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eCommerce Fulfillment & 3PL eCommerce Fulfillment Guide

By
Joshua Weatherwax
Table of Contents

When you increase eCommerce sales that's great, but it's meaningless if you can't get your products to the customers.

Do you have an order fulfillment process in place?

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If you're just starting an eCommerce business or already run one, understanding the ins-and-out of order fulfillment is as vital as knowing what is eCommerce.

Keep reading to learn about eCommerce fulfillment, fulfillment centers, and the services and companies that you can use to improve yours.

eCommerce Order Fulfillment

Order fulfillment is one of the most important parts of eCommerce sales and imperative in ensuring customer satisfaction.

Here are some important eCommerce trends regarding fulfillment:

  • More than 90% of consumers have not purchased a product due to a lack of free shipping at least once. This is particularly true of recurring shipments like a coffee bean subscription.
  • More than 46% of small to mid-sized businesses saw an increase in profit when offering free eCommerce shipping.
  • 40% of consumers won't order a product if delivery time takes too long. Shipping expectations vary by industry, but the rule-of-thumb is that you need to ship as quickly as your competitors.
  • About 60% of all eCommerce businesses outsource their fulfillment to some degree. This may be using third party fulfillment companies or participating in dropshipping.
  • eCommerce fulfillment costs are increasing an average of 18% each year. This makes controlling your inventory carrying cost even more important. If you end up with dead stock or too many wholesale items to sell, you'll bleed money more quickly.

What Is Order Fulfillment in eCommerce?

Order fulfillment in eCommerce is the picking, packing, and shipping of online purchases to customers.

eCommerce Fulfillment Cycle

Order fulfillment may be done in the eCommerce business's warehouse by employees or it may be outsourced to a third party. It is also a major driver of revenue and can increase eCommerce sales when done well. If you choose to handle deliveries yourself, you'll want to invest in good route planning software.

eCommerce Fulfillment Center

An eCommerce fulfillment center is a physical location where a third party logistics provider fulfills orders.

These locations are different from normal warehouses as the products within them belong to other businesses. These centers are strategically located to help fulfill orders for multiple businesses in a given region. eCommerce fulfillment centers can also ship products for both a direct to consumer and B2B business.

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3PL eCommerce Fulfillment

3PL eCommerce fulfillment is when a business takes customers’s orders but a third party picks, packs, and ships the products. It is used to keep warehouse and shipping costs low while increasing the ability to make eCommerce sales.

3PL fulfillment is used by businesses of all types and sizes. More than 85% of Fortune 500 companies use 3PL fulfillment. Many startups also use 3PL since they can't afford a large warehouse or fulfillment team. 3PL lets entrepreneurs turn their eCommerce business ideas into profitable businesses more quickly.

eCommerce Fulfillment Services

There are many eCommerce fulfillment services on the market, but the best have a few features in common.

Here's what to look for:

  • Platform integration. You need a fulfillment service that can easily be integrated into your existing D2C (see D2C meaning) or B2B eCommerce platform. If this isn't the case, it becomes much more difficult for orders to get passed along and tracking becomes nearly impossible. If you use a headless eCommerce platform, you likely won't have to worry about this. Luckily for food suppliers, BlueCart eCommerce can easily be integrated with most fulfillment services (and even comes with Shippo integration right out of the box). This lets businesses focus on selling their products and growing their profits and expanding into the DTC food market.
  • Bulk shipping discounts. If you plan on making B2B sales or just have large order quantities, shipping discounts are vital. As your order size goes up, so does the cost to ship. Bulk discounts can keep this in check without hampering your ability to sell. This is especially valuable if you require minimum order quantities (MOQ) as a wholesaler (see what is wholesale).
  • Valuable locations. There's no point in using a fulfillment service that doesn't have locations near your customers. This will increase your shipping time and push away your buyers. Try to stick with a company that has a good network of centers in the areas you sell to.
  • Strong tracking system. Modern shoppers like to have a firm idea regarding shipping times and delivery. Go with a fulfillment service that uses accurate package tracking so you can keep your customers informed and happy. You can have the best eCommerce packaging in the world, but it's meaningless if the products get lost.
  • Return handling. Unfortunately, all companies run into issues with customer returns. If your fulfillment service doesn't accept returns, you'll have to do it yourself. This is expensive and difficult, so it's better if the fulfillment service can do it. Even better if they're integrated into your eCommerce payment gateway so refunds can be automatically issued. Users of BlueCart eCommerce don’t have to be worried, since it comes with a built-in, easy returns and credits functionality.

eCommerce Fulfillment System

An eCommerce fulfillment system, also called fulfillment software, is used to automate the inventory management process. This includes things like generating a list of products to pick, creating shipping labels, and tracking packages as they are shipped.

