What is Order Fulfillment? Define Your Process & Strategy in 2022

Note: This article was originally published on October 18, 2018 and last updated on February 17, 2022 to present a more modern approach to order fulfillment in 2022.

Think about the last time you ordered something from an on-line memory and had a less than ideal delivery experience. possibly your software was lost, late, or damaged .
Are you itching to buy from that seller again ?

If not, you ’ re not alone. 37 % of customers say they ’ ll never shop class with a retailer again following a negative manner of speaking experience .
Preventing that result for your own ecommerce stigmatize comes down to one thing : your order fulfillment scheme .

Main takeaways (TL;DR)

  1. When your business is growing, make sure your fulfillment strategy can scale with you. We recommend answering the 10 questions below for a better approach.
  2. The order fulfillment process has 4 main steps, from receiving to shipping.
  3. How to choose an order fulfillment option depends on a few factors such as the bandwidth, time and space you may have to fulfill orders yourself, or the control you want over the supply chain.
  4. If you decide to outsource your order fulfillment process, there are 5 questions you can ask a third-party logistics provider in order to choose the right one for your order fulfillment strategy (on locations, platform integrations, 2-day shipping, etc.).

What is order fulfillment?

Order fulfillment covers the complete process from when a sale takes place all the way through delivery to your customer. successful arrange fulfillment depends on a third base party to complete the club fulfillment steps for the ecommerce on-line storehouse from receiving, process, carry, picking, and shipping an on-line order to customers .
A successful retail order fulfillment scheme is critical for ecommerce businesses to stay competitive and build customer loyalty .

Order fulfillment explained (Video)

How does the order fulfillment process work? (4 steps + infographic)

At this bespeak, you may be considering outsourcing ecommerce order fulfillment to a 3PL — but what precisely does that entail ? What goes on in a fulfillment focus on may seem like a mystery, but it doesn ’ t have to be .
here ’ s what happens at a 3PL ’ randomness fulfillment center once a customer submits an rate on your on-line store.

Step 1: Receiving

Your 3PL needs your armory in-hand in order to start fulfilling orders. Receiving refers to the acceptance and memory of incoming armory at the fulfillment center .
Each 3PL has its own processes for receiving and storing armory, much involving documentation submitted by the merchant. This keeps things organized and timely, meaning your orders can start ship preferably .
once the 3PL receives your stock, the items are then stored in consecrated repositing storehouse locations, such as shelves, bins, or pallets .

Step 2: Picking

The holy order fulfillment summons begins with warehouse pick .
When an order is pushed to your 3PL ’ second order fulfillment system, it is assigned to the pick team. A picker receives a packing slip with the items, quantities, and storage locations at the adeptness to collect the order products from their respective locations .

Step 3: Packing

once all items in an order have been picked, it ’ south time to get them securely packed up .
Some 3PLs will charge for packing materials, while others include them as part of their fulfillment services. Your 3PL will choose packing materials that will both protect your products and add up to the lowest practical dimensional slant .
These materials can include boxes, bubble mailers or poly bags, packing tape, bubble wrap, atmosphere satiate, and early dunnage .
If you ’ vitamin d prefer to keep your brand front and center, some 3PLs allow you to stock your own custom-made boxes or differently use plain brown boxes .

Step 4: Shipping

once the decree is packed, it ’ south time to ship .
Most 3PLs will purchase transportation labels from shipping carrier ( s ) on the merchant ’ second behalf .
Some fulfillment providers have preferred carriers with whom they partner, while others compare shipping costs from a variety of carriers. The latter helps ensure the most low-cost price possible for any given shipping option .
One adult benefit of outsourcing fulfillment is that major carriers pick up orders directly from the 3PL ’ mho fulfillment centers to ship .
once the order ships, you receive order tracking information. Depending on the 3PL ’ mho engineering, you can either automatically or manually plowshare this information with customers .
Order fulfillment process infographic

Order fulfillment process: 3 tips to do it right

Your receiving processes are key

If you ’ re owning the receiving depart of your order fulfillment processes, you want to make sure that it is optimized so you can act fast. Any cargo should be processed deoxyadenosine monophosphate promptly as possible so that your customers can enjoy a fast delivery .

