Whether a customer places an order online, by mail, or over the telephone, he or she expects nearly instant gratification. Delays or errors in order processing and order fulfillment are the leading cause of dissatisfied customers, followed by a customer service team that is unable or unwilling to offer an adequate solution.
Having a top-notch order fulfillment process makes all of the difference between satisfying current customers and capturing repeat business, and struggling to fulfill return and refund requests.
What Is Ecommerce Order Fulfillment?
Ecommerce order fulfillment is the process of receiving, processing, packing, and shipping online orders to customers. This critical aspect of ecommerce ensures that customers receive their purchased products in a timely, accurate, and efficient manner. It involves several steps, including inventory management, order processing, packaging, shipping, and tracking. Ecommerce businesses can either handle order fulfillment in-house or outsource it to third-party logistics providers (3PLs) who specialize in managing these tasks. In today's fast-paced world of online shopping, having a seamless and efficient order fulfillment process is vital for ensuring customer satisfaction and maintaining a competitive edge in the market. With the help of visionary fulfillment technology partners like Extensiv, businesses can optimize their ecommerce order fulfillment processes to meet the ever-changing demands of consumers and scale their operations effortlessly.
Why Order Fulfillment Is Crucial for Ecommerce Brands
In the highly competitive world of ecommerce, brands need to ensure that their order fulfillment process is efficient and reliable to succeed and thrive. This section will discuss the importance of order fulfillment for ecommerce brands and the various factors that contribute to its significance.
Meeting Customer Expectations
Today's consumers have high expectations when it comes to online shopping. They expect fast, accurate, and seamless delivery of their orders. Failure to meet these expectations can result in lost customers and negative reviews, which can severely impact a brand's reputation and growth. Efficient order fulfillment plays a crucial role in meeting and even exceeding consumer expectations, ensuring repeat business and customer loyalty.
Maintaining a Competitive Edge
With numerous ecommerce brands vying for consumer attention, having a robust order fulfillment process can be a significant differentiator. Brands that can consistently deliver products quickly and accurately are more likely to gain a competitive edge in the market, attracting new customers and retaining existing ones.
Efficient Inventory Management
Efficient order fulfillment involves effective inventory management, ensuring that products are available for customers when they need them. By keeping accurate records of inventory levels and utilizing advanced inventory management tools, ecommerce brands can avoid stockouts and overstocking, thereby optimizing warehouse space and reducing costs.
Reliable Delivery
One of the key aspects of order fulfillment is ensuring that products reach customers safely and on time. A reliable delivery process not only creates a positive customer experience but also builds trust in the brand. Ecommerce brands must work closely with their fulfillment partners to establish a dependable delivery system, selecting the right carriers, monitoring shipment progress, and addressing any issues that may arise promptly. By prioritizing reliable delivery, ecommerce brands can cultivate customer satisfaction and loyalty, ultimately contributing to their long-term success.
Reducing Operational Costs
A streamlined order fulfillment process can help ecommerce brands and merchants reduce operational costs. By automating tasks, minimizing errors, and improving warehouse efficiency, brands can save time and resources, enabling them to invest in other aspects of their business, such as marketing and product development.
Facilitating Scalability and Growth
As ecommerce brands grow, so do their order fulfillment needs. By partnering with visionary fulfillment technology providers like Extensiv, brands can ensure that their order fulfillment processes are scalable, allowing them to expand their operations without the need for costly platform migrations. With seamless scalability, brands can focus on reaching new markets and growing their business while expertly managing their order fulfillment needs.
In conclusion, reliable order fulfillment is essential for ecommerce brands looking to succeed in the competitive online marketplace. By investing in efficient order fulfillment processes and partnering with knowledgeable providers like Extensiv, brands can meet customer expectations, maintain a competitive edge, and facilitate business growth.
The Impact of Ecommerce Fulfillment on 3PLs
The rapid growth of ecommerce has created new challenges and opportunities for outsourced fulfillment. As the demand for seamless and efficient ecommerce fulfillment increases, 3PLs must adapt and innovate to meet these evolving needs. In this section, we will explore the importance of reliable ecommerce fulfillment for 3PLs and how it can benefit their business.
Increases Customer Loyalty
By offering reliable and efficient ecommerce fulfillment services, 3PLs can significantly enhance customer satisfaction and loyalty. When ecommerce retailers know they can trust their 3PL to deliver products promptly and accurately, they are more likely to stick with that provider and recommend them to others. This helps to build long-lasting relationships with clients and grow the 3PL's business.
