5月 31, 2024

What is Ecommerce Order Fulfillment and Why Should Companies Care About it?

Introduction

It’s the holiday season.

You’re with your family, enjoying the holidays, when you suddenly remember you’ve to buy them gifts.

You quickly reach out to your smartphone and browse through the shopping apps to buy gifts. Luckily, the ecommerce app delivers gifts in a few hours. You add the products to the cart, pay for them, and complete the checkout process. You have all the gifts delivered to your home within a few hours.

Sounds familiar, isn’t it?

Most of us do that. Ecommerce companies are also accustomed to delivering products at the last minute during the holiday season.

And it’s not just the holiday season. Ecommerce companies understand the need for speedy delivery and always seem prepared. After all, 88% of customers are willing to pay extra for same-day delivery.

But have you ever wondered how these companies fulfill orders within a short turnaround time? It is a complex process where warehouses have to pick, pack, and ship the orders quickly.

The answer lies in effective ecommerce order fulfillment and shipping.

In this blog, we’ll discuss:

What is ecommerce order fulfillment?
Components of ecommerce order fulfillment
How does ecommerce order fulfillment work?
Challenges in ecommerce order fulfillment and shipping
How to choose the right ecommerce order fulfillment and shipping solution?
How can Marmeto streamline ecommerce order fulfillment and shipping?

It will help you understand how the order fulfillment and shipping process works and how a good order fulfillment and shipping solution can streamline these processes.

What is ecommerce order fulfillment?

Ecommerce order fulfillment is the process of storing, picking, packing, and shipping products to customers.

An effective order fulfillment process has many benefits:

It ensures that the customers receive their orders on time without incurring high shipping costs.
It manages orders efficiently, regardless of future seasonal demands and business scalability.
Well-established order fulfillment processes enable companies to have exclusive shipping agreements with carriers. This helps them reduce shipping costs and ensure timely delivery.

Although a well-oiled order fulfillment process ensures timely delivery, companies must invest in a good ecommerce order fulfillment solution to automate the process, improve order accuracy, and enhance customer satisfaction. It eliminates all the hassles involved in processing orders manually.

Let’s understand how you can combine strategies and technology to improve the order fulfillment process.

Components of ecommerce order fulfillment

There are plenty of components involved in ensuring successful order fulfillment and shipping. Let’s explore some of the main components essential for this process.

Order fulfillment and management

An order fulfillment and management system will help the warehouse workers pick, pack, and ship the products securely to the customers. Additionally, it will monitor stock levels, order status, and other activities to ensure successful and accurate order fulfillment. Given the all-encompassing features of order fulfillment and management systems, these systems can help companies earn more revenue or stagnate by providing timely delivery to customers.

Inventory management

Inventory management helps companies maintain optimal stock levels. It provides real-time insights that help companies track inventory levels, forecast demand based on demand patterns and sales trends, and automatically reorder products to prevent stockouts. Effective inventory management also allows companies to retain customers and optimize product stocking and storage.

Shipping management

Shipping management helps companies choose the right shipping carriers, calculate shipping rates automatically, schedule shipments, and determine routes to deliver products quickly. The carriers and shipping methods are selected based on factors like product type, customer location, and cost. This ensures timely delivery and enhances customer experience.

Warehouse management

All the products are safely stored in the warehouse. Hence, companies must use warehouse management to manage the warehouse and the inventory efficiently. A good warehouse management system will streamline the order fulfillment process, reduce the picking and packing time, and ensure accuracy in order fulfillment. It should be efficient enough to manage large order volumes at all times.

Pick-and-pack management

The pick-and-pack management system helps warehouse workers pick or retrieve products from the inventory and pack them using the right packaging material before shipping them. It streamlines the process, minimizes the processing time, and eliminates errors in picking and packing the order. An efficient pick-and-pack management system plays a pivotal role in enhancing customer satisfaction.

Returns management

The returns management system processes and manages the product returned by the customer. It automates the return or refund updates and shares real-time return tracking information with the customer. It ensures that the customer receives a refund or replacement, depending on their choice. An efficient returns management system can improve customer satisfaction and eliminate all the hassles of accepting the returned product.

How does ecommerce order fulfillment work?

Here is the typical workflow of how an ecommerce company fulfills orders - right from when a customer orders to when they are shipped.

Receiving orders

The order fulfillment process starts when the fulfillment center receives customer order details. Since every product has a unique Store-Keeping Unit (SKU) number and a specific storage location, you can check the inventory level to ensure enough stock to fulfill the orders. If you outsource orders to an intermediary or third-party service, send the order details to the provider.

Processing orders

Once you have an update on the inventory level, it’s time to process the orders. This step involves picking or retrieving products from the inventory, packing them, and shipping them. The workers at the warehouse include details such as the quantity of the products, the shipping label, and other specific information like instructions and packaging materials used before shipping.

Shipping orders

Retail giants like Amazon have their own logistics network to ship products, while small ecommerce companies rely on shipping carriers or local post offices.

Remember to check the shipping costs and work with carriers willing to reduce the costs if you sell in bulk. This is important because 47% of customers would refrain from buying products from a brand if additional shipping costs were involved.

An exclusive agreement with a shipping carrier can reduce shipping costs and encourage customers to buy from your brand again.

Besides this, provide real-time status about the package to ensure transparency in the delivery process.

