eCommerce Fulfillment: Strategies and Steps for Success

eCommerce Fulfillment: The Art And Science Of Delivering Customer Delight

Final: Delivering Customer Delight: The Art And Science Of eCommerce Fulfillment

In the world of eCommerce, fulfillment is more than just delivering products to customers. It’s about creating a satisfying shopping experience.

Ecommerce fulfillment is the whole process that occurs after a customer places an order on your website, and before they receive their product. It includes eCommerce management, eCommerce Payment Methods, eCommerce Shipping and more.

In this article, we provide insights and best practices that will help you take your eCommerce fulfillment to the next level.

 

Key Highlights

  • E-commerce fulfillment is the process of delivering products to customers after they have placed an order online.
  • Outsourcing ecommerce fulfillment can provide benefits such as cost savings, scalability, and increased efficiency.
  • Technology plays a key role in ecommerce fulfillment, as it can help automate processes, improve efficiency, and provide real-time visibility into inventory and order status.
  • Selecting the right eCommerce platform and fulfillment provider can significantly impact the success of your business.
  • Currency is an important factor to consider in ecommerce localization.

 

What is ecommerce fulfillment?

Ecommerce fulfillment is the process of receiving, processing, and shipping orders placed through an online store.

It is a complex process because it involves many different steps and systems working together to get orders from your online store to your customers’ doorstep.

A smooth and efficient ecommerce fulfillment process can lead to:

  • Increased customer satisfaction
  • Repeat business
  • Positive word-of-mouth referrals

Ecommerce fulfillment is specifically designed for online orders and often involves different processes and technologies than traditional retail fulfillment.

In ecommerce fulfillment, orders are received electronically, picked from a warehouse, and shipped directly to the customer, whereas in traditional retail fulfillment, orders are picked from a store and either shipped to the customer or made available for in-store pickup.

To make sure that your ecommerce fulfillment process runs smoothly, it’s important to have systems in place to;

  • Manage your inventory
  • Process orders efficiently
  • Ensure that packages are shipped on time and accurately

 

Why Is eCommerce Fulfillment Important?

Fulfillment is important because it’s the key to keeping your customers happy and coming back for more.

  • 84% of consumers will not come back to shop from you after just one poor delivery experience

It’s the careful packing, the lightning-fast shipping, the real-time tracking that lets your customers know exactly where their package is at all times.

Without ecommerce fulfillment, your customers might be left waiting, wondering when their order will arrive. They might receive damaged or incorrect items, or they might have trouble tracking their package. These problems can lead to frustration, disappointment, and ultimately, lost business.

Final: Delivering Customer Delight: The Art And Science Of eCommerce Fulfillment

 

Types Of E-commerce Fulfillment

Here are some of the most common types of e-commerce fulfillment.

Dropshipping

Dropshipping is a type of e-commerce fulfillment in which the seller does not keep the products in stock but instead purchases them from a third-party supplier, who then ships the products directly to the end customer.

In a dropshipping arrangement, the seller acts as a middleman between the supplier and the customer, and the supplier is responsible for storing and handling the inventory.

The dropshipping process works as follows:

  • The seller lists the products on their e-commerce store or marketplace.
  • A customer places an order for the product on the seller’s website.
  • The seller forwards the order and shipping information to the supplier.
  • The supplier ships the product directly to the customer, with the seller’s branding and packaging.

Pros of Dropshipping

  • Allows sellers to offer a wide range of products
  • Minimal investment
  • Low risk to test the market
  • Enables businesses to scale quickly

Cons of Dropshipping

  • Less inventory control
  • Risk of stockouts
  • Less control over the quality and packaging.

Warehousing And Fulfillment Centers

Warehousing and fulfillment centers are a type of e-commerce fulfillment that involves storing and processing inventory in a dedicated warehouse or fulfillment center.

In this model, the e-commerce business rents space in a warehouse or fulfillment center and outsources the storage, inventory management, picking, packing, and shipping processes to the provider.

The provider, often a third-party logistics (3PL) company, is responsible for receiving and storing inventory from the e-commerce business.

The provider uses warehouse management systems (WMS) and Inventory management software (IMS) to manage the inventory and ensure that the products are always in stock and ready to be shipped to customers.

