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By Tom Wintaugh
Learn the essentials of ecommerce fulfillment and discover strategies to accelerate your operations and meet customer demand.
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Ecommerce fulfillment isn't just about getting orders into customers' hands—it involves meeting customer expectations and providing an accurate and efficient delivery experience. Studies show that 53 percent of shoppers won’t purchase an item online if they don’t know when it will arrive. A strong fulfillment process is key to staying relevant, competitive, and profitable in the current ecommerce climate.
With customer loyalty on the line, you need to make sure your fulfillment strategy is dialed in. In this article, we discuss what you need to know about ecommerce fulfillment and provide strategies for you to accelerate your operations and meet customer demand.
Ecommerce fulfillment encompasses the end-to-end procedures, workflows, and systems that allow businesses to get their products to customers. This includes processes that happen after a customer has hit the “Buy Now” button—order management, shipping, returns, and more—as well as ongoing ecommerce operations such as warehousing and inventory management.
Some ecommerce businesses manage these processes with in-house teams and systems, while others use third-party providers to store and deliver their products. Which of these methods you choose will depend on multiple factors including the size of your business, the geographic range you serve, and the products you sell.
Proper ecommerce fulfillment is crucial for the ongoing success of your business. While many resources for online sellers focus on the importance of driving sales, what happens after the sale is just as, if not more, important. If a customer purchases a product but is left unsatisfied with some aspect of that product’s fulfillment—whether it’s a slow delivery, improper packaging resulting in a damaged item, or a difficult returns process—they’ll be unlikely to return to your business in the future or to recommend it to others. On the other hand, a seamless ecommerce fulfillment process can spur brand loyalty and repeat sales.
As an online seller, you are responsible for managing your inventory, packing the right products, and shipping to your customers in a timely manner. This article will explore all aspects of the ecommerce fulfillment process, outline steps for success, and offer specific fulfillment factors that different industries should consider.
Ecommerce fulfillment services encompass the processes and logistics involved in each stage of the fulfillment journey. This can refer to services that are handled in-house by a business or outsourced to a third-party provider. Some examples of ecommerce fulfillment services include:
Also known as inventory storage, warehousing refers to the organization and storage of physical products before they are purchased by and delivered to the customer. Proper ecommerce warehousing requires businesses to keep their product stock secure while knowing where certain items are located and how long they’ve been stored. Some businesses may use their own warehouses or storage areas, but many eventually choose to outsource their storage to a larger third-party warehousing center.
It's not enough to simply store your products—sellers need to carefully manage their inventory. Inventory management refers to all the everyday activities that take place within a company’s warehouse to keep track of their products, including organizing, counting, restocking, forecasting, and more. Maintaining accurate records of inventory is crucial for ecommerce fulfillment, and can help businesses manage their supply chain and avoid disruption.
Order management refers to the back-end system of fulfilling online orders. Once an order is submitted on a website, it needs to be processed, entered into the fulfillment cycle, and routed for shipping. Online sellers today have many options for digital order management systems that can be integrated with their ecommerce platform as well as their payment and shipping platforms to manage orders across multiple channels and warehouses.
Order fulfillment is the end-to-end journey of delivering a product to a customer. The order fulfillment process includes picking the product up from the existing inventory, packing it securely, shipping it with the appropriate method and rate, and delivering it to the correct address. A streamlined order fulfillment process can help to boost customer satisfaction and drive repeat purchases.
Ecommerce shipping refers to the different delivery methods that online sellers use to ship their products. Shipping methods will depend on the types of products sold, the distance between fulfillment centers and customers, and the technology required to streamline backend processes. Many ecommerce platforms allow customers to select the shipping method that works best for them from a predetermined list, whether it's free shipping, rush delivery, or buy online pick-up in store (BOPIS).
Drop shipping is a fulfillment model where a business doesn’t physically hold the products they sell. Instead, they relay any orders to the product’s manufacturer, or drop shipper, who then handles shipping the product directly to the purchaser. Although drop shipping is a good option for some businesses, it can mean that sellers have less control over their fulfillment process and overall customer experience.
Freight shipping involves the physical transportation of bulk goods, merchandise, and commodities by land, sea, or air. Freight shipping might be domestic or international and is a critical piece of many ecommerce businesses’ fulfillment operations. Most products can be delivered via freight shipping, but some categories of products, such as temperature-controlled substances or hazardous materials, may be subject to limitations and restrictions.
