Ogoship
How to ship fast and sell global.
Put simply, order fulfillment is the process that begins once your customers complete a purchase on your website and ends once they receive their goods.
Depending on how you run your e-commerce business, order fulfillment can have several additional phases — with some of them happening before the customer even gets to the checkout.
Here's an oversight of what a complete order fulfillment process may look like.
1) Receiving products from the manufacturer
2) Inventory management and stock checks
3) Warehouse and stock shelf management
4) Picking and packing products
5) Preparing the product for shipping
6) Delivery to the customer
7) Returns process
Any mistakes in the ordering process cost money. Additionally, late or lost deliveries lead to unhappy customers, which in turn leads to bad reviews. Because online reviews have a significant influence on the shopping habits of modern consumers, this can be dreadful for your business.
The e-commerce industry has matured and become more competitive and customer expectations have also changed. Today, quick and low-cost deliveries are seen pretty much as standard. But to achieve this, the order fulfillment process must be organized and optimized.
To wow your customers with a seamless and smooth delivery process you need to have both a well-planned order fulfillment process and the right systems in place. Timely communications on the whereabouts of your shipment, tracking codes, and delivery statuses are just some important things you need to be able to communicate to your customers. All of this on top of fast shipping itself, of course.
Optimizing usually means optimizing the costs too. E-commerce businesses must pay close attention to shipping costs. If you’re organizing shipping yourself, spare some time for negotiating with various carriers and keep an eye on the best rates to keep the shipping costs low. If you use a professional 3PL partner, the partner does this for you.
In-house order fulfillment is the process where the e-commerce merchant does all the phases of the order fulfillment process themself.
If you are just starting out, it's common that you'll process orders in-house. This, though, requires a significant time commitment at a point when merchants are trying to acquire customers and grow their business. When business expands, merchants are usually faced with two choices:
1) Outsourcing the order fulfillment process
2) Investing in building the order fulfillment process themselves
Investing in the building of order fulfillment infrastructure is a big commitment that includes renting warehouse space, employing logistics staff, and investing in equipment and licensing software.
In-house order fulfillment:
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How much are you spending on order fulfillment right now? Do you have full visibility of all the costs? Download a free order fulfillment cost calculator template.
Third-party order fulfillment is a popular solution for merchants whose business has started to gain some growth. The merchants may feel they spend too much time picking and packing, are running out of storage space, or just don't want to manage a distribution warehouse themselves.
By outsourcing to a third-party fulfillment service provider or 3PL, e-commerce businesses can access several benefits, including logistics expertise, larger storage capacities, and discounted bulk shipping rates from carriers.
With this method, the tasks related to order fulfillment are all handled by the third party: from receiving, picking and packing, to labelling and returns.
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Cons:
Dropshipping is a method where the merchant never stores the stock themselves. Instead, all the goods are produced, stored, and shipped by the manufacturer. When the customer places an order in the merchant's shop, the details are forwarded to the manufacturer. From there, the manufacturer sends the delivery directly to the customer. Dropshipping doesn't allow merchants full control over inventory or order fulfillment. Additionally, the manufacturer can be positioned anywhere globally, which typically contributes to extended delivery times.
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To make it in the very competitive e-commerce world, you need a plan. First, you need to decide if e-commerce is a side job or a hobby, or something you want to do seriously.
Figure out where you see your business in a few years. How much money do you need to make to sync with your other life plans? Which niche can you target? Who is your competition?
Once you understand where you want to be in the next few months and years, you should have a good idea of what it will take to achieve your goals.
Do research on your competitors. Find out what price, options, and delivery times they are offering. Unless you have exclusive access to products, you'll always be competing with someone.
By having a complete understanding of your competitors — and what they do well — you can start identifying areas where you can beat them. This could, for example, be on service, customer experience, delivery times, delivery costs – or something else.
Many merchants have access to the same products, one of the best ways to ensure customer loyalty is through excellent service and a delightful customer experience. Items that are delivered on time with no problems are a proven way to establish trust and enhance your reputation. Set the bar high.
So, make e-commerce order fulfillment a top priority in your operations. Additionally, by minimizing order mistakes or errors, you can avoid extra costs that will hurt your profits.
Run the numbers on how many shipments you are sending out per month and how much that currently costs.
Does your profit margin allow you to provide the fast and cost-effective shipping that customers demand? Identify any areas that you can improve upon.
Outsourcing with the right 3PL ecommerce fulfillment company can give you access to excellent service at a reasonable price. Additionally, it will allow you to keep overheads down and access better shipping prices.
For businesses that are scaling up, a third-party fulfillment service or 3PL will provide some considerable benefits that are more cost-effective than going alone.
One of the perhaps biggest factors that affect the success of online retailers is their shipping costs and times. Charging too little for shipping can eat into your profits, but charging too much could turn customers off. It's a delicate balance.
A smart e-commerce order fulfillment strategy should be dynamic. For example, offering customers delivery options like same-day delivery or in-store pick-up (where possible) can be very effective.
Additionally, merchants may want to explore the idea of free delivery for purchases over a certain threshold. The cost of these deliveries can be built into the product price but can quickly be recouped by encouraging higher spending.
Ultimately, it’s up to you to find the right order fulfillment solution for your business and your products. However, it's a field where it's possible to gain a lot and lose a lot.
Remember, our friendly e-commerce experts are always happy to help you to figure out which order fulfillment solution would be most efficient for you – simply get in touch.
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Ready to learn more? Our experts will answer any questions you may have on how to get started, what the key features are, which warehouse locations bring your e-commerce business the maximum benefit.
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