Final: Delivering Customer Delight: The Art And Science Of eCommerce Fulfillment

Pros of warehousing and fulfillment centers

  • Help businesses increase their efficiency by storing and organizing inventory, processing orders, and managing shipping and delivery.
  • Improve their customer experience by providing fast and reliable shipping, accurate order processing, and easy returns management.
  • Can save on storage costs, labor costs, and shipping costs
  • Access to Expertise which can help businesses optimize their operations.

Cons of warehousing and fulfillment centers

  • Additional Cost such as storage fees, order processing fees, and shipping fees
  • Loss of Control
  • Limited Customization
  • Distance from Customers
  • Dependence on Third-Party Providers

In-house fulfillment

In-house fulfillment is a type of e-commerce fulfillment in which the seller keeps the products in their own warehouse or fulfillment center and handles all aspects of the fulfillment process in-house.

In this model, the e-commerce business owns or leases a warehouse and employs its own staff to manage the storage, inventory management, picking, packing, and shipping processes.

The in-house fulfillment process works as follows:

  • The seller receives and stores inventory in their own warehouse or fulfillment center.
  • When an order is received, the seller’s team of warehouse workers picks and packs the order and ships it directly to the customer.
  • The seller may also handle returns and exchanges in-house.

Pros of In-house fulfillment

  • Greater control over the fulfillment process, which can help ensure a high level of product quality and customer service.
  • Opportunity to create a customized brand experience by using branded packaging and shipping materials.
  • More cost-effective for businesses that have a high volume of orders or a large number of SKUs.

Cons of In-house fulfillment

  • More complex and time-consuming
  • Requires a significant investment (Warehousing and labor)
  • May not be the best option for businesses with fluctuating demand

Third-Party Logistics (3PL)

This type of e-commerce fulfillment is when the seller hires a third-party logistics (3PL) provider to handle the storage, inventory management, picking, packing, and shipping of their products.

In this model, the e-commerce business does not own or lease a warehouse or employ their own staff for fulfillment, but rather contracts with a 3PL provider to handle all aspects of the fulfillment process.

  • In this fulfillment arrangement, the 3PL provider receives the seller’s inventory and stores it in their own warehouse or fulfillment center.
  • When an order is received, the 3PL provider’s team picks, packs, and ships the order directly to the customer on behalf of the seller.
  • The 3PL provider may also handle returns and exchanges on behalf of the seller.

Final: Delivering Customer Delight: The Art And Science Of eCommerce Fulfillment

Pros of outsourced fulfillment

  • No need to invest in warehousing infrastructure, equipment, or staff
  • Offers the ability to scale up or down quickly in response to changing demand.
  • More cost-effective for small or medium-sized businesses
  • Provides companies with access to specialized expertise and technologies that they may not have in-house.

Cons of outsourced fulfillment

  • Less control over the product quality and packaging
  • Communication Challenges can lead to shipping delays

 

E-commerce Fulfillment Strategy

Here are some strategies that can be put into practice to fulfill e-commerce orders.

1. Outsourcing

Outsourcing fulfillment to a third-party provider can be beneficial for retailers who don’t have the resources or personnel to manage their own fulfillment operations. Outsourcing can also help businesses streamline operations and reduce costs.

Key aspects of Outsourcing

Outsourcing order processing involves hiring a 3PL provider to manage the order fulfillment process. This includes;

  • Warehousing and storage
  • Receiving and processing customer orders
  • Picking and packing products
  • Preparing them for shipping
  • Selecting carriers
  • Negotiating shipping rates
  • Managing the shipping process
  • Managing returns

2. Automation

Automation is becoming increasingly popular in e-commerce fulfillment as it helps streamline the process and reduce errors. Automated systems can be used to manage inventory, pick and pack orders, and ship products.

Key aspects of Automation

  • Warehouse management systems (WMS)
  • Order management systems (OMS)
  • Data analytics

A Warehouse Management System (WMS) is an ecommerce fulfillment software that is designed to manage the day-to-day operations of a warehouse or distribution center. It is a central system that oversees and optimizes the movement and storage of goods within a warehouse, from receiving and inventory management to order fulfillment and shipping.

An Order Management System (OMS) is an ecommerce order fulfillment software that helps businesses manage and track orders from various sales channels, such as online marketplaces, ecommerce platforms, and brick-and-mortar stores. An OMS enables businesses to process orders more efficiently, providing better customer service, and optimizing order fulfillment.

Automation can be used to analyze data such as customer preferences, purchase history, and website activity to predict demand and optimize inventory management. This can help to reduce overstocking and out-of-stock situations, improving customer satisfaction and reducing costs.

