As a leading eCommerce fulfillment company, we at eFulfillment Service (EFS) often work with startup merchants that are new to order fulfillment, and occasionally aren’t too familiar with what it is or how exactly it works.
So we wanted to create a post that answers the basic question, “What is Order Fulfillment?,” starting with two brief definitions:
Order fulfillment is defined as the steps involved in receiving, processing and delivering orders to end customers.
A fulfillment service is defined as a third-party company that provides these order fulfillment steps on behalf of another party, such as an online seller.
These general definitions can apply to many types of orders, from large business-to-business (B2B) orders, to individual direct-to-consumer (D2C) orders.
Because we’re an Internet fulfillment company, for this post we’ll talk in particular about eCommerce order fulfillment, which we’ll more specifically define as the steps involved in receiving, processing and delivering online orders to end consumers at residential addresses.
To help better understand exactly what eCommerce order fulfillment is, let’s walk through the different steps involved, starting with receiving.
Whether you outsource your order fulfillment to a company like eFulfillment Service, or you choose to do it in-house, receiving inventory from your manufacturers or suppliers is the first step toward getting orders to your end customers.
Here are the typical things that merchants or their fulfillment providers do once inventory is received at their warehouse:
- Count each item to ensure the actual number of items matches the number of items ordered from the supplier(s)
- Inspect the inventory to see if any items have been damaged
- Add SKUs to warehouse management software in order to keep track of the location, counts and number of sales of each of your items
- Apply SKU or bar code labels if they do not already have them
It is also not uncommon for items to be kitted during the receiving process. Check out our post, Can Kitting Save You Money on Order Fulfillment?, for more information on kitting.
Once inventory has been received, counted, inspected, labeled, and added to your warehouse management software, it is time for it to be shelved.
Proper inventory storage is one of the most important aspects of maximizing the speed and accuracy of your order fulfillment operations.
Each SKU is often designated an individual storage bin to allow for faster, more efficient order processing. Typically only a portion of inventory is placed in bins, with overflow storage residing in a separate area of the warehouse. “Hot SKUs,” meaning those that sell the most often, should be placed closer to order packing stations, which may involve the occasional reorganization of bins, something that software can assist with.
So now your inventory has been inspected, sorted and placed on shelves in the warehouse. Next comes order processing.
The first step in processing an order is receiving that order. Once an order is placed online by a customer, there are a number of ways for eCommerce sellers to get that order to their fulfillment warehouse. The most ideal way is by integrating fulfillment software with your shopping cart to allow orders to be automatically received by your fulfillment warehouse. At EFS, we receive orders a few different ways.
Once the order has been received by your warehouse, the individual items that make up that order are then picked off the shelves by warehouse staff and transported to an order packing station. The packing station will go through a series of quality control checks, determine the best packaging materials, scan items, add packing slips and any inserts, seal the box, and then move it to the shipping station.
There are a variety of methods and technologies involved with picking and packing orders, and what works for one seller may not work for another. This is one of the main reasons eCommerce merchants decide to outsource their order fulfillment, as they simply don’t have the in-house experience, expertise or technology to maximize order processing efficiencies.
After an order has been picked and packed, it is moved to a shipping station to prep it for delivery to the end customer.
It is the responsibility of the shipping station to weigh the package and determine the best ship method for the order. While some online sellers have a small handful of products that require basic delivery from just one carrier, such as the U.S. Postal Service, other sellers have orders that come in all shapes and sizes with specific requirements that are sent to customers domestically and internationally, which means shipping becomes much more complex.
It is also the responsibility of the ship station to update the status of an order so sellers know when those orders have been shipped, and so that those sellers and their customers can track the order to the point of delivery.
When answering the question, “What is Order Fulfillment?,” it’s important not to forget about returns.
For online buyers, the ability to easily return purchased items is an important part of the buying decision. For online sellers, the ability to effectively handle those returns is critical to their fulfillment operations, and to their overall businesses.
Online sellers should establish both an internal and external returns policy. An external policy should be listed on the seller’s website and make clear to customers how and where to send returns, while an internal policy should make clear to your staff or fulfilment provider how returns will be handled once they arrive back at the warehouse.
While the five steps above have been explained at a basic level, each involves numerous intricacies that often need to be tailored for each individual seller, and even for different types of orders. So if you’re ever asked, “What is Order Fulfillment?,” it’s probably easiest to just give the basic definition at the top!
If you’re an eCommerce seller in need of affordable order fulfillment for your business, let us know, we’d love to chat.