Improves Efficiency
Investing in advanced fulfillment technology and processes allows 3PLs to streamline their operations and improve overall efficiency. This includes adopting warehouse management systems (WMS) and other tools designed specifically for ecommerce fulfillment, such as Extensiv's suite of end-to-end integrated, cloud-based platforms. These innovations can help 3PLs to manage inventory more effectively, reduce errors, and save time–all of which contribute to a more profitable business.
Lowers Shipping Costs
Effective ecommerce fulfillment can also help 3PLs reduce shipping costs by optimizing carrier selection, delivery routes, and packaging materials. This not only saves money for the shippers but also makes the 3PL a more favorable partner to their clients, who benefit from these savings. Ultimately, this makes the 3PL more competitive in the market and better equipped to attract and retain clients.
Extends Ecommerce Reach
By partnering with a fulfillment technology provider like Extensiv, 3PLs can tap into a vast network of connected warehouses and distribution centers. This enables them to extend their geographic reach and offer their clients access to new markets, both domestically and internationally. With the ability to fulfill orders from multiple locations, 3PLs can reduce shipping times, lower costs, and provide a more seamless experience for their ecommerce clients and their customers.
Enhances Adaptability and Scalability
As the ecommerce landscape continues to evolve, it's essential for 3PLs to stay agile and adapt to changing consumer expectations and industry trends. By investing in cutting-edge fulfillment technology and staying informed about market developments, 3PLs can better anticipate and respond to shifts in demand, ensuring that their business remains competitive and positioned for growth. With the right technology and expertise, 3PLs can scale their operations as needed, without the pain of platform migrations or operational disruptions.
5 Steps in the Order Fulfillment Process
The order fulfillment process is a critical aspect of ecommerce, as it determines the speed and efficiency with which customers receive their products. Understanding the various steps involved can help both ecommerce brands and 3PL providers optimize their operations, leading to increased consumer satisfaction and business growth. In this section, we will examine the key stages of the order fulfillment process in greater detail.
Order Receiving
The first step in the fulfillment process is receiving the new order from the consumer once they checkout. This typically involves capturing the customer's information, including their name, address, and payment details, as well as the specific items they wish to purchase. To ensure accuracy and efficiency, it's essential to have an easy-to-use and reliable ecommerce platform that can seamlessly integrate with a WMS or other order management platforms, like Extensiv's cloud-based solutions.
Order Processing
Once the order is received, it moves to the processing stage. During this phase, the WMS checks the inventory levels for the requested items and confirms their availability. For a more efficient process, consider utilizing real-time inventory tracking systems, which can help prevent stockouts and reduce the likelihood of backorders. Once inventory is confirmed, the order is queued for picking and packing, often using a priority-based system to ensure timely fulfillment.
Picking and Packing
In the picking and packing stage, warehousing staff locate the items listed in the order, pick them from the shelves, and carefully pack them for shipment along with a packing slip. Implementing advanced picking technologies, such as pick-to-light systems, voice picking, or mobile devices connected to the WMS, can significantly improve picking accuracy and efficiency. Additionally, consider using automated packing solutions or packing stations with predefined packing guidelines to reduce errors and minimize damage to products during transit.
Shipping
Once the order is packed, it moves on to the shipping stage. At this point, the order management system, WMS, or other fulfillment software selects the most appropriate carrier and shipping method to ship orders, taking into account factors such as the destination, package size, and delivery timeline. To optimize shipping costs and delivery times, consider integrating a multi-carrier shipping management software solution that can automatically compare rates and delivery options from multiple carriers such as Extensiv Order Manager. The packed order is then labeled with the appropriate shipping label and handed off to the selected carrier for delivery.
Returns
Despite the best efforts of ecommerce brands and 3PL providers, returns are an inevitable part of the order fulfillment process. A well-managed returns process can help maintain customer satisfaction and minimize the impact on the business. To achieve this, set up clear return policies, provide customers with easy-to-follow instructions and prepaid return labels, and implement a streamlined system for processing returned items for restocking or disposal.
By understanding and optimizing each step in the order fulfillment process, ecommerce brands and 3PLs can work together to ensure that customers receive their orders quickly, accurately, and with minimal hassle. Utilizing advanced fulfillment technology solutions, like those offered by Extensiv, can help to streamline these processes and drive continued success in the ever-changing world of ecommerce.