3. Inventory Management

Inventory management involves tracking inventory levels, monitoring stock movements, and ensuring that orders are fulfilled in a timely manner and it’s an important part of the e-commerce fulfillment services

Inventory management systems can be used to automate this process and ensure that orders are fulfilled accurately.

Final: Delivering Customer Delight: The Art And Science Of eCommerce Fulfillment

Key aspects of Inventory management systems.

  • Accurate tracking
  • Demand forecasting
  • Stock rotation

An e-commerce business needs to keep an accurate count of inventory to ensure that there is enough stock to fulfill orders. It is a must to track the quantities of items in stock and alert the business when inventory levels are low. This helps the business to replenish inventory in a timely manner and avoid stockouts.

E-commerce businesses can use historical data to forecast demand for products. This helps to ensure that they have enough inventory to meet customer demand without overstocking, which can tie up capital and increase storage costs.

Effective inventory management involves rotating stock to ensure that older inventory is sold first. This helps to prevent items from expiring or becoming obsolete, which can lead to lost sales and waste.

4. Customer Service

Customer service is also an important part of the e-commerce fulfillment process as customers should be able to contact the retailer with any questions or concerns they may have about their orders.

Key aspects of customer service

  • Responsive communication
  • Order tracking
  • Hassle-free Returns and Exchanges
  • Timely refunds
  • Personalization
  • Proactive communication
  • Continuous improvement

E-commerce businesses should aim to respond to customer inquiries and issues as quickly as possible.

A clear and easy-to-understand return policy can help to reduce customer dissatisfaction and improve the overall customer experience.  E-commerce businesses should aim to process refunds as quickly as possible.

Personalizing the customer experience can help to build customer loyalty and increase customer satisfaction. This can be achieved by;

  • Addressing customers by name
  • Sending personalized emails
  • Offering customized recommendations

 

Which Steps Are Included In The Fulfillment Process?

Final: Delivering Customer Delight: The Art And Science Of eCommerce Fulfillment

Here are the typical steps involved in the ecommerce fulfillment process:

1. Receiving the order

The first step is to receive the order from the customer. This can be done through a website, mobile app, or other online platform. The order includes the customer’s contact and shipping information, as well as the details of the products they have purchased.

2. Order Processing

Once an order is placed, the eCommerce store receives the order and initiates the order processing process. This involves verifying the payment details and checking if the products are in stock.

Read our Ultimate Guide to eCommerce Payment Methods

3. Picking and packing

Once the order has been received, the products need to be picked and packed for shipping. This involves

  • Locating the products in a warehouse
  • Verifying the quantity and quality
  • Packaging them for shipping

4. Labeling and tracking

Each package must be labeled with the customer’s shipping address, tracking number, and any other required information. This step is important to ensure that the package is delivered to the correct address and can be tracked throughout the delivery process.

5. Shipping

The package is then shipped to the customer using a chosen delivery service.

The shipping method may vary depending on the:

  • Customer’s location
  • Size and weight of the package
  • Shipping preferences of the customer
Read our Essential Guide to E-commerce Shipping Solutions

 

6. Delivery and tracking

Once the package is shipped, the customer can track its progress through the delivery service’s tracking system. The customer may also receive notifications and updates on the delivery status via email or other means.

7. Returns and exchanges

If the customer wishes to return or exchange a product, the ecommerce retailer must have a process in place for handling these requests.

This may involve:

  • Issuing a return label
  • Processing a refund
  • Shipping out a replacement product

8. Customer service

Throughout the entire ecommerce fulfillment process, it is important to provide excellent customer service.

This may involve:

  • Answering questions
  • Resolving issues
  • Providing updates to the customer as needed

 

Benefits Of Outsourcing E-Commerce Fulfillment

The following are some of the key benefits of outsourcing e-commerce fulfillment:

Cost Savings

  • Outsourcing e-commerce fulfillment can help businesses reduce costs associated with warehousing, packing, shipping, and delivery.
  • Third-party logistics providers can leverage economies of scale to offer lower shipping rates, which can lead to lower overall operational costs.

Improved Efficiency

  • Third-party logistics providers have expertise in logistics and supply chain management.
  • This can lead to improved efficiency in the fulfillment process, faster order processing times, and improved customer satisfaction.

