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Order fulfillment is one of the most important steps in a business. Whether you are an online merchant, distributor, or retailer, order fulfillment helps to increase your company’s revenue and profits. It can be done by taking on additional responsibilities such as utilizing advanced technology or hiring new staff members.
The process of storing items, packaging orders, and distributing them to customers is known as order fulfillment. Order fulfillment, in a broad sense, refers to anything that occurs when a consumer placed an order until they get it. Businesses may do their own fulfillment, outsource it to fulfillment partners, dropship their orders, or employ a combination of ways.
All of the processes involved in getting purchased items to consumers are referred to as order fulfillment.
Receiving incoming wholesale shipments, sorting stock, and shelving inventory for efficient picking and packaging are all steps in the order fulfillment process.
The items are then chosen, tested for quality and correctness, packaged, and labeled for shipping as orders come in. Returns management (also known as reverse logistics) is often thought of as an extension of the fulfillment process.
All of these stages will be handled at your facility—whether it’s a warehouse, storage unit, garage, or other space—if you’re performing in-house fulfillment. These processes will be handled by a third-party firm if you outsource the fulfillment process (or employ dropshipping).
Let’s look at the distinctions between these two approaches.
Strategies for Order Fulfillment
Although order fulfillment is a straightforward logistical procedure, it may be time-consuming and labor-intensive.
In fact, many new and expanding companies discover that eCommerce shipping and handling keeps them so busy that they can’t focus on other important activities like marketing, product scouting, and website upkeep.
Furthermore, the infrastructure necessary to successfully manage fulfillment (such as an industrial warehouse and sufficient employees) is too expensive for many small shops.
New and developing firms often outsource order fulfillment or employ dropshipping, however more established organizations find that keeping operations in-house gives them more control and helps them save money on order fulfillment.
Here are the four most common methods that companies manage order fulfillment.
Businesses that operate their own warehouse and shipping operations, often with their own building, equipment, and employees, are referred to as in-house order fulfillment.
For the most part, this strategy is the most effective.
- Small companies that handle less than ten orders each day are considered small.
- End-to-end control is sought by well-funded, well-established businesses.
- Different product offers, suppliers, and procedures are being tested by businesses.
- Store owners who work full-time
Businesses may use order fulfillment firms or bigger third-party logistics organizations to outsource order fulfillment duties.
Fulfillment service providers are experts in Management of Inventory, order processing, and shipping, so they can take care of all of these responsibilities for you with modern infrastructure and assured accuracy.
This strategy is the most effective for
- Small firms that handle 10 or more orders each day are growing.
- Entrepreneurs that are responsible for their own marketing, product procurement, and development are known as solopreneurs.
- Multipreneurs who need to devote time to other projects
- Store owners who work a second job part-time
Every stage of the order fulfillment process is handled by the supplier under the dropshipping business model. The seller does not maintain any goods on hand, but instead sends each order (together with payment) to the vendor as soon as it is received. The goods is subsequently packed and sent to the consumer by the seller.
Dropshipping is an excellent choice for:
- Entrepreneurs who want to create a low-risk business with little money
- Retailers interested in putting a fresh idea or product category to the test
- Part-time sellers who can only devote a certain amount of hours each week to running an online business
- Established internet retailers want to diversify their product offers
Some (or all) of the aforementioned order fulfillment approaches are used in a hybrid approach to order fulfillment. Because it provides a lot of flexibility, this is a popular choice for developing enterprises.
For unique goods or things that need assembly, such as gift baskets, you may employ in-house fulfillment. Outsourced fulfillment may be used to complement it for non-custom goods that are consistent sellers or to assist handle seasonal sales surges without having to enlarge your warehouse. You may also utilize dropshipping to explore prospective new shop additions before investing on a big wholesale buy.
This is the best solution for:
- Retailers who are putting innovative procedures, goods, channels, and ideas to the test.
- Sellers who work full-time and have the capacity to handle numerous fulfillment methods
- Online sallers
An Order Fulfillment Operation’s Elements
Even if you totally outsource order fulfillment, every online seller requires a good grasp of the process. It’s critical to understand how everything works in order to keep prices down, whether you ship everyday from your own warehouse or outsource everything to a fulfillment partner.
Every eCommerce company needs a website. Shopify is a popular eCommerce platform because it allows you to create a website, handle orders, and communicate with consumers all in one place. Shopify now integrates with technologies like Oberlo, allowing you to link your website directly with dropshipping providers. For a free trial, go to Shopify.