5 Order Fulfillment Practices for 3PLs
In the highly competitive world of ecommerce, 3PLs play a critical role in ensuring that consumers receive their orders quickly, accurately, and efficiently. As a 3PL, adopting best practices for order fulfillment can help you stay ahead of the competition, handle a wide range of SKUs, and provide exceptional service to your clients. In this section, we will explore several key practices that can elevate your order fulfillment processes, with a subtle focus on the benefits of Extensiv's solutions.
Strong Integrations
Seamless integration between your warehouse management system, order management platform, and ecommerce platforms like Amazon is essential for efficient order fulfillment. Strong integrations help reduce manual data entry, minimize the risk of human error, and speed up the entire fulfillment process. Consider adopting cloud-based, integrated solutions like Extensiv's suite of warehouse, inventory, and order management platforms, which connect easily with various sales channels and streamline data sharing.
Automated Processes
Automation can significantly improve the speed and accuracy of your order fulfillment processes, from picking and packing to shipping via carriers like USPS and handling same-day deliveries. Implementing technologies like mobile barcode scanning, pick-to-light systems, and automated packing stations can help reduce human error and increase overall efficiency. Extensiv's cloud-native platforms are designed to support the integration of such automated solutions, allowing your order fulfillment company to scale and adapt to the ever-evolving world of ecommerce.
Clear Inventory Visibility
Real-time inventory visibility is crucial for 3PLs, as it helps you maintain accurate stock levels, avoid stockouts, and reduce the likelihood of backorders. Ensure your order fulfillment system offers real-time inventory tracking and can be accessed from anywhere, at any time. Extensiv's cloud-based platforms provide up-to-date inventory information, empowering you to make informed decisions and provide accurate information to your expanding customer base.
Effective Communication
Maintaining open lines of communication with your ecommerce clients is critical for successful third-party fulfillment. Providing regular updates on inventory levels, order status, and any potential issues helps build trust and allows your clients to plan more effectively. Consider implementing a centralized dashboard or portal, like those offered by Extensiv, to streamline communication and provide real-time updates to your clients. Including a comprehensive FAQ section on your website can also help address common questions and concerns.
Continuous Improvement
In the fast-paced world of ecommerce, it's essential to continually evaluate and improve your order fulfillment model. Regularly review your performance metrics, identify areas for improvement, and implement changes to optimize efficiency and customer satisfaction. By leveraging Extensiv's advanced reporting and analytics features, you can gain valuable insights into your fulfillment operations, manage fluctuating order volumes, and make data-driven decisions for continuous improvement.
By adopting these best practices for order fulfillment, your 3PL business can provide a comprehensive fulfillment solution that not only meets customer expectations but also positively impacts your bottom line. Leveraging innovative technology solutions like those offered by Extensiv can help you achieve greater efficiency, scalability, and success in the ever-changing world of ecommerce.
The 3 Best Order Fulfillment Strategies for Ecommerce Brands: Drop Shipping, In-House, and 3PL
There are three ways in which a company fulfills ecommerce and other orders: by hiring and utilizing in-house staff, drop shipping from its suppliers (see our guide on questions to ask drop shipping suppliers here), and outsourcing to a 3PL fulfillment operation. Each of these methods has its benefits and drawbacks, and one method may be better suited to the needs of a particular business than the other two.
Drop Shipping
The micropreneur or ultra-small business may depend on drop shipping. Having a drop shipping arrangement with its vendors eliminates the need to have a facility and manpower to receive, shelve, and then ship goods.
Eliminating inventory on hand also saves money for the business that is located in a state or province that levies an inventory tax. Drop shipping is an excellent fulfillment method for a home-based business, a business that lacks inventory storage or warehouse space, or one that is located in an area that is difficult for large trucks to navigate. Trucking firms charge additional fees if deliveries or pickups require a liftgate, inside delivery, or have no loading dock available. Drop shipments avoid inbound freight accessorial fees.
Drop Shipping Challenges
There are several downsides to drop shipping, however. The first is that the shipper has no control over the process. A retailer has to depend on the capabilities of his or her vendors; if a vendor hires staff that is inattentive in picking the product, packaging, or labeling, then that retailer's customer is likely to receive a package that contains the wrong product or one that is damaged. In order to correct the problem, the retailer will have to issue a return goods authorization, reorder the correct product from the vendor, pay for reshipment, and then negotiate a credit from the vendor on the original shipment.
