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Order Fulfillment: Meaning & Process

By
Joshua Weatherwax
Table of Contents

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.

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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.

Order Fulfillment Meaning: 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 be outsourced to a third-party company for 3PL eCommerce fulfillment. If done in-house, automating this process can streamline the workload of your eCommerce fulfillment team as you grow.

eCommerce Order Fulfillment: What Is Order Fulfillment in eCommerce?

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 orders in a single platform.

Fulfilling these orders is a major driver of revenue and can increase eCommerce sales when done well.

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 business, this process may also include other steps.

One common step that many businesses include is the assembly of products or compiling them for all types of subscription boxes 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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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 steps:

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).

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 guidelines, 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 products due to under-ordering.

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, or sent out for bulk shipping overseas. An estimated date of arrival will also be generated and sent to the customer.

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.

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. This will give you greater insight into your inventory and let you plan optimal reorder points. Nobody wants to be stuck with dead stock.

Track Shipments

One of the biggest eCommerce trends is fast, free shipping. 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, so you can 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 your customer receives their order late or never receives it at all, you'll lose money. Plus, the right shipping partner can help you navigate the murky seas of what you can and cannot ship legally, such as shipping alcohol.
  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.
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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 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.

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.