Have a backup strategy in place

When it comes to shipping products, there are a batch of external factors that you won ’ t have control over. Goods can be damaged, carriers may decide to increase their fees, exceeding weather conditions might impact your manner of speaking, etc.
Having a good backup scheme for your order fulfillment can help you prevent late deliveries .

Use everything you can to anticipate demand

Keeping an adequate sum of supplies in your inventory is essential to keep up with the necessitate. If it ’ sulfur not your first year running your business, you could start by analyzing your data ( orders, armory, etc. ) from the former year to understand if there is any seasonality in your market .

Order fulfillment strategy: 10 questions to determine yours

There ’ s no such thing as a one-size-fits-all club fulfillment scheme. here are some important factors to keep in mind when scaling fulfillment for your on-line shop .

1. Business size and order volume

  • How many SKUs does your business sell?
  • How many orders are you currently shipping each month?
  • How many orders do you predict you’ll be shipping next month? Next year?

The act of products you sell and your monthly order book play a big function in finding a fulfillment solution that works for you. If you ’ re new to the universe of ecommerce, your fulfillment strategy is likely to look very different from, say, Walmart Marketplace or Target .
Low order volume may make it more cost-effective for you to keep fulfillment in-house, as opposed to outsourcing. If you sell a limited variety of products and are shipping just a few orders each week, you probably don ’ t need a full stock or warehouse management system to keep track of your inventory and operations .
If your business is growing quickly and your average order value is steadily increasing, keep in mind when you’re likely to outgrow your fulfillment strategy. It ’ s important to make sure your ecommerce fulfillment strategy can scale with you .

2. Sales channels and technology

  • Where are you selling online?
  • Are you selling on an ecommerce website, a marketplace, or both?
  • Which ecommerce platform are you using?

Your fulfillment scheme should complement and support your on-line sales channels, specially from a engineering point of view. Order fulfillment software that already integrates with your ecommerce chopine and on-line marketplaces can help you manage the entire order fulfillment march more efficiently without having to do any developer make .

“ ShipBob was the obvious solution for us. They align very well with Shopify and don ’ t have older, archaic technology like other 3PLs. ”
Greg MacDonald, CEO & Founder, Bathorium

This is specially authoritative if you ’ rhenium sell across more than one impart ; your technology should streamline the order fulfillment process, not complicate it.
This means that deoxyadenosine monophosphate soon as an on-line order is placed on any of your sales channels, it should automatically be pushed to your fulfillment operations. then it can be picked, packed, and shipped in a timely manner .
Choosing a fulfillment avail with the right inventory management software is besides critical. You should always have entire visibility into inventory quantities on hand across fulfillment locations, arsenic well as a system in target to prevent stockouts .
overall, ecommerce businesses need to leverage engineering that connects the upstream activities of buy and manufacture to the downstream activities of sales and product demand to make more accurate buy and production decisions .

3. Location, location, location

  • Are your customers centrally located in one region, or are they spread across the country?
  • Do you have a large international customer base?

Where you ship to and from are two of the most important aspects that should inform your fulfillment scheme. Customers want ecommerce delivery to be quick and without a high gear price tag : 73 % of shoppers expect low-cost, fast deliveries, and 24 % of customers cancel an holy order due to slow shipping .
To make certain you can deliver on customer expectations, try to minimize the number of shipping zones your average package travels. This can reduce transportation costs and times, leading to happier customers .
If you ’ re presently shipping orders from more rural areas, you ’ re probably incurring unnecessarily high gear shipping costs. rather, consider fulfilling orders from more central, urban location ( sulfur ) .
Shipping from multiple locations near your customers can besides drive down logistics costs and shipping times. This helps you leverage earth ship more much, which is significantly cheaper than expedited ship and faster than grind ship from one side of the country to the other .
For case, ShipBob is a ball-shaped fulfillment caller with several locations in multiple countries

“ We partnered with ShipBob to scale up operations in the United States. We ’ ve seen a reduction of 70 % on ship costs in the US, which helps keep conversions high. ”
Greg MacDonald, CEO & Founder, Bathorium

4. Customization needs

  • Are your products made-to-order?
  • Is customization a key selling point of your brand?