Returns management

A customer could return the product to the warehouse, where the product will be examined for malfunctions or damages. Depending on the customer's request and return policies, you can refund or replace the product.

Challenges in ecommerce order fulfillment and shipping

While the workflow for fulfilling and shipping orders may seem straightforward, you could face the following difficulties.

Supply chain issues

companies have been facing supply chain problems since the pandemic. Political instability and labor problems have worsened the situation, affecting the global supply chain and leading to shipping delays. Although the situation may have improved right now, companies must be prepared for such situations and find solutions like localizing the inventory to deliver products on time.

Seasonal demands

You may have had your marketing strategies right when you promoted massive discounts to customers during the holiday season. However, the whole effort could fail if you don’t fulfill orders on time. Take the example of Flipkart. The ecommerce giant lost customers to Amazon and Snapdeal in 2014 because it could not fulfill orders during the Big Billion Day Sale. They had to apologize to customers because all the products got sold before customers could buy them. Preparing for seasonal demand and optimizing the order fulfillment process is the basic ask from ecommerce brands.

Lack of technology

Many companies still rely on obsolete technologies that are not designed for scalability or speed in processing orders. Modern technologies are essential to automating processes, making data-driven business decisions, and attaining real-time visibility of inventory levels. Without technology, ecommerce companies will face challenges in fulfilling orders.

How to choose the right ecommerce order fulfillment and shipping solution?

To overcome the above challenges and fulfill orders smoothly, you need a robust ecommerce order management tool. Here are some factors to consider while choosing the right solution.

Integrations

Choose a solution that can integrate seamlessly with your service providers, supply chain, warehouses, accounting, and customer service. It must also offer APIs to connect with third-party applications. Integration with proprietary and third-party applications will give you real-time insights into the inventory levels, forecast demand, and enable you to fulfill orders smoothly. It is also helpful in tracking orders in real time and updating customers about the status.

Automation

Choose an order management system that automates tasks like calculating shipping costs, updating customers about orders, and fulfilling requests. This will help you save efforts on fulfilling orders, accelerate decision-making, and reduce errors.

Supports international orders and payments

Today, over 52% of online shoppers prefer shopping internationally. Hence, if you want to expand your business to different countries, look for an order management system that supports international orders and payments. This will help you easily accept cross-border payments and grow your business to the next level.

Shipping

Ensure your order management system handles shipping, giving you control over shipping and tracking deliveries. The system should manage scheduling, quotes, and routes to provide a seamless delivery experience to customers.

Reporting and forecasting

The order management system you choose must offer reporting and forecasting capabilities. While the forecasting feature will help you predict the stock levels and maintain the inventory to avoid overstocking or stockouts, the reporting capabilities will provide you with real-time insights on order fulfillment and shipping. These insights will help you identify the areas of improvement and build strategies to make the process more efficient.

If you’re looking for a specific solution, consider using Shopify’s centralized order management solution. It will help you manage and monitor inventory across various locations, use fulfillment and shipping methods that work for you, and manage returns and refunds efficiently. From custom automation to granular reporting and analytics, Shopify’s centralized order management solution offers all the capabilities necessary to improve order fulfillment and customer satisfaction.

How can Marmeto streamline ecommerce order fulfillment and shipping?

By now, you know how order fulfillment and shipping work in ecommerce and the features to look for while choosing a good order management solution.

However, you must work with a trustworthy partner who will understand your business needs and align the solutions with them through customization. For example, if you’re using Shopify’s ecommerce platform and want a specific functionality to streamline order fulfillment, the partner should have the capability and knowledge to customize it.

Marmeto does precisely that! Depending on your business needs, our team of experts can customize Shopify’s functionalities or integrate shipping solutions with your ecommerce platform.

We’ve helped 1000+ ecommerce clients across 41 countries develop and grow their ecommerce business successfully with our knowledge and experience.

Wrap-up

The ecommerce industry is booming. By 2027, the industry will be worth $7.9 trillion and 23% of worldwide retail purchases will happen online. This has led to more competition among ecommerce companies. As if that wasn’t enough, ecommerce companies also face challenges like slow shipping and high cart abandonment rates. The cart abandonment rate is as high as 70%, and the slow shipping results in a 24% drop in online shopping sessions.

To avoid such issues, ecommerce companies must improve their order fulfillment and shipping processes.

There will be challenges like over-dependence on legacy technologies, seasonal and unforeseen demands, and supply chain issues. However, a good ecommerce order fulfillment and shipping solution will help companies overcome these problems.

Marmeto can integrate order fulfillment and shipping solutions with your ecommerce platform. If you’re looking for a solution to improve your order processing and delivery process, contact us. We’ll be happy to help you.

FAQs

Why is ecommerce order fulfillment process important?

An order fulfillment process is necessary to ensure that companies process and fulfill customer orders successfully and on time. It also helps build a solid relationship with the customer.
How does the order fulfillment process work?

The ecommerce company receives the order as soon as the customer places it. Workers at the fulfillment center or warehouse retrieve or pick the products, pack them, and send them to the shipping carrier for delivery. Most ecommerce companies also have a return management process to manage customers' return orders, process refunds, or replace the product.
How to choose the right ecommerce order fulfillment solutions provider?

Check if the solution provider offers features like integration with third-party and proprietary systems, supports shipping and international orders and payments, automates low-end tasks, and provides detailed reports to help companies make informed decisions.