What is order fulfillment?
Order fulfillment refers to the steps a supplier, wholesaler, or dropshipper takes between getting a new order and placing that order at the customer’s doorstep. It covers everything from stocking goods, receiving products, packing and shipping, and finally notifying the customer about order delivery. This is one of the most vital parts of eCommerce, as it constitutes the very process that can make or break the customer experience.
Order fulfillment models
eCommerce offers sellers three types of fulfillment models.
- In-house fulfillment – by acquiring and storing stock, sellers can fulfill orders via their in-house team. The goods are taken from stock and sent directly from their warehouse or home when orders are placed. This requires that the seller has good storage and manages stock levels.
- Third-party fulfillment – Outsourcing fulfillment could be a suitable option for you if you don’t have space to store or hold goods. It also takes the stress of shipping off the seller’s shoulders, giving them more time to focus on the business itself.
- Dropshipping – this method involves sellers passing the incoming orders to suppliers. To fulfill orders, you simply give an order to your supplier and enter your customer’s address. Essentially, the supplier then fulfills the order and ships it to the customer without your involvement.
Learn more about Print on Demand and starting a Print on Demand business.
The order fulfillment steps
There are five major steps in order fulfillment. Not all of them are vital in the ordering process, but every company needs to cover them if they want to make it online.
- Receiving inventory – eCommerce supply chain allows for inventory handling to be more flexible than in-store. Either the customer will buy and store stock for sale or act as a middleman or outsourcer. In this latter case, they have to dropship the customer’s order with their supplier.
- Storing inventory – If the company decides not to outsource, it will be on them to provide storage. This will require the use of a warehouse or a large area of the office or home space. It is up to them to keep a close eye on stock levels and ensure they have enough to meet demand.
- Order processing – Those who outsource order fulfillment don’t have to stress over the minor order processing details, as their partner handles the process. For businesses that manage their own inventory, this is where the order is taken off the shelf, packed and inspected for damages, and finally moved to the shipping station.
- Order shipping – The type of item will determine how it can be shipped. Smaller, lighter items can be sent via usual mailing methods, while larger or heavier ones will need specialist couriers. Once the item is sent, the seller will notify the customer via email with delivery and tracking information. Typically, companies contract a third-party carrier to fulfill this step.
- Returns – If the item does not meet expectations, eCommerce allows for easy return options for the buyer. Most companies will provide a returns label with their invoices to allow free postage, though some will need the buyer to handle this themselves. While this will ideally not be necessary, all eCommerce companies must have a clear and concise returns policy.
eCommerce order fulfillment process
eCommerce order fulfillment involves the steps of receiving, processing, and shipping the order, but you can further break it down into the following steps:
- A store receives an order online, via phone, or email
- Its inventory system registers the order request
- The store owner sends an order confirmation to the customer
- The store owner sends the order request to the supplier
- The supplier locates and picks the ordered product
- Order is packed and shipped
- The customer is notified of the order shipping status
- Order arrives
- If needed, orders are returned and refunds made
- The inventory is updated