Order Fulfillment: A Complete Business Owner's Guide

Nicole Georgiev
Table of Contents
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    Fulfillment is the most important part of a business's order management and order processing.

    It's responsible for picking, packing, and shipping the products to the customer.

    Download our FREE Order Management eBook

    This means that fulfillment errors can have a major impact on customer satisfaction and your ability to meet demand.

    Read on to learn the basics of order fulfillment, the steps involved, and the tools you can use to streamline your order fulfillment process.

    What Is Order Fulfillment?

    Order fulfillment, also called order processing and fulfillment, is the process of receiving, packaging, and shipping a customer's order. The process starts when a customer places their order and does not end until the order is delivered to customers.

    Order fulfillment may be done in a business's own warehouse by employees or get outsourced fulfillment from 3PL companies. If done in-house, automating this process can streamline the workload of your eCommerce fulfillment team as you grow.

    What Is eCommerce Order Fulfillment?

    Order fulfillment in eCommerce is the same process as other fulfillment processes, but begins when the customer places an order through an online storefront.

    These orders may be placed on a website run using a headless eCommerce platform or through an online marketplace like BlueCart eCommerce. It lets you sell and manage B2B and B2C (B2B vs B2C) orders in a single platform.

    Fulfilling these orders is a major driver of revenue and can increase eCommerce sales when done well. The eCommerce order fulfillment process must be carefully followed in order to ensure that it's completed correctly. Order fulfillment systems and software may be used to track this process, such as when shipping orders.

    This post is part of our FREE Order Management & Fulfillment Guide eBook.

    Order Fulfillment Process

    The order fulfillment process includes all steps related to receiving, packaging, and shipping a customer's order. Depending on what you sell and the scale of your eCommerce business, this process may also include other steps.

    One common step that many businesses include is assembling products or compiling them for all types of subscription boxes, such as the baking subscription box, meat subscription box, and coffee bag subscription via product kitting. Another step is performing a credit check on a B2B customer due to order volume or size (or a prior billing issue).

    The key to the order fulfillment process is that it is nearly entirely done by your fulfillment team and inventory control manager or a third-party fulfillment company.

    Quiz: Order Fulfillment Involves All of the Following Business Processes Except

    Were you paying attention to how order fulfillment works? Let's find out with a quick quiz.

    Order fulfillment involves all of the following business processes except:

    A. Making customers aware of the product.

    B. Assembling the product.

    C. Checking the customer's credit.

    D. Submitting the order.

    E. Shipping the product.

    If you chose A, you’re correct. That's the job of sales and marketing. Nice work!

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    4 Order Fulfillment Process Steps

    Though there are multiple ways to handle customer orders, there are a few key steps in the order fulfillment process that all businesses should follow.

    Follow these four steps:

    1. Receive Customer Orders

    Orders will come into the business through various channels including in-person, on the company's website, or through an eCommerce marketplace. Regardless of how the order comes in, it is then sent to the fulfillment team to begin processing. Right away this is an area where you can drive efficiencies by using an all in one sales platform that combines your customer orders from all sales channels into a unified dashboard (like BlueCart).

    Receiving the order is the first step of the supply chain process and fulfillment processing. Utilizing an order fulfillment strategy is crucial to ensure efficiency and accuracy. It may also improve customer experiences when you improve your order fulfillment process.

    1. Process Customer Orders

    With the customer's order in hand, the fulfillment team must then find each product within the warehouse. If you follow proper inventory management techniques, this should be easy as all products are accounted for and located in the correct place.

    If not, this is where many businesses run into trouble with their order processing. Some of the most common issues here are inventory being spread throughout the warehouse and backordered items due to under-ordering. You can mitigate the likelihood of these issues by using multichannel order management software.

    After processing the customer orders, it's time for picking and packing. This may be done at an order fulfillment center. It's possible for you to consider outsourced fulfillment options. Outsourced order fulfillment may save you time and money.

    1. Ship Customer Orders

    With the products collected, they are then brought to one location and put into eCommerce packaging. This packaging will keep them safe during transit, but also act as a marketing tool for the business.

