s intuitive software can manage inventory levels, order processing, shipping, tracking, and much more.
|You retain control over every step of the process.||Much bigger up-front investment (software, packing materials, warehouse, etc.)|
|Ability to use custom, branded packaging (some providers offer this, as well)||Time- and work-intensive for internal teams.|
|Directly connected to the customer experience.||Requires logistics expertise.|
|Directly connected to the internal team.||Fewer resources are available to grow other facets of the business.|
Third-Party Fulfillment: Pros and Cons
Some companies elect to outsource their entire fulfillment process rather than handle any part in-house. Relying on a reputable third party to take over this part of the business frees up storage or warehouse space while allowing management more time to focus on the revenue-generating aspects of the operation.
|Reduces typical order fulfillment time.||Loss of direct control.|
|Offload the burden of staffing onto the provider.||Merchant is responsible for provider mistakes.|
|Improved scalability; expansion is easier, even into foreign countries.||Little, if any, ability to customize packaging.|
|Often leads to lower cost-per-order.||Cost-per-order savings may be eclipsed by provider add-on fees.|
|Logistics expertise.||Longer-term cost of outsourcing (as opposed to investing in your own system).|
3 Tips to Improve the Order Fulfillment Process
Making sure the order fulfillment process is tight and transparent should be a priority of every online merchant. With that in mind, here are three simple tips that can help, regardless of which fulfillment option you choose:
Keep track of keeping track
If your business gets busy at certain times of the year, it’s easy to ignore projects that aren’t screaming for attention. Set aside some time to do a thorough inspection of your inventory space, delving into the corners, top-shelves, and other places where items are easily overlooked. Take stock of packing materials, including labels and other printing supplies. Make a detailed list of what needs to be restocked, as well as slow-selling items that could be marked down.
Increase your follow-up
You can conduct research, but the only way to be sure you have a happy customer is to ask them what they think. Follow up orders with a quick email and be certain the customer is 100% satisfied. Try to resolve any issues, right then and there. Not only will this build a relationship with your audience, but it’s also a good way to prevent chargebacks.
Update your product information
It may not be the most fun part of the job, but adding weights, dimensions, and details to all of your product descriptions allow shoppers to order more confidently. It also helps streamline your storage, packing, and shipping. Having numbers on hand for postage costs, inventory requirements, and box or envelope sizing will speed up your fulfillment process.
Pick the Right Fulfillment Partner
In the end, one of the most important considerations of outsourcing to a fulfillment center is making sure you have the right fulfillment partner. The following is a list of reputable online order fulfillment providers you might want to consider. The list is representative but in no way exhaustive.
|ShipBob offers same-day delivery for orders placed in certain major US cities (LA, NYC, San Francisco, Dallas, & Chicago), as well as 2-day shipping within the continental US. The company’s free software helps manage inventory and orders.|
|ShipMonk is known for transparency when it comes to shipping rates, discounts, and tracking. The company’s warehouse automation technology boasts 99.9% picking accuracy, and its software integrates with other solutions such as PayPal, eBay, Shopify, etc.|
|eFulfillment Service delivers flexible pricing, discounted shipping, and dependable customer support, with no order minimums or long-term contracts. The company also offers cross-docking, allowing orders received at the warehouse to be shipped without being stored.|
|Red Stag Fulfillment specializes in shipments over 5 pounds and offers a 100% guarantee for their 48-hour dock-to-stock time, order and inventory accuracy, and more. Long-term contracts are not required, and there are no order minimums.|
|Rakuten Super Logistics integrates with all leading eCommerce platforms and shopping carts. The company guarantees 100% order accuracy and a 100% order turnaround by the next business day. They can also provide two-day ground shipping to 98% of the US.|
|Fulfillify has a warehouse network that allows them to reach 98.6% of the US population with one- to two-day ground shipping. The company can also handle kitting/custom order assemblies and does not require prospective clients to sign long-term agreements.|
|IDS Fulfillment offers an efficient and cost-effective supply chain designed for the speedy delivery and lower shipping costs. The company provides flexible, scalable solutions that allow merchants to outsource any part or all of the fulfillment process.|
|FedEx Fulfillment is an easy-to-use integrated supply chain system backed by FedEx’s experience, logistics expertise, and established transportation networks. The company can fulfill customer orders in more than 200 countries and territories.|
|Fulfillment by Amazon (FBA) gives you access to Amazon’s massive network of 170 fulfillment centers and proven logistical capabilities. Using FBA also makes merchant’s products Prime-eligible, meaning Amazon Prime members receive free two-day shipping.|
Order Fulfillment, Chargebacks, & More
Handled correctly, a good fulfillment experience can solidify customers’ loyalties and bring them back in the future. However, a bad fulfillment experience may mean losing a customer for life. It can also trigger a customer dispute, which means even more lost revenue.
It’s possible to prevent and dispute chargebacks associated with order fulfillment and delivery. That said, it can will be a complicated, time-consuming process, with no guarantee of success. Chargebacks911® has a wealth of experience-based knowledge and expertise in providing cost-effective prevention and risk mitigation strategies. Contact us today to learn more.