What is Order Fulfillment?

Order fulfillment refers to the process of receiving, packaging, and shipping custom orders. It begins with the customer placing an order, followed by storage and processing of inventory, picking, packing, and delivery management.

The end goal of order fulfillment is to ensure the accurate and timely delivery of products while maintaining customer satisfaction and minimizing errors. It is a vital step in the sales process, due to which most retailers use order fulfillment software or third-party logistics (3PL) services to speed up the picking, managing, and delivery of the purchase.

Customers trust brands that deliver what they promise. And with the evolving demands of customers, businesses must incorporate a strong order fulfillment strategy to get the orders into the customers’ hands as quickly as possible.

The order fulfillment process varies from business to business. For larger corporations, it may begin at centralized warehouses that manage inventory. Meanwhile, for SMBs (small-to-medium-sized businesses), the order fulfilment is usually managed in-house or outsourced to a 3PL.

What is the Importance of Order Fulfillment?

Order fulfillment plays a crucial part in running and branding your e-commerce business. With the competition in the online shopping market skyrocketing, where big-box stores like Amazon have set new standards, the stakes for efficient delivery are high. Due to this rising demand, a well-crafted order fulfillment strategy is key to your brand’s success.

Subsequently, a poor order fulfillment process deters customers from shopping at your store again. It leaves a bad impression that can be detrimental to your business reputation, causing you to lose sales drastically.

Let’s further explore the reasons that signify the importance of order fulfillment:

It Cuts Down Costs and Saves Time

With the right fulfillment strategy and service partner, you can lower your storing, packaging, and shipping costs.

In addition, collaborating with couriers that offer lower shipping rates for businesses that work at scale is also cost-effective.

A well-planned order fulfillment process involves inventory management that speeds up the order-to-delivery time. It ensures the availability of stock, pre-calculates stockouts, and streamlines the order processing.

 It Makes the Customers Happy

Once the customer places their order, the business only has a few days to ensure that the product is not only delivered on time but also accurately.  

Customers can’t see what happens at the back-end: the procurement, warehouse inventory management, storage, picking, packaging, and delivery process. However, how these activities are carried out makes a direct impact on the customer’s happiness.

Say, you’re the owner of a home and lifestyle brand. A customer places an order on your online store for an indoor plant set, expecting it to be delivered in 3-5 days. However, your warehouse team didn’t manage the inventory levels properly and realized that the item the customer placed an order for is out of stock. This leads to a delay in the order fulfillment process, and the clock is ticking till the customer gets upset.

On the contrary, if the stock levels are checked beforehand and the packaging is done to pristine perfection, your customer will most likely return to your store. This reduces the need for returns and exchanges, leading to an increased loyalty base.

It Helps Businesses Scale

Managing your inventory, integrating automatic software and systems, and outsourcing fulfillment processes can help brands fulfill more orders. Consequently, it leads to business growth while maintaining quality.

Businesses progressing on a well-structured fulfillment strategy typically leverage warehouse management systems (WMS) to ensure visibility into inventory levels. Furthermore, they may integrate an order management system (OMS) that streamlines the order processing.

Other than that, partnering with a 3PL provider allows brands to handle large order volumes without compromising on quality. Moreover, KPIs provided by automated systems enable businesses to identify gaps and make better decisions. This helps brands work smarter while reducing costs.

How Does the Order Fulfillment Process Work?

The order fulfillment process usually goes through several stages, from receiving the inventory to picking, packaging, and return processing. It may vary from business to business but generally follows the below-mentioned steps:

Receiving the Inventory

The order fulfillment process starts with the acceptance and storage of incoming inventory. The manufacturer or supplier sends the stocks, which are then checked for quality and stored in the warehouse or storage facility.

If the brand takes outsourcing services from a 3PL provider, then they manage the inventory for them. The 3PL service provider documents the inventory and organizes it to ensure timely order shipping.

Preparing/Picking the Order

After a customer places an order, the brand’s back-end team or person receives the details. The picker then picks the item/s from the inventory storage to kickstart the delivery of the order.

An inventory management system helps speed up this process.

Businesses that outsource order fulfillment services don’t have to worry about picking because the 3PL provider takes care of it. They assign it to the warehouse picking team that collects the product from the designated locations.

Packing the Order

Safe and thoughtful packaging goes a long way in optimizing the customer experience. So, after the order is picked from the storage, the packaging stage becomes crucial.