    The order is now ready for shipment and will go out through the business's own shipping service, a third-party carrier (such as third party logistics), or sent out for bulk shipping overseas. An estimated date of arrival will also be generated and sent to the customer.

    Once the order is picked, packed, and shipped, customers may have the option to track their orders.

    1. Process Customer Returns

    Unfortunately, not all customers will be satisfied with their orders. When these customers send the order back, the fulfillment team is responsible in part for processing these returns.

    The financial portion of the return will go through the office, but the fulfillment team must inspect the products and re-allocate them in the warehouse. These products must be assigned a new SKU number, as they are worth less and cannot be sold as new.

    To process a return, the fulfillment team will need a shipping label printer and packing slip. The shipping label should have the customer's RMA number on it. Once the product is received back at the warehouse, the fulfillment team will inspect it and then re-allocate it accordingly.

    Luckily, BlueCart has robust and easy-to-use returns and refunds/credits system built in. That saves everyone involved time and trouble.

    Order Fulfillment Software

    The best way to track and optimize your order fulfillment processes is by using order fulfillment software or an order management system. These tools are used to automate the fulfillment process and eliminate issues in tracking and shipping.

    Order Fulfillment Software

    There are many options for order fulfillment software, but look for one that has the following features:

    Generate Picking Lists

    When orders come in, your fulfillment team will receive a list of the products. If this is done manually, that leaves a lot of room for error. Stick with software that automatically generates an easy-to-read picking list for your staff. They'll thank you for it.

    Adjust Inventory Levels

    The best order fulfillment software should also be inventory control software. It should track the inventory levels of your products and automatically deduct new orders. After receiving inventory, you'll have real time updates of what is going in and out of your stock room. Properly storing inventory is crucial. This will give you greater insight into your inventory and let you plan an optimal reorder point.

    Nobody wants to be stuck with dead stock. Not sure what the deadstock meaning is? Take a quick read to learn about this inventory management process and how it benefits order fulfillment services.

    Track Shipments

    One of the biggest eCommerce trends is offering expedited shipping and overnight shipping options. In fact, 69% of consumers say they will not order from a company that has failed to deliver a product within two days of the estimated date.

    You need to be able to provide accurate delivery estimates and tracking. Make sure you use software that can do just that, to keep those customers coming back. If you handle delivery yourself, you'll also want to invest in route planning software to optimize your routes and cut costs.

    How to Improve Order Fulfillment Process

    Since order fulfillment is such an important part of your inventory management operations, optimizing the process is vital.

    Here are four steps you can take to improve your order fulfillment process:

    1. Integrate software. The best way to ensure orders are processed correctly and quickly is by making sure your software is communicating properly. Orders should be transferred to the fulfillment team automatically and without errors. If this isn't the case, you should reevaluate the eCommerce software you use.
    2. Use well-known eCommerce shipping companies. The fulfillment process doesn't end when the products leave your warehouse. Using an unknown shipping company may save you money, but it also adds risk. If you sell wine from home, you must know the potential legal risks of shipping it. If your customer receives their order late or never receives it at all, you'll lose money. The right shipping partner can help you navigate the murky seas of what you can and cannot ship legally, such as shipping alcohol. So ship responsibly and learn how to ship wine and alcohol securely.
    3. Establish and use warehouses in good locations. If you have multiple locations or use a third-party fulfillment company, make sure the warehouses are located near the areas you ship to. This will keep shipping times down and ensure your customers don't get frustrated.
    4. Keep communicating with the customer. This is a key step in ensuring customer satisfaction. You should send an order status update any time there's a change and make sure the customer knows that you're available when they need you. This lessens any frustration they may feel when orders are delayed. Hiring a dedicated order management specialist to help here is a great idea. BlueCart's online marketplace is a great option for suppliers to connect with thousands of buyers. Our app also provides plenty of ways to communicate with other businesses, like phone, chat, and email.
    Download our FREE Order Management eBook

    Drop Shipping vs Order Fulfillment

    If you don't have the space or team to fulfill orders on your own, you can use dropshipping. Dropshipping is a business model where you sell items from a supplier to your customers without ever stocking them yourself.

