Having the best product and an epic website with a user-friendly checkout feature is all great. But if your E-Commerce fulfillment does not run smoothly, your business will be all splash and no cash.
We understand that E-Commerce fulfillment is not the most exciting conversation piece. However, if you live within the world of online retail, it is a crucial element that you need to become interested in.
A study done in 2018 revealed that the very top feature for online shoppers is free shipping. An astounding 83 percent of online shoppers were influenced to buy based on this benefit alone. In addition, shipping costs are a major factor in shopping cart abandonment, with 54 percent of study respondents saying they abandoned their cart due to the high cost of shipping. Speed also matters also, with 25 percent of respondents admitting to canceling orders when arrival time was too long.
What this tells us is that predictable and accurate fulfillment will keep customers happy and result in fewer abandoned carts and more return customers. Robust E-Commerce fulfillment processes can save you time and money. In addition, well-run fulfillment will help you expand your business.
At Flex Logistics, we know that a successful E-Commerce fulfillment process involves multiple vendors and schedules that need to line up like a well-oiled machine. The better you manage all these moving pieces, the greater your E-Commerce success. And if you need help managing your fulfillment, a 3PL service like Flex might be the missing piece in your E-Commerce puzzle!
What is E-Commerce Fulfillment?
E-Commerce fulfillment is the part of your E-Commerce operation that delivers your products to customers after they order it online. In truth, E-Commerce fulfillment has been an integral part of your business from the start, whether you realize it or not. When you were packing boxes in your garage, you were your own fulfillment provider. Now that your business has grown, you may outsource your fulfillment to a third-party logistics (3PL) service.
The fulfillment part of the supply chain entails receiving and storing inventory, processing orders, picking items, packing boxes and transporting the items to the customer’s shipping destination. Your fulfillment processes include several things. Getting product onto fulfillment center shelves is E-Commerce fulfillment. Picking and packing orders is order fulfillment. Shipping times and methods are part of your third-party logistics operations.
3 Types of Order Fulfillment
Online business owners have three unique options for order fulfillment; merchant (in-house) fulfillment, third-party logistics, and dropshipping. Each of these options comes with its own unique benefits and drawbacks.
1. Third-Party Order Fulfillment
Third-party (3PL) fulfillment means that your entire order fulfillment process is outsourced to another company separate from your business. It consists of an order fulfillment vendor and other third parties. The third-party handles all aspects of order fulfillment, including receiving inventory, storage, picking, packing, shipping and returns.
When expertise and time management is an issue, 3PL is a great option. The 3PL company, such as Flex Logistics, will handle the order fulfillment process on your behalf so you can focus on other things that matter. Fulfilling orders in-house can be quite complicated, costly and time-consuming.
3PLs can provide you with a multitude of order fulfillment services that make the order fulfillment process relatively easier to manage. They can also reduce your shipping costs significantly while providing you with fast shipping options to keep your clients satisfied.
2. Merchant Fulfillment
The merchant fulfillment strategy concept indicates all procedures of order fulfillment done internally. As a seller, you will be tasked with managing every step of the E-Commerce order fulfillment process, including receiving inventory, warehousing the products, picking and packing the goods, shipping to the customer and handling returns. Sellers have direct management of what happens in the business.
This fulfillment strategy is mostly used by small scale sellers who process a low volume of customer orders and new sellers who do not know exactly what their order volume will be. In-house fulfillment provides the seller with more control over the order fulfillment process but can become quite difficult and expensive as your business grows. When your order volume increases, you may decide to transfer your operations to a larger fulfillment center, which means costly technology, warehouse space, staff and equipment.
Many online sellers choose to outsource the order fulfillment process because it has relatively lower upfront costs, and it is much easier to manage and scale than continuing to handle everything in-house.
3. Dropshipping
In dropshipping, production and shipment of orders are performed directly by the manufacturer. When a customer places an order, the information is sent directly to the manufacturer, who then ships the item directly to the client.
This is usually an attractive option to businesses that resell products manufactured by a third-party as it saves both the buyer and the seller costs from a middleman and overhead expenses. In some cases, the manufacturer may