Subscription fulfillment refers to the infrastructure, systems, and processes required to carry out recurring orders at the frequency chosen by the purchaser. Subscription models are extremely popular in ecommerce, and part of that popularity comes from the convenience of receiving items at the same time each subscription interval—for instance, during the first week of each month. An optimized subscription fulfillment can help contribute to an ideal subscriber experience for your customers.
Returns management refers to a business’ process for handling customer returns, facilitating product transport, and entering returns back into inventory. A painless returns process can help boost customer satisfaction and encourage repeat business. However, businesses should balance out a flexible return policy with common-sense protections against returns fraud.
Ecommerce fulfillment centers are the facilities where orders are shipped. Many online merchants outsource their warehousing and shipping to third-party fulfillment centers. These centers relieve sellers of the necessary physical space and operational capability required to store products and manage inventory.
Ecommerce fulfillment is about more than just shipping products. The process involves multiple moving parts and workflows:
The most successful businesses have a fulfillment strategy that allows them to seamlessly move products, introduce speed and agility when needed, and minimize expenses and risks. In the next sections, we’ll take a deep dive into some best practices for optimizing your fulfillment process.
Here’s the truth: shoppers will turn to your competitors if they can’t get the speed and delivery that they want from you. Your fulfillment process is directly related to your ability to create trust with customers. A well-executed fulfillment strategy allows you to meet customer expectations, grow your business, and achieve success.
To have a smooth and accurate fulfillment process, you’ll need to take time to secure the infrastructure, processes, and teams you need. Consider aspects like the locations of your fulfillment centers, shipping zones, shipping integrations with your ecommerce platform, and your customer-facing shipping and delivery options to ensure timely fulfillment of your products.
You’ll also want to consider your fulfillment model. Online sellers commonly use one of three different ecommerce order fulfillment options: in-house fulfillment, drop-shipping, and third-party logistics. The best fulfillment model will depend on the size of your business, order volume, proximity to customers, and your overall online demand.
The COVID-19 pandemic has accelerated demand for online shopping and increased competition to new levels. To thrive, you need a fulfillment process that can be counted on both today and tomorrow and provide the agility to ramp up at any given time.
Your website needs to integrate seamlessly with your fulfillment systems and empower you to challenge disruption, meet customer needs, and automate time-consuming aspects. During this period of higher demand, you won’t have the time and resources to be bogged down by issues like rising overhead costs and monolithic systems. A strong ecommerce ecosystem allows you to focus on what matters: getting products to customers and turning purchasers into lifelong customers.
Inventory management is the process of monitoring your goods on hand before they are fulfilled to customers. Since it involves ordering, restocking, and storing products, inventory is one of the biggest costs for online merchants—the average cost to fulfill an order is 70 percent of the average order value. Having the right amount of inventory on hand helps you to balance costs with opportunities to generate sales on your website.
To cut costs and improve your bottom line, you’ll want to practice effective inventory management. Consider optimizing your supply chain, measuring customer demand, reducing excess inventory, and offering subscriptions to automate the reordering process and save time and money. This increased efficiency helps to organize your fulfillment process and make it easier to find and package goods for your customers.
Ecommerce moves fast, so your fulfillment strategy needs to be able to keep up pace. An organized and well-structured fulfillment workflow enables you to get products to customers quickly while reducing your lead time.
Depending on your order volume, you may need to expand your fulfillment centers to reach customers faster or partner with a third-party fulfillment provider to expand your shipping and delivery options. You could also consider a click and collect strategy that relies on retail locations for pickup and fast fulfillment. This could lower purchasing friction, drive sales and profit, and create more convenience for your customers.
Shipping speed is only part of the fulfillment experience. You’ll also want to take advantage of opportunities to enhance your customer service. Clear communication, real-time updates, convenient return policies, and branded packaging materials are effective ways to communicate your brand offerings and elevate the experience.
The best fulfillment strategy will also depend on the market in which you’re selling. Here are considerations for some of the major ecommerce industries.