Scalability

  • E-commerce businesses may experience fluctuations in demand based on factors such as seasonality, marketing campaigns, and new product launches.
  • Outsourcing fulfillment operations can help businesses to quickly scale their operations up or down based on these fluctuations, without the need for major operational changes or large capital expenditures.

Reduced Operational Burden

  • A business can focus on its core competencies and strategic initiatives, rather than being distracted by logistics and supply chain management.
  • This can help businesses to invest more resources in marketing, product development, and customer service.

Access To Technology And Expertise

  • Access to the latest technologies, such as warehouse management systems, order management systems, and transportation management systems.
  • These technologies can help businesses to improve order accuracy, inventory management, and shipping times.

Flexibility

  • E-commerce businesses can experience fluctuations in demand based on factors such as seasonality, promotional campaigns, or changes in consumer behavior.
  • Outsourcing e-commerce fulfillment provides businesses with the flexibility to quickly scale their operations up or down to accommodate these fluctuations.

Global Reach

  • A third-party logistics provider with a global presence can help businesses to expand into new markets, by providing access to international shipping and distribution networks.
  • Fulfillment providers can handle customs, taxes, and other logistical challenges associated with international shipping, making it easier for businesses to sell to customers in other countries.

 

Scope Of eCommerce Fulfillment In 2023

Increased Use Of Automation And Technology

Advancements in technology and automation are changing the way eCommerce companies approach fulfillment and logistics, making it possible to operate with greater efficiency, speed, and accuracy.

Final: Delivering Customer Delight: The Art And Science Of eCommerce Fulfillment

Here are some examples of how automation and technology are likely to impact eCommerce fulfillment in 2023:

  • Robotics and automation - According to a study, a package can be manually handled 20 times or more during shipping. This accounts for an average of 17 times an ecommerce delivery may be dropped or mishandled in a single shipment. This is where automated picking and packing systems and robotic sorters come in handy.
  • Artificial intelligence (AI) and machine learning - analyze vast amounts of data to identify patterns and make predictions, enabling eCommerce companies to make more informed decisions and improve their operations.
  • Internet of Things (IoT) - used to track and monitor inventory throughout the fulfillment process, from the warehouse to the last-mile delivery.
  • Augmented reality (AR) -  used to enhance the picking process by providing warehouse workers with real-time information and guidance, such as the location of an item in the warehouse or how to pack an order.

Growth Of Same-Day And Next-Day Delivery

69% of consumers are less likely to shop with a retailer in the future if a purchase is not delivered within 2 days of the date promised. This shows that, Consumers are becoming more demanding in terms of delivery timeframes.

  • Same-day delivery refers to the delivery of an order on the same day it was placed.
  • Next-day delivery, as the name suggests, refers to the delivery of an order on the following day after it was placed.

This requires a highly efficient fulfillment process that can pick, pack, and ship an order in a matter of hours.

Expansion Of Omnichannel Fulfillment

Omnichannel fulfillment is a retail strategy that aims to provide a seamless and integrated shopping experience for customers across all channels, whether online or offline.

It involves using various channels to fulfill customer orders, such as in-store pickup, ship-from-store, or ship-to-home, and leveraging technology to manage and optimize inventory across all channels.

The Emergence Of New Fulfillment Models

The emergence of new ecommerce fulfillment models is one of the key areas that is expected to shape the scope of eCommerce fulfillment in 2023.

Here are some examples of new fulfillment models that are likely to gain traction in 2023:

  • Micro-fulfillment centers (MFCs) - are small-scale warehouses located close to urban centers. They are designed to enable rapid order fulfillment.
  • Crowdshipping – a model that leverages  individuals, such as gig workers or volunteers, to deliver packages to customers.
  • Dark stores - retail locations that are closed to the public and dedicated solely to fulfilling eCommerce orders.
  • Hybrid models - As eCommerce companies seek to optimize their fulfillment operations, many are adopting hybrid models that combine various fulfillment models.

Increased Focus On Sustainability

With growing concern about the environmental impact of shipping, fulfillment centers, and e-commerce businesses will need to find ways to reduce waste and emissions.

Here are some examples of how eCommerce companies are addressing sustainability in their fulfillment services;

  • Packaging – eCommerce companies are using more sustainable packaging materials, such as recycled paper or biodegradable plastics, to reduce waste and minimize the environmental impact of shipping materials.
  • Transportation – Optimizing transportation networks to reduce carbon emission. This includes using more fuel-efficient vehicles, implementing routing algorithms to optimize delivery routes.
  • Energy conservation - eCommerce companies are adopting energy-efficient technologies, such as LED lighting, smart sensors, and automation, to reduce energy consumption and minimize the environmental impact of their warehouses and fulfillment centers.
  • Recycling and waste reduction - eCommerce companies are implementing recycling programs and waste reduction initiatives to minimize the amount of waste generated by their fulfillment processes.

