It’s no secret that ecommerce fulfillment involves a lot of moving parts, whether you’re an emerging or established brand. For this reason, there’s a lot of confusion over what exactly takes place once a customer clicks ‘purchase’ on their order – from merchants as well as consumers!
If you don’t have a good level of insight into what order fulfillment involves, it’s very difficult to make the right decision regarding your model and strategy. This can have adverse consequences in the form of logistical issues and dissatisfied customers – two things that every ecommerce merchant wants to avoid.
In this blog, we‘re going to discuss the ins and outs of what order fulfillment is – and how partnering with a 3PL can help to streamline this process!
In its simplest definition, ecommerce fulfillment refers to the process by which an online merchant gets an order to their customer, either by doing it themselves or outsourcing to a third party.
Once a customer has placed an order, it’s the merchant’s responsibility to ensure that goods are processed, packed, and shipped in a timely and efficient manner. For this reason, ecommerce order fulfillment plays a major role in fostering customer loyalty and high retention rates.
First things first: not all ecommerce fulfillment is alike! There are multiple order fulfillment models out there that cater to different business needs.
The suitability of each model will depend on a variety of factors, such as your order volumes, the products you sell, and your internal bandwidth to manage fulfillment-related tasks.
In-house order fulfillment is when merchants directly manage their own fulfillment process. This means they are using their own staff and internal resources, instead of outsourcing to a third party.
This method is most commonly used by young brands who have recently entered the marketplace, where inventory storage and packing may be done from home or an office.
While self-fulfillment is a great way to get started, it’s very difficult to scale effectively. As your business grows, you will need to invest in storage space, inventory management software, and increased staffing to keep on top of increased order volumes.
Because this quickly becomes costly, the majority of businesses will ultimately switch to outsourcing their fulfillment.
Drop shipping is an outsourced fulfillment option where the merchant doesn’t have direct control over their supply chain or inventory. When an order is placed, the merchant simply forwards this information to the manufacturer. The manufacturer is then responsible for storing, packing, and shipping the item directly to the customer.
Because merchants don’t technically ‘own’ their stock, drop shipping is a very affordable fulfillment option with low overheads – however, it does result in reduced profits. Because many manufacturers are based overseas, shipping times are also generally longer, which may put off consumers who are looking for faster delivery times.
Third party fulfillment sees merchants’ partner with an external third-party logistics (3PL) provider who can manage the entire fulfillment process on their behalf, from the initial receiving of inventory to shipping orders directly to customers.
For businesses who are finding order fulfillment too costly or time-consuming on their own, 3PL partnerships allow them to leverage both superior infrastructure (including smart warehousing and automation) and industry expertise to create a more streamlined and cost-effective ecommerce fulfillment strategy than they can achieve on their own.
By taking the weight of fulfillment off a merchants’ shoulders, 3PLs help to free up time and resources so that teams can focus on growing their business and brand.
If you’re a growing business that’s finding order volumes hard to handle or want a more cost-effective shipping strategy, now might be a good time to consider partnering with a 3PL.
If this is on your radar, you’re probably wondering how exactly a 3PL manages the ecommerce fulfillment process – and how they make it as efficient as possible for both your business and your end customer.
Below is a step-by-step overview of what a typical order fulfillment workflow would look like with a 3PL (though it may vary depending on your needs and specifications).
When your stock arrives, it will be directed to a facility belonging to your fulfillment provider. Your provider will then process, label, and enter stock into their inventory management system. If you partner with a technologically-advanced provider, their system should integrate directly with your ecommerce store so that stock availability is visible to both your staff and customers.
Once your new stock has been processed, it’s ready to be stored until required to fulfill an order. Your provider will typically allocate a certain amount of warehouse space, based on your stock levels and order volumes.
Depending on the nature of the items i.e. whether they are bulky, fragile, or heavy, this will dictate the storage strategy used by your provider to prevent stock damage and allow for the efficient movement of goods between facilities.
When your customer places an order, this will be sent directly to your 3PL’s order fulfillment system, which sends a notification to begin the ‘picking’ process. ‘Picking’ sees staff receive information on which specific SKUs are required and in what quantities, and where those items are currently being stored.
Once retrieved, items will be packed according to the system chosen by the merchant. This could mean generic packaging materials that are supplied by the 3PL, or specialist packaging supplied by the merchant and sent to the fulfillment center.
If you’re interested in using custom packaging for your products, Whiplash is on-hand to connect you with a packaging supplier that fits your needs!
Depending on the size and the dimensional weight of your packages, your 3PL will decide which shipping method will be the most cost-effective for you. Depending on where your end customer is based, your 3PL should also ensure that the order is being fulfilled at the facility which ensures the fastest delivery time.
Shipping is easily one of the biggest benefits of outsourcing to a 3PL. As very large shipping operations, 3PLs have the ability to negotiate with major carriers, such as FedEx and USPS, for more favorable carrier rates that businesses would be able to obtain on their own. This saves merchants a lot of money over the long-term!
With return rates as high as 30% in some product categories, 3PLs play an important role in processing returns and getting these items back into stock as quickly as possible. When your customer initiates a return, you can arrange for your 3PL to manage this process on your behalf, including actioning your existing returns policy and arranging an exchange of SKUs if required.
As well as allowing customers to initiate returns via their original confirmation email for a speedier process, Whiplash also integrates with several returns management systems to make returns logistics as streamlined as possible for both customers and merchants.
The Whiplash platform makes ecommerce order fulfillment easy with its real-time inventory management system and seamless integration with your ecommerce site, allowing you full transparency into your orders and fulfillment process with only the most up-to-date data.