The following items are required for all order fulfillment and delivery operations:
A location where products may be received and stored
To make the process function, each order fulfillment operation requires well-organized product storage. Depending on the scale of your organization, a spare room, garage, storage unit, retail stockroom, or warehouse may all offer the space you want. Stack shelves, containers, bags, or cartons to organize your area. Use whichever method works best for keeping things arranged and accessible for quick selecting.
For adequate receiving, storage, and operations capabilities, high order quantities usually need an industrial warehouse. In these circumstances, the warehouse layout is critical to the success of your fulfillment business. It should also include the appropriate equipment for your goods and procedures, such as shelves and stock carts.
One of the main reasons why merchants opt to work with third-party fulfillment businesses is because of this. You won’t have to spend in leasing and outfitting your own facility since they have a specialized infrastructure to handle items and order quantities of various sizes.
Red Stag Fulfillment is a third-party logistics provider that specializes in delivering big, heavy, and delicate cargo. Heavy-duty shelving, sturdy gear, and adequate employees are all available in the company’s specialized warehouse facilities, which can manage enormous order quantities. (Photo courtesy of Red Stag Fulfillment)
Alternatively, low-volume inventory storage and receiving can be done from cost-effective spaces like a guest bedroom or garage. This system uses light-duty shelving and labeled plastic bins to manage stock. (Source: Hustle & Slow)
Space for Order Preparation and Packing
This space, which is sometimes referred to as a packing station, may be a kitchen table, a stockroom counter, or a set of tables or workstations in a warehouse. It should ideally be a location where you can easily acquire packaging supplies such as boxes, mailers, tape, wrap, and fill.
Industrial packing stations, such as the one seen below, are common in specialized activities. (Image courtesy of Cisco-Eagle)
This is where your selected products are confirmed for correctness against the customer’s order, either via a packing slip or a barcode scanner, depending on your arrangement. Items are packaged for transportation once they have been checked.
Shipping Supplies for Order Packing
When it comes to shipping, every inch matters. To properly send a product, utilize the smallest, lightest box, flat mailer, or envelope feasible.
You’ll also need packing supplies. The most popular materials used to protect items and fill holes in shipping boxes include plain newspaper, packing paper, bubble wrap, air pillows, foam sheets, and peanuts.
Finally, you’ll want a method for sealing boxes and mailers. Many envelopes and mailers are self-sealing, but strong packing tape and a decent dispenser are required for boxes.
Invoices or packing slips
Pulling orders and verifying for correctness might be aided with a printed invoice or packing slip that lists all of the products requested. The main distinction is that invoices contain pricing, but packing slips do not.
A receipt should be sent with all transactions, however packing slips are preferable for gift orders since they do not indicate costs. You may print them through your eCommerce platform’s order manager or from a back-end Management of Inventory program, whichever you choose.
A Method for Making and Printing Shipping Labels
Printing shipping labels for filled boxes is the last step of order fulfillment.
The majority of these websites and applications work with all sorts of printers, including laser, inkjet, and thermal.
Orders for Shipping
The bulk of a retailer’s involvement in order fulfillment is to manage orders and prepare them for shipping. After that, a shipping carrier delivers the products to the buyer, although navigating their services is a difficult undertaking in and of itself.
Sizes and Weights of Boxes
The weight and size of the box are factors in calculating shipping costs. As seen in the chart below, a few more inches may make a significant difference—often more so than weight. That’s why, for each shipment, it’s critical to select the smallest box or mailer feasible.
If you ship in just a few box sizes at set weights, managing rates with one carrier can be fairly easy. But if your sizes and weights of boxes vary per order, comparing carriers will ensure you get the best rate on every package. The easiest way to do that is by using a shipping rate comparison software such as Ordoro, ShipStation, or ShippingEasy.
How Package Weight & Size Affect Shipping Rates
Note that the aforementioned rates include peak holiday surcharges and are likely to be lower throughout the rest of the year.
Priority Mail from the United States Postal Service may be the best option. On flat mailers and tiny, lightweight items weighing less than two pounds, USPS Priority Mail routinely outperforms UPS and FedEx. When you join up for a four-week trial with Stamps.com, a USPS mailing program, you’ll get a free shipping scale to help you weigh your items. UPS and FedEx are often less expensive for shipments weighing more than three pounds. In our FedEx vs UPS vs USPS buyer’s guide, you can learn more about carrier pricing and services.