To ensure that the order is properly packaged, use protective materials like bubble wrap, bubble mailers, boxes, packing tape, poly bags, air fill, and others.

Shipping the Order

The packaged order is prepared to ship. Businesses attach a label to each packaged order and double-check for safety to prevent damage. Finally, the order is handed over to the shipping carrier for delivery to the customer’s address.

3PL providers usually purchase shipping labels from the shipping carrier on the retailer’s behalf. This saves businesses the time and energy spent on arranging carrier pickups themselves.

The customer is provided a tracking number that helps them monitor the delivery progress.

Handling Returns

Although a business always makes sure and hopes that it never happens, returned orders are inevitable. For such cases, a company needs to establish a return policy that helps customers ship the item back. Along with that, they also need to decide the return window – a typical return window is between 30 and 60 days.

Once an item is returned, the brand inspects the product and quality to see if it can be re-entered into inventory for resale or disposed of.

How to Optimize the Order Fulfillment Process?

To ensure products get to your customers faster with minimal costs, these are some elements you can incorporate in your order fulfillment strategy:

Automate the Order Processes

Manual order fulfillment processes are susceptible to errors. These errors decrease customers’ satisfaction levels.

Some ways you can automate the order fulfillment process are:

• Automated Order Routing: Helps route orders to the most suitable fulfillment center based on stock availability, location, and delivery speed. Setting up automated order routing helps minimize delays and ensures that products are delivered timely with reduced costs.
• Order Management System (OMS): An OMS automates various parts of order fulfillment. This includes verification, payment processing, and order routing. This speeds up order-to-delivery times, streamlines business operations, and improves accuracy.
• Automated Inventory Replenishment: Assists businesses in triggering purchase orders when stock levels drop based on pre-determined criteria. It maintains the optimal stock level without the risk of overstocking, lowering storage costs, and enhancing the income stream.

Enhance Inventory Management

Efficiency is key in order fulfillment. Customers appreciate items that are delivered faster.

Therefore, keeping a check on your inventory helps you manage order fulfillment in a more effective way. Moreover, invest in a real-time inventory tracking system (IMS) that provides real-time data on stock levels. It notifies of any stockouts that may happen, helping businesses make timely decisions.

Other than that, brands can localize their inventory. This means that they hold their stock in warehouses or storage facilities near regions where a greater portion of their customer base is.  It helps them leverage ground shipping, which cuts costs while still getting orders to customers fast.

Double-Check Products Before Shipping

It is always better to take extra measures in double-checking a customer order than to have it be returned for being incorrect and face sales loss.

Not only that, but businesses also risk disappointing their customers when they rush to ship orders. Therefore, they are less likely to make another purchase from that brand.

A thorough order-picking plan aids in limiting these risks. Additionally, with consistent accuracy, businesses can build trust and enhance their credibility.

Optimize Warehouse Operations

The warehouse is the mitochondria of the order fulfillment process. It is the central hub that lays the foundation for the rest of the order operations to work smoothly. Among the strategies that enhance the warehouse workflows are:

• Warehouse Management System (WMS): Leveraging a WMS improves the efficiency of order picking, expediting order fulfillment. This gives them the ability to enhance their order fulfilment process, increasing customer satisfaction and profitability.
• Batch Picking and Zone Picking: In batch picking, companies can pick multiple orders at once, which significantly decreases the order fulfillment time. On the other hand, zone picking involves allocating specific zones for different items. This enhances the picking and packaging processes.

Improve Communication with Customers

Customers appreciate effective communication that answers the questions they may have along the order fulfillment process. For this reason, keep the customers looped in at every step of the process.

This can be done by offering immediate order confirmation emails/messages that also mention estimated delivery dates. In addition, proactively update the order status to reduce customer anxiety and increase transparency.

Other than that, prioritize building a responsive customer support team. This guarantees that customer queries are resolved timely and effectively.

Make Use of Data and Analytics

Using data to drive the order fulfillment process is a powerful way to enhance business operations.

Key metrics like order accuracy, fulfillment speed, and customer satisfaction scores help identify areas for improvement. Moreover, analyzing key indicators helps brands become more strategic in picking and packaging orders, improving warehouse layouts, and negotiating better delivery charges.

Simplifying their order fulfilment process can help firms enhance customer satisfaction and open up new revenue streams.

What Are the Different Types of Order Fulfillment?

Order fulfilment models can be divided into three types. They are dropshipping, merchant fulfillment, and third-party fulfillment. Let’s explore them in detail.