Fulfillment software features vary, but they usually include various tools for inventory control. This includes tools like inventory forecasting and reorder point analysis reports as well as tracking established inventory KPIs. These systems can also be integrated into the business's POS system and eCommerce platform for instant data transmission.

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eCommerce Fulfillment Companies

If you operate a small eCommerce business, you likely can't handle a large number of orders at a time. That's where an eCommerce fulfillment company comes in. These 3PL companies are eCommerce shipping companies that can move far more product more efficiently and usually have multiple facilities that make it easier to sell to distant regions.

There is no best fulfillment company, since different industries have different needs. Pick a fulfillment company that aligns well with your eCommerce business plan and can ensure customer satisfaction. This isn't an area to take the cheap route since revenue greatly depends on it.

Best Fulfillment Companies For Startups 

If your business is new or still in its early stages, paying for eCommerce fulfillment may not be the most appealing thing. Luckily, there are a number of eCommerce fulfillment companies with payment plans specifically built with startups in mind.

Here are the three best fulfillment companies for startups:

  • Amazon FBA. One of the most popular options for startups is the Amazon “Fulfilled by Amazon” service. It’s a program designed for users of the Amazon online marketplace and allows you to build your business through the site without having to worry about fulfilling orders. However, there are a few rules regarding the service that may limit your ability to use it. If you participate in dropshipping or otherwise sell products with another brand on them, Amazon won’t fulfill orders for you.
  • FedEx Fulfillment. Unsurprisingly, one of the leading companies in logistics and delivery have their own fulfillment service. This 3PL service offers a range of services and is designed to scale with your business. Their platform is easy-to-use and can be integrated into most marketplaces or eCommerce platforms. The biggest benefit is that it gives you direct access to one of the largest shipping fleets in North America, so delivery estimates are usually pretty accurate.
  • eFulfillment Service. Started in 2001, eFulfillment Service has become one of the most-trusted and reliable 3PL companies for eCommerce businesses. This is largely thanks to their focus on customer service and an adherence to modern technology. They offer a wide range of services and are a great choice for small to mid-sized businesses that ship small packages or shipments. If you’re looking for bulk shipping support, they might not be the best choice.

Automated eCommerce Fulfillment

One of the biggest trends in recent years is eCommerce fulfillment automation. This is a method of streamlining fulfillment operations using fulfillment software. However, the business needs to take additional steps to make the eCommerce software have the biggest impact.

Here are the steps:

  1. Organize your warehouse. Your warehouse staff have a lot on their plate and a poorly laid out warehouse can hamper their ability to get the job done. Make sure to arrange your warehouse in a logical manner and keep similar products together to save time and money. This is especially important if you do product kitting, since you routinely ship multiple products together.
  2. Set reorder and stock level thresholds. Automation is useless if your system doesn't know when to do things. Establish optimal reorder points and safety stock levels for your products. Then make sure to keep an eye on your eCommerce analytics. When these thresholds are passed, the software will automatically place an order and you don't have to worry about issues with backordered items.
  3. Add branding. This step won't change the process itself, but makes the packages more personalized. When the customer receives their package with your branding and any personal touches like a thank you note, they won't be thinking about automation. This builds the customer relationship and increases the chance of them becoming a return customer. This is a great tool for DTC marketing and B2B marketing.

eCommerce Fulfillment Software

Whether you handle fulfillment on your own, automate the process, or outsource it, the software you invest in plays a major role in its success. You need to find software that’s trustworthy, easy-to-use, and capable of being integrated into all other software you use. Reach out to multiple providers and see if you can get a demo or trial access to test out the features. This is an area where trying to save money can negatively impact your ability to make quick and informed decisions.

Have You Had Your Fill?

The world of eCommerce fulfillment may not be glamorous, but it has a major impact on your bottom line. By optimizing fulfillment and integrating all software, you can lower your costs and grow your sales. You may also want to use an online marketplace to increase your sales and make the most out of your new fulfillment operation.

For even more information on eCommerce businesses, we recommend checking out our eCommerce business guide or some of our favorite and best Commerce books and eCommerce blog. Knowledge is the most valuable resource at your disposal.