If you sell items that are custom-made, particularly endowment wrapped, or extremely fragile, you may want to choose a more hands-on approach to your entire provision chain .
Outsourcing fulfillment means giving up control over every custom detail. Being able to pack items yourself gives you the exemption, flexibility, and reassurance that customization will be precisely right each prison term .

Order fulfillment options: what are they (and how to choose one)

It ’ randomness clear that unlike ecommerce businesses have different needs. With all of the factors above in thinker, the best order fulfillment strategy for your business might not be the same as your competitors.
The most common order fulfillment methods are outsourcing to a third-party fulfillment supplier, merchant fulfillment, and dropshipping .

Third-party fulfillment

Third-party fulfillment is defined as the outsource of fulfillment logistics to an external collaborator. These processes can include armory management, generating optimized picking lists, packing boxes, and shipping orders, and managing returns .

many ecommerce retailers partner with a third-party logistics ( 3PL ) partner to outsource provision chain -related tasks that can often be besides unproductive, costly, or building complex to manage in-house.

If you no longer have the bandwidth or space to fulfill orders yourself, working with a 3PL can help automate time-consuming tasks. Freeing up the time taken up by product fulfillment allows you to focus rather on growing your business .

“ Working with ShipBob has allowed us to focus on the crucial parts of running our business and lets person else take concern of the shipping. ”
Brett Miller, CEO, BRIK

3PLs have inbound and outbound logistics expertise that your commercial enterprise can — and should — leverage. They besides have the infrastructure needed to ship larger order volumes, making them invaluable as your commercial enterprise scales or needs to ramp up cursorily and deliver orders accurately .

Merchant fulfillment

besides called in-house fulfillment and self-fulfillment, merchant fulfillment refers to an ecommerce seller completing the entire order fulfillment process without the help of a third party .
many online brands choose to fulfill orders in-house when first starting out. This frequently means storing inventory and packing orders from home .
Merchant fulfillment offers more control over your retail supply chain than outsourcing the lapp processes, but it can besides be dearly-won and hard to scale as your clientele grows .

“ ShipBob can process things more cursorily than we could in-house and at scale. These time savings translate into price savings deoxyadenosine monophosphate well. ”
Sarah Chalos, Co-Founder and President, I Heart Keenwah

When your ordain volume gets besides high to keep fulfilling orders from home plate, you have two options : Expand your merchant fulfillment operations by investing in fulfillment infrastructure, including warehouses, tug, equipment, and more, or outsource to a 3PL .
The former can be an expensive attempt, which is why thus many businesses choose the latter .

Dropshipping

Dropshipping is a much more hands-off set about to both fabrication and order fulfillment. stock is produced, stored, and shipped by the manufacturer .
When a customer places an order, the rate details are forwarded to the manufacturer. The product ships directly from the manufacturer to the end consumer .
first gear barriers to entrance and minimal operating expense make dropshipping an attractive choice to many raw ecommerce businesses. however, manufacturers are much located oversea, which means that shipping takes significantly longer and is potentially more expensive than fulfilling orders domestically .
overall, dropshipping offers merchants very small control over the add chain, specially when it comes to inventory management and order fulfillment .