Businesses that sell HVAC products and parts online will want to consider how to tailor their ecommerce fulfillment strategies to best serve both businesses and consumers. An HVAC ecommerce business may sell their products to repair companies who require regular shipments of frequently needed parts—these clients might benefit from a platform that allows for built-in reordering or subscription purchasing. Meanwhile, individual homeowners looking to install or repair their own HVAC systems might need to order unique combinations of parts. Implementing custom product builders into your online HVAC store can help these customers bundle the exact products they need with convenience and ease.
HVAC businesses will also need to consider advanced shipping and pickup solutions for their different customer bases. Certain HVAC products may be large and therefore difficult to ship, while some buyers, such as individual homeowners or local businesses, may prefer to pick up their orders in person after purchasing online.
Businesses that manufacture and sell chemicals online will have unique fulfillment considerations. The shelf life and expiration dates of chemicals make it imperative that products are shipped on time and that companies are proactive about avoiding supply chain issues. Some chemicals may need to be packaged in a specific way or kept at a controlled temperature in order to arrive to the customer safely and in good condition. And since policies regarding the sale and shipment of hazardous chemicals can vary widely across different states and countries, chemical supply companies will need to take extra precautions to ensure their fulfillment procedures are in compliance with regulations everywhere they ship.
An ecommerce fulfillment system that allows for subscription purchases or automatic reordering will also benefit chemical supply businesses, since many of their customers will likely require regular shipments.
Businesses that sell auto parts online often manage massive catalogs of products sorted by make, model, and year, and may need advanced warehouse management solutions to store, organize, and maintain these products. Customers ordering specific auto parts online likely need the products to arrive as quickly as possible in order to repair their vehicles, so automotive ecommerce businesses should prioritize options for rapid delivery in order to satisfy their buyers. Some automotive parts or other related accessories will require special shipping conditions, since they may include flammable or hazardous materials.
If you sell clothing, you’ll want to make sure your warehousing and inventory processes are streamlined, especially for handling a wide range of styles, sizes, colors, and clothing types. Since the sizing and fit of apparel can vary, you’ll also need to be prepared for a high return rate from customers. Make sure your fulfillment process is able to handle returns and exchanges effectively to boost your customer service and build loyalty.
With hard goods like furniture, toys, and appliances, you’ll want to carefully consider the size and weight of your product to determine the best ways to store, pack, and ship them. You’ll also need to take into account seasonality so you can accurately predict inventory and make sure your fulfillment centers can accommodate.
When selling perishables and food items, you need to take shelf life into account. This means making sure products are properly packaged and safely shipped to customers in a timely manner. Make sure you have a solid fulfillment strategy and reliable shipping partner so you can communicate delivery times with accuracy and transparency. Delivering perishables may also require a higher level of communication with the customer to ensure that they are present to receive the package when it's delivered.
For businesses that sell temperature-controlled goods such as pharmaceuticals, lab samples, beverages, and more, it’s critical to make sure products remain in good condition upon delivery to the customer. This necessity impacts every part of the fulfillment process, from transportation and storage to packaging and shipping. You'll want to consider storage solutions like refrigerators, insulated containers, and chillers, as well as specialized packaging solutions such as insulated containers and gel packs. Keep in mind that some cold chain solutions, such as dry ice, may require compliance with certain regulations.
Cold chain ecommerce sellers also need to take into account shipping routes, delivery timing, and climate hazards. If a temperature-controlled good can't be safely delivered using a certain method, you'll want to have alternatives on hand.
A final piece of the ecommerce fulfillment puzzle for businesses to consider is compliance. When fulfilling customer orders, ecommerce businesses need to comply with a number of federal, state, and local regulations. A few examples of these include:
By paying close attention to compliance in your ecommerce fulfillment strategy, you can better serve your customers while protecting your business from liability.
While a website is essential for growing your business, your ordering, delivery, and post-purchase experiences are what leads shoppers to revisit your business for future purchases. Failure to have an effective fulfillment strategy can cause dissatisfaction among shoppers and hurt your business in the long run. An organized, accurate, and efficient order fulfillment process allows you to deliver on your promise, meet the expectations of today’s shoppers, and secure a long-term customer base.
This blog was updated July 13, 2022.
Miva offers a flexible and adaptable ecommerce platform that evolves with businesses and allows them to drive sales, maximize average order value, cut overhead costs, and increase revenue. Miva has been helping businesses realize their ecommerce potential for over 20 years and empowering retail, wholesale, and direct-to-consumer sellers across all industries to transform their business through ecommerce.