In addition, if a vendor is unethical, he or she may steal the retailer's mailing list and begin marketing directly to those customers the retailer has brought in. After all, the vendor has immediate access to the customer's name, address, contact email, telephone number, and the type of merchandise they have purchased.
A second downside to drop shipping is that the retailer must wait until a minimum order quantity or value is reached before they are able to fulfill the initial customer order. This can cause undue delays for the first customer who has made a purchase and create havoc during peak ordering times such as the holiday season. Orders that require a 3- to 6-week delivery window are orders that are likely to be canceled.
Finally, many vendors will not drop ship. This reduces the number of wholesale opportunities that are available to the retailer, which also limits the ability to negotiate the best prices or capture the widest selection of merchandise.
In-House Fulfillment
A second order fulfillment option is for the retailer to perform these duties in-house. This requires the business to hire staffers who have shipping and receiving experience. This also requires having warehouse space for storing inventory and purchasing and storing shipping materials such as boxes, crates, pallets, packing peanuts, bubble wrap, and tape. In addition, there may also be a need to purchase or rent material handling equipment.
In-house ecommerce order fulfillment affords the retailer more control over the fulfillment process and creates a closer alignment between order entry, merchandise procurement, and order fulfillment. Products can be inspected upon receipt for damage and to ensure the correct materials have come in. Pick and pack functions can be closely supervised to ensure those materials go out in good order. Any returns or mis-shipments can be resolved in days, with the retailer taking full responsibility for correcting the error. In-house shipping streamlines the ecommerce order fulfillment process and ensures the more timely delivery of products.
In-House Fulfillment Challenges
In-house shipping increases a business' overhead expenses, sometimes dramatically. Creating a pick and pack area involves installing heavy duty shelving and well-marked storage containers that are logically organized and easily accessible to employees.
If a business begins to grow and offer more merchandise, its warehouse space requirements will also grow. As the retail operation becomes larger, there may be a need for material handling equipment such as a pallet jack, forklift, or scissor lift. Whether these are purchased or rented, the per month cost can easily slash the profit margin of a small business.
The shipping area will also need to have specialized shipping software and hardware installed. Freight carriers today make use of bar coded labels to track shipments, and these require a specialized bar code printer and barcode software to create. Both FedEx and UPS also communicate via specialized software with the shipper to schedule pick ups and calculate invoices.
Additional safety mechanisms, procedures, and training must also be implemented. "Struck by" incidents–those that involve an employee being hit by a falling object or moving vehicle–as well as injuries caused by improper lifting, are the most expensive safety issues that businesses doing in-house shipping face.
Training employees to safely use material handling equipment, to lift and move heavy boxes, and to maintain a safe shipping environment not only takes time and effort, it is required by OSHA. The cost of workers compensation insurance also increases with the presence of an in-house shipping area, as the probability of accidents and injuries goes up with this function. Warehouse work is one of the top 14 occupations listed by the CDC as having the most work-related injuries.
One final drawback of a business doing its own shipping is that it will have to negotiate freight rates with each of its carriers, often on an annual basis. Freight haulers often contract on an annual basis and calculate rates and discounts based on prior year volume. Small businesses who are just beginning to ship greater quantities of goods have little negotiating power as they have no history they can leverage.
If current year shipments have skyrocketed compared to the previous year, the in-house shipper may be paying too much for outbound freight. In addition, if a retailer uses an LTL or TL trucking firm periodically, they are likely to be charged the retail cost to ship. Shipping costs for small shippers can bounce depending on current and projected cost of fuel; larger shippers often are provided a cushion against gas price spikes.
Outsourcing to 3PLs
A third solution to the order fulfillment challenge is to outsource the order fulfillment process to a specialty firm, also known as outsourcing to third-party logistics. The ecommerce order fulfillment enterprise is just that–a business whose sole purpose is to receive goods from various vendors, store goods, pick, pack, and ship goods, for one or several wholesale and retail businesses.
Order fulfillment businesses are often located in areas that are logistically favorable, close to major highways or near rail lines. These enterprise parks tend to be low rent and low tax as they are strictly industrial in nature, which reduces overall operational costs for the fulfillment provider. Because a fulfillment operation is, in essence, a distribution center, it will be set up with the storage and shipping supplies and equipment that is needed for order fulfillment for products ranging in size from a diamond ring to a spinet piano. A fulfillment operation calculates its fees based on the amount of space a business requires, the amount of handling each unit received in and shipped out demands, the volume of goods returned, and the cost to integrate fulfillment with order entry and transfer. These costs vary from client to client and depend heavily on the quantity of goods a retailer handles.