Summary

  • You no longer have the bandwidth or space to fulfill orders yourself? Outsource to a 3PL provider.
  • Your order volume gets too high to keep fulfilling orders from home? Invest in fulfillment infrastructure or outsource to a 3PL.
  • You want a hands-off approach to both manufacturing and order fulfillment? You might consider dropshipping (read the pros and cons above).

Order fulfillment and 3PL pricing models

different 3PLs price their fulfillment services in different ways. here ’ s how ShipBob prices our ecommerce order fulfillment services .
Note: Order fulfillment price depends on your business ’ mho specific needs .

Fulfillment service How it’s priced
Receiving two-dimensional rate
armory storage Per bank identification number, shelf, and pallet
Pick and pack fees Included in full fulfillment cost
Standard promotion Included in total fulfillment cost
Shipping Carrier price passed immediately on to customer

Read more: Order Fulfillment Costs and 3PL price Models : Everything You Need to Know
barely like there is no one-size-fits-all fulfillment solution, there is no one price mannequin that fits all ecommerce businesses. Above is an exemplar of ShipBob ’ second simple fulfillment price. Reach out to our team for a custom fulfillment quote that takes into report your clientele ’ south size, needs, strategy and budget .

5 questions to ask when choosing the right order fulfillment service & strategy

If you ’ ve decided that outsourcing orderliness fulfillment to a third-party logistics service supplier is the right choice for your ecommerce occupation, choosing a 3PL can be a agonizing job .
The options can seem endless, with confusing price and outdated processes .
It ’ s important to find an regulate fulfillment supplier that you trust to handle your inventory, provide a positive know to your customers, and ultimately help you grow your clientele .
here are 5 questions to ask a potential third-party fulfillment company to make surely you find the right partner for your clientele :

  1. How are you different from a traditional pack-and-pick 3PL ?
  2. How does your engineering work ? Which ecommerce chopine integrations do you support ?
  3. Where are your fulfillment centers located ?
  4. Do you offer two-day ship ?
  5. How can you help me offer a best-in-class customer feel ?

How to choose a 3PL for your ecommerce business

The above are just a few of the things to keep in beware when choosing a 3PL .
We know there are a short ton of options and lots of information out there, and it can be hard to decide what future steps to take. That ’ randomness why we created a dislodge template, “ How to Choose a 3PL for Your Ecommerce Business, ” to help you find the right spouse for your business .
This lead covers :

  • How to find a fulfillment ship’s company you can trust to help your ecommerce business grow
  • The justly questions to ask a electric potential 3PL to make indisputable you ’ re a common fit
  • What technology and features to look for to achieve faster, more low-cost ecommerce order fulfillment
  • And much more…

Order fulfillment FAQs

The order fulfillment serve doesn ’ thyroxine want to be difficult, but knowing some common questions can help out when choosing a fulfillment spouse .

What does it mean when an order is in fulfillment?

If your order is “ in fulfillment ” that most likely means that it ’ second been processed and is presently being prepared for dispatch. Once fulfillment is completed, an order has been delivered to the customer and the process is complete .

What is order fulfillment rate?

The order fulfillment rate ( or regulate fill rate ) is the number of orders that are processed divided by the full issue of orders .

What is logistics fulfillment?

Logistics fulfillment is frequently interchanged with order fulfillment, meaning to complete the logistic work from checkout to rescue of the item .

What is the order fulfillment process?

The order fulfillment process is the steps a clientele takes from the moment they have received an regulate until it is delivered to the customer .

Leave order fulfillment to the pros

Need avail with order fulfillment ? ShipBob is a professional order fulfillment company that stores inventory, packs boxes, and ships orders for ecommerce businesses of all sizes .

“ We are very print by ShipBob ’ s transparency, simplicity, and intuitive splashboard. Their transportation costs are very fair, and their platform makes fulfillment feel sol easily. ”

Harley Abrams, Operations Manager of SuperSpeed Golf, LLC

Get in touch to see if we ’ re a estimable fit for your commercial enterprise ’ s unique needs. Request a price quote below .

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