Dimensional Weight: What It Is & Why It Matters
When shipping, the word dimensional weight (or DIM weight) will most likely appear on your shipping rates. All carriers utilize DIM weight to calculate rates based on a box’s overall dimensions rather than its actual weight. Simply said, because of its proportions, shipping a big, lightweight package costs more (length x width x height).
The real box weight in the example below is 39.6 lbs. (which will round up to 40 lbs. with all carriers), but its dim weight is 70 lbs. owing to size, and a 70 lb. charge will be applied.
Flat-rate boxes are ideal shipping small and heavy items. Flat-rate box programs such as USPS Priority Flat Rate and FedEx One Rate charge depending on the size of the box rather than the weight. This may be a fantastic bargain if you’re shipping tiny, heavy things, but you’re typically better off using DIM weights if you’re shipping small, light items.
Types of Addresses
UPS and FedEx distinguish between business and residential addresses, and items shipped to residential addresses are often charged a higher cost or subject to surcharges. Because delivery to residential locations is their major business, USPS is often the cheapest option.
Residential Surcharges on UPS & FedEx Shipments
Note that the aforementioned rates include peak holiday surcharges and are likely to be lower throughout the rest of the year.
Zones of Delivery
Carriers use Zones of Delivery to define parts of the country, and these zones determine shipping rates and package time-in-transit. Zones are based on your location, so you will always be in Zone One. As distances from your location increase, the Zone numbers, shipping rates, and delivery times all increase.
FedEx zone map for Houston, Texas deliveries
One advantage of partnering with a fulfillment center is that it may have multiple warehouses strategically positioned around the country—leading to more efficient Zones of Delivery for your customer bases. ShipBob, for example, allows sellers to distribute stock between any of its 22 warehouses in the US.
The effect of employing several distribution centers to store and deliver merchandise is shown in these maps. (Image courtesy of ShipBob)
Use delivery zone maps on your website; buyers may be hesitant to place an order if delivery timings are unclear. On your shipping details or checkout page, a Time-in-Transit map may effectively express delivery timeframes and create trust in the consumer.
Just be sure to provide your order processing timeframes with the map so that customers have reasonable expectations for delivery. UPS and FedEx zone maps may can be adjusted to display travel times for items delivering from your location to any place in the United States.
Instead of utilizing a static map, you may utilize an app or plugin to assist handle shipping for you if you’re using an eCommerce platform like Shopify. Shoppers will now be able to check real-time delivery estimates and pricing for their respective areas.
Methods of Transport
Methods of Transport are the different service levels that carriers use to define delivery speeds and shipping rates. Generally, the faster the delivery time, the higher the rate. Offering a choice of delivery speeds is good customer service, but make sure you can deliver what your customers pay for. When customers pay extra for faster or expedited service, they expect it to arrive as promised. A good rule of thumb for efficient order fulfillment is to post an early cutoff time for expedited orders on your website. That gives you time to get expedited orders packed and shipped same-day.
Total Volume of Shipments
The average number of shipments you send every week is referred to as shipping volume. UPS and FedEx both provide reduced shipping prices depending on typical shipment volumes, service types, and package weights and sizes. If you have a lot of orders, volume discounts are a terrific way to save money. However, it makes it difficult for small sellers to compete since bigger sellers get significant savings and may therefore offer buyers low-cost or free delivery.
Small shippers, on the other hand, might expand their volume to qualify for cheaper rates. You may, for example, consolidate all of your shipments with one carrier, such as UPS or FedEx, and have suppliers send incoming merchandise via your shipping account. Your volume will rise with time, and so will your discounts. However, always compare prices. Because shipping prices fluctuate, make it a practice to examine your incoming and outgoing charges on a frequent basis.
How to Ship with UPS, FedEx, and the US Postal Service
Now that you understand how shipping costs are calculated, it’s time to choose which carriers to use and how you’ll compare pricing and print labels. There are several approaches that may be used.
Ship With UPS & FedEx
Creating a shipper account with UPS or FedEx is free, and you can begin the procedure online. You’ll get commercial prices on both land and air shipments as soon as you register, which are cheaper than retail rates. You may also add daily or scheduled pick-up services for a cost, as well as make mailing labels online or with free software installed on your computer.
Use USPS
To get started with the USPS, create an account online to buy cheap postage and print mailing labels. To save visits to the post office, you may also plan a free carrier pickup for your parcels. Stamps.com and Endicia.com, for example, make it simple to handle USPS shipment and qualify for even reduced rates.