3PL Fulfillment Challenges
While the logistics are obviously optimized with a 3PL, the primary obstacle to outsourcing to a specialist for a very small or start-up business are the initial integration costs. It may require $1000.00 or more to integrate the order fulfillment center's software with that of the client company. It may also be difficult for the client company to estimate their space needs, especially during a product launch.
Why Brands Should Leverage 3PLs for Order Fulfillment
For most, a third-party logistics provider is the optimal path. There are several benefits to employing a specialized outsourcing solution for order fulfillment. The first is that the business is scalable to the retailer's needs. As a retail operation grows, it only needs to request more space. The cost per square foot may go down as space requirements grow as the overall revenue generated by a growing business increases with each pallet of materials received, stored, and shipped.
As a distribution operation, the order fulfillment enterprise trains its staff in receiving and shipping best practices. It may automate a number of functions, including package handling, loading and offloading, and on-the-fly labeling. This type of enterprise relies on a workflow that is efficient, safe and accurate; errors or non-cost-effective processes on their part may cause their client to move his or her inventory elsewhere. The order fulfillment operation assumes the risks associated with warehouse operations and is designed to be OSHA-compliant and have the appropriate workers' compensation coverage for its employees.
Since an order fulfillment operation ships and receives large quantities of goods daily, it has the ability to negotiate freight rates with a number of carriers that are favorable to its clients and the end consumer. Shipping costs can be a dealbreaker for the consumer, so the retailer who is able to offer reduced, flat rate or free shipping as a "perk" is often the one who captures customers for life. Order fulfillment houses also carry the documents needed for international shipments, expanding its clients' ability to engage in global sales and exporting.
The order fulfillment warehouse helps small to mid-sized ecommerce businesses leverage the operation's economies of scale in order to optimize the supply chain while keeping the client's enterprise lean. Many successful marketing companies, such as the infomercial powerhouse Tristar, rely on an order fulfillment service to build a dynamic sales establishment and brand that is recognizable throughout North America. For the ecommerce entrepreneur who prefers focusing on sales and marketing rather than picking, packing, and shipping, outsourced ecommerce order fulfillment may be the optimal solution.
Find a Fulfillment Partner with Extensiv
In today's competitive ecommerce landscape, finding the right fulfillment partner is crucial for brands and 3PLs. The traditional process of selecting a 3PL can be time-consuming, unreliable, and inefficient. As ecommerce merchants look to build dynamic fulfillment networks utilizing multiple geographically dispersed 3PLs, the need for a streamlined partner discovery process becomes increasingly important. Extensiv's Fulfillment Marketplace offers a solution that simplifies the search for a trusted 3PL, ensuring that brands can scale efficiently and cost-effectively.
Introducing Extensiv Fulfillment Marketplace
In the rapidly evolving world of ecommerce, finding the right fulfillment partner is crucial for growth-oriented merchants. Traditional methods of searching for and evaluating 3PL providers can be time-consuming, unreliable, and inefficient. That's where Extensiv Fulfillment Marketplace comes in, offering a game-changing solution to streamline the process of discovering and partnering with 3PLs that meet your unique requirements.
Extensiv Fulfillment Marketplace is a free, online directory that simplifies the search for a 3PL partner by providing a curated list of trusted, high-performing 3PLs across various service verticals in the United States, Canada, and strategic international locations. You can easily filter your search by categories such as "Preferred Regions," "Ecommerce Services," and "Additional Services," ensuring you find a partner that matches your specific needs.
By connecting brands with multiple, geographically dispersed 3PLs, the marketplace allows you to build a dynamic fulfillment network that optimizes efficiency and reduces costs. Moreover, with seamless integration to Extensiv Order Manager, you'll maintain visibility and control over your inventory, order routing, and stock replenishment, regardless of the number of warehouse locations or partners.
The platform's intuitive discovery experience enables you to enter your information once and receive bids from multiple prequalified 3PLs, making the selection process more efficient. As a result, you can expect to find suitable partners more quickly, improve fulfillment services, and ultimately increase customer satisfaction.
Don't let the traditional challenges of finding a 3PL partner hold your business back. Explore Extensiv Fulfillment Marketplace and revolutionize your ecommerce fulfillment strategy. Visit our Fulfillment Marketplace today and discover the perfect 3PL partner to support your growth journey.