    There are a few benefits to using dropshipping. First, there is very little upfront investment needed, since you never own the products. This means you can start and grow a business much more quickly. Second, it cuts down your overhead expenses as you don't have to pay for a warehouse or staff. Third, much of the fulfillment process is automated and dropshipping vendors/ suppliers have a good handle on shipping times and tracking.

    There are also a few drawbacks. First, you rely wholly on your supplier(s) to inspect, package, and ship products to your customers. If there are any issues in the process, you may not be aware and can't fix them yourself. Second, your product selection will be limited to what the supplier can ship. This can make expanding more difficult if your customers want new product types.

    Why Is Order Fulfillment Important?

    Order fulfillment is important for businesses because it helps ensure that customers receive their orders promptly and as expected. By fulfilling orders correctly and in a timely manner, businesses can build customer satisfaction and loyalty, which leads to repeat business and positive word-of-mouth referrals. In addition, fulfilling orders efficiently helps businesses reduce costs associated with inventory management and shipping.

    Want to learn more about order management?
    This post is part of our FREE Order Management & Fulfillment Guide eBook.

    Types of Order Fulfillment

    There are four main order fulfillment models businesses use to get products to their customers: in-house, third-party, drop shipping, and hybrid. Each model has its own benefits and drawbacks that need to be considered before deciding which is right for your business.

    1. In-house fulfillment is when a business handles all aspects of order fulfillment, from manufacturing and warehousing to shipping and customer service. The main benefit of in-house fulfillment is that it gives you complete control over every aspect of the process and allows you to respond quickly to changes in customer demand. The downside is that it can be expensive to set up and maintain an in-house fulfillment operation, especially if you don't have much volume.
    2. Third-party fulfillment is when a business outsources all or part of its fulfillment operation to a third-party provider. The main benefit of using a third-party fulfillment provider is that it can save you money on labor and other costs associated with running a fulfillment operation. The downside is that you'll have less control over your fulfillment process and may have to deal with longer shipping times.
    3. Drop shipping is when a business uses a third-party fulfillment provider to ship products directly to customers on behalf of the company. The main benefit of drop shipping is that it eliminates the need for the business to maintain inventory or manage shipping logistics. The downside is that you'll have less control over the quality of your products and may have to deal with longer shipping times.
    4. Hybrid fulfillment is a mix of the three previous models and can be customized to fit the specific needs of a business. The main benefit of hybrid fulfillment is that it allows companies to take advantage of the best features of each model. The downside is that it can be more expensive and complex to set up and manage a hybrid fulfillment operation.
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    Frequently Asked Questions About Order Fulfillment

    How to Improve the Order Fulfillment Process?

    To improve the order fulfillment process, follow the steps below:

    1. Integrate software.
    2. Use well-known eCommerce shipping companies.
    3. Establish and use warehouses in good locations.
    4. Keep communicating with your customer(s).

    How Do I Improve My Order Fulfillment Cycle Time?

    Improve your order fulfillment cycle time by utilizing supply chain technology. This can minimize errors and also quickly move business operations when it comes to sourcing, production, and delivery.

    How Do You Increase Order Fulfillment Accuracy?

    Increase order fulfillment accuracy by:

    1. Setting rate goals for order accuracy
    2. Improving your inventory management process
    3. Optimizing both the picking and packing process
    4. Implementing fulfillment technology

    What Is the Order Fulfillment Meaning?

    The order fulfillment meaning refers to the process of receiving orders, then packing and shipping them. This occurs whenever a customer purchases a product or service from an eCommerce store.

    What Is the Order Fulfillment Process and What Is the Order Fulfillment Process Step by Step?

    Order fulfillment involves a step-by-step process that includes receiving goods, storing the goods for a short time in the proper warehouse or distribution center, and processing the order by picking and packaging it, then shipping it. Logistics may also be included in this process as the final step.

    What Is Order Fulfillment?

    Order fulfillment involves receiving, packing, and shipping customer orders once an order has been placed through an online or eCommerce store. This process is essential for all orders and online stores.

    Was That Fulfilling?

    Order fulfillment plays a major role in the sales process and directly impacts customer satisfaction and retention. By optimizing fulfillment processes and integrating software, you can lower your costs and grow your sales.

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