Software for Shipping
The websites and software of UPS, FedEx, and USPS have one big flaw: you can’t compare pricing across several providers.
Comparing rates is the most effective strategy to save shipping expenses and ensure that you’re receiving the greatest deal. Shipping rate comparison tools (such as ShippingEasy and Ordoro) are useful for every online business, even tiny ones. Furthermore, these technologies offer consumers drastically reduced prices, which may significantly cut your fulfillment costs.
Toggle between methods and carriers to get the actual cost of each shipping option with ShippingEasy.
These tools not only help you get the best rate, but also assist in managing orders, sending confirmation emails, promotional marketing, and automating tasks. Most Software for Shipping platforms are highly affordable, and some are even free to use.
B2B and inbound shipping
Individual packages are transported differently than big shipments, such as wholesale orders from your supplier to your warehouse.
If you’re sending big, multi-box orders to commercial customers in bulk, consider utilizing LTL freight, which stands for “less than truckload.” Truck freight may be far less expensive, particularly for packages weighing more than 250 pounds. Although both UPS and FedEx provide freight services, you’ll usually save money by using a freight broker.
Challenges in Order Fulfillment in 2022
Year after year, you’ll have to handle certain connected issues, as well as new hurdles brought on by distinct events or situations (such as COVID-19). Here are some key considerations to bear in mind when you plan your fulfillment strategy for 2022.
Problems with the Supply Chain
The pandemic resulted in a surge in eCommerce demand as well as a lack of personnel, equipment, materials, and space, resulting in a massive supply chain disruption that will continue to affect merchants for some time.
Natural catastrophes, political instability, transportation problems, cyber-attacks, and market changes may all cause widespread and local supply chain disruptions.
It’s better to be proactive when it comes to difficulties that might slow down your fulfillment process. Here are some suggestions for dealing with supply chain interruptions and maintaining a robust supply network.
- Build inventory: Have a backstock of important items that can maintain your business’s sales for many months if your supply chain is disrupted.
- Identify backup suppliers: In the event that your principal vendor is unable to provide the items you want, you should have backup suppliers on hand to prevent running out of stock. It’s ideal to cultivate ties with secondary suppliers and even order a percentage of your goods from them on a yearly basis.
- Communicate with your consumers: When it comes to maintaining customers during a supply chain disruption, transparency is essential. Be honest with customers about delays and other issues, and provide suggestions to help them have a better experience.
Fluctuations in Season
The Christmas season results in a large boost in retail sales. Despite inflation and economic hardship, Christmas sales are slowly growing, according to the National Retail Federation (NRF).
It’s critical to stay on top of the pandemonium throughout the winter holidays when order volumes fluctuate and shipping and sourcing delays occur. Here are a few strategies to consider.
- To minimize backorders and income loss, make sure you buy enough stock far ahead of time by anticipating demand for forthcoming holidays.
- Outsource: Managing seasonal demand without adding more personnel or extending your warehouse space might be tough. However, when business slows down in January, these additional resources come with the requirement for training, payroll, administration, and fat reduction. Consider outsourcing all or a portion of your fulfillment to a third-party organization with the scalable infrastructure to accommodate fluctuating demand before the holidays arrive.
- Consider investing in software like Ordoro, which can automate many of the labor-intensive procedures involved in fulfillment for smaller firms that don’t want to ramp up for the Christmas season or outsource to a fulfillment center.
Fulfillment on an international scale
Many small internet companies only ship inside the United States, but you could have a shopper from Canada or the United Kingdom who can’t live without your goods. Alternatively, you could want to expand your consumer base by offering worldwide delivery.
In any case, you have a variety of alternatives when it comes to executing overseas orders. Consider utilizing USPS’s International Priority service, which works well with Canada Post, Royal Mail, and a variety of other international postal systems.
Management of Inventory
Proper Management of Inventory means having the right products, in the right quantities, at the right time to sell to customers—making it integral to order fulfillment.
Dedicated fulfillment companies specialize in the management of inventory, so outsourcing is a popular way to handle this task efficiently.
Conclusion
A successful eCommerce business relies on accurate and quick order fulfillment. You must comprehend the complete order fulfillment process, adopt effective habits, and control expenses from beginning to finish to remain ahead of the competition.
There are various methods to get orders into the hands of your consumers, and for a growing company, a combination of fulfillment solutions is frequently the best option. As your business expands, look for flexible, as-needed fulfillment alternatives that will allow you to increase capacity while keeping prices down.