Final: Delivering Customer Delight: The Art And Science Of eCommerce Fulfillment

Continued Globalization

The e-commerce market is becoming more global due to the expansion of the internet, the higher availability of technology, and the increasing prevalence of international trade.

Here are some examples of how globalization is shaping eCommerce fulfillment;

  • Cross-border trade - eCommerce companies are increasingly selling products to customers in different countries, which requires efficient and reliable cross-border fulfillment networks.
  • Localization – Localization includes adapting to local languages, currencies, and cultural norms, as well as offering region-specific products and promotions.
  • Partnerships – eCommerce companies are forming strategic partnerships with local logistics and fulfillment providers in different countries to expand their reach and improve their fulfillment capabilities.

Final: Delivering Customer Delight: The Art And Science Of eCommerce Fulfillment

 

Conclusion

eCommerce fulfillment is a fundamental component of any online business, and delivering exceptional customer experiences requires both the art and science of fulfillment.

Individuals looking to get into eCommerce should prioritize implementing strategies for managing customer expectations, personalized packaging, and branding opportunities while also leveraging automation, data analytics, and AI-powered tools to optimize performance.

By doing so, they can elevate their customers’ experience, improve customer loyalty, and achieve long-term growth.

 

Next Steps: What now?

 

Further reading – Useful Resources

Frequently Asked Questions

What is eCommerce fulfillment?

Ecommerce fulfillment is the process of receiving, processing, and delivering orders to customers. It includes packing and shipping products, managing returns, and providing customer service.

How does outsourcing fulfillment save money?

Outsourcing fulfillment can save money compared to doing it yourself because you don’t need to spend on extra staff and facilities. Fulfillment centers also use advanced technology that can make the process more efficient, leading to lower costs.

What are some common challenges with ecommerce fulfillment and how can I address them?

Common challenges with ecommerce fulfillment include inventory management, shipping delays, returns processing, and order accuracy. These can be addressed through effective planning, clear communication, and the use of technology.

What factors should I consider when choosing an ecommerce fulfillment partner?

Some key factors to consider when choosing an ecommerce fulfillment partner include location, capabilities, experience, pricing, and customer service.

What are some of the key trends in eCommerce fulfillment?

Some of the key trends in ecommerce fulfillment include increased use of automation and technology, growth of same-day and next-day delivery, expansion of omnichannel fulfillment, the emergence of new fulfillment models, increased focus on sustainability, and continued globalization.

10 Best VPS Hosting on Reddit: Most Recommended Providers 2024

Reddit is a popular source for hosting recommendations, including VPS hosting. With multiple conversations on choosing a service and dozens o...
4 min read
Ela Gal-Kfir
Ela Gal-Kfir
Digital Marketing Specialist

HostAdvice Speaks to ScalaHosting: An Interview with Chris Rusev

HostAdvice had the opportunity to speak with Chris Rusev, the CEO and co-founder of , a web hosting company that offers shared, cloud VPS, and res...
8 min read
Eddie Segal
Eddie Segal
Digital Marketing Specialist

Email Deliverability: What Is It, Key Factors & Best Practices

What is Email Deliverability? Think of it like mailing a letter and making sure it lands right in the recipient's hands, not lost or thrown...
17 min read
Ela Gal-Kfir
Ela Gal-Kfir
Digital Marketing Specialist

Email Marketing vs. Social Media: Which is More Effective?

What is Email Marketing? Email marketing is a  that involves companies reaching out to potential and existing customers via email ...
10 min read
Ela Gal-Kfir
Ela Gal-Kfir
Digital Marketing Specialist
HostAdvice.com provides professional web hosting reviews fully independent of any other entity. Our reviews are unbiased, honest, and apply the same evaluation standards to all those reviewed. While monetary compensation is received from a few of the companies listed on this site, compensation of services and products have no influence on the direction or conclusions of our reviews. Nor does the compensation influence our rankings for certain host companies. This compensation covers account purchasing costs, testing costs and royalties paid to reviewers.
Click to go to the top of the page
Go To Top