Dropshipping

Businesses that use this kind of order fulfilment sell goods without keeping inventory. The entire process is forwarded to a third-party supplier, without the business ever physically touching or seeing the inventory.

It is a low-budget, easy-to-manage order fulfillment model that is optimal for entrepreneurs and low-investment startups.

For instance, an online e-commerce store sells mobile accessories, but shipping and packaging are handled in China on the store’s behalf.

Although in this model, businesses gain free time to focus on other core areas, it may be hard to find reliable dropshipping providers due to regional differences. Moreover, it relinquishes business control over checking inventory, packaging items, and other aspects of the fulfillment process.

Merchant Fulfillment

Merchant fulfillment, also called in-house fulfillment, is when the business completes the entire order fulfillment process itself. From storage to picking, packaging, and shipping, the business takes full control.

This fulfilment approach works best for companies with low sales volumes.

However, it is time-consuming and labor-intensive, which increases the chances of human error.

Third-Party Fulfillment

Third-party is an order fulfillment model where a company outsources the fulfillment processes to a third-party logistics (3PL) provider. The 3PL provider is a specialized company that takes on inventory, printing shipping labels, picking items from warehouses, packing and shipping. 

Outsourced fulfilment allows for faster delivery, freeing up resources for innovation, customer satisfaction, and expansion.

There are, however, certain downsides to this fulfillment model. Firstly, it comes with an added cost of picking and packing orders. Secondly, businesses lose control over supply chain operations. Lastly, there are customer service problems since doubts can arise in determining who the accountable party is.

Having said that, growing e-commerce stores that are experiencing a surge in their order volume can benefit from the services of a third-party logistics provider.

How Does SubscriptionFlow Manage the Order Fulfillment Process?

From placing an order to delivering the product, SubscriptionFlow oversees the complete subscription lifecycle. It ensures that orders are fulfilled on time, with reduced manual effort and increased efficiency.

This fulfillment software accepts customer orders as subscriptions, generates automated invoices, and adjusts subscription changes. By keeping inventory levels balanced, businesses can prevent cash lockups or sales losses due to stockouts.

With SubscriptionFlow, companies can digitally create shipping labels with the correct customer information. After shipment, brands can rest assured as SubscriptionFlow tracks order deliveries in real-time. It also supports fast problem resolution and renewals.

Let’s have a detailed understanding of how SubscriptionFlow manages the order fulfillment process.

Data Management

SubscriptionFlow’s order-to-delivery pipeline initiates with order acceptance, where it accepts orders as subscriptions through a company’s platform. The advanced system safely stores client data, including personal information, shipping address, and payment details.

Its smart operational prowess triggers appropriate workflows based on the client’s selected subscription plan.

Automated Operations

SubscriptionFlow offers organisations the advantage of automating the fulfilment process.

It generates automated invoices, enables recurring payments, and manages payment retries frictionlessly. Moreover, customers can effortlessly upgrade, downgrade, pause, or cancel their subscriptions. Subscription renewals are taken care of.

Not only that, but brands can create custom workflows to apply coupons and generate credit notes as well. All in all, SubscriptionFlow’s automation capabilities help reduce costs, improve efficiency and retain customers.

Real-Time Visibility

Businesses have the advantage of obtaining detailed reports and analytics, helping them monitor how the operations are being run. SubscriptionFlow offers insight into key metrics like MRR, churn rate, and subscriber life cycle.

In addition, brands also get access to financial reports specifying invoice details and net revenue. They can view subscriber demographics like age, preferences, and their purchase history. Businesses can utilize these insights to improve subscription strategies and identify potential risks.

Integration Capabilities

SubscriptionFlow automates the shipping process by integrating with several shipping platforms seamlessly. With pre-built integration with tools and custom integrations with 3PL systems, it helps you keep your fulfillment system as simple or as complex as you want.

Moreover, it gives businesses complete control over the fulfilment process by centralising shipment tracking and delivery updates. This integrated system empowers teams to respond to disruptions in real time and maintain high service standards. It also ensures accurate deliveries by synchronising shipment dates and customer information.

Scalability Features

Scalability is arguably the most significant advantage that SubscriptionFlow provides to companies. As your e-commerce business grows, SubscriptionFlow allows the fulfillment operations to scale without breaking under the strain of complexity.

It supports bulk order processing, syncing, and label generation, so the fulfillment process doesn’t become a bottleneck as brands scale.

Furthermore, with multiple currencies and payment gateway options, businesses can expand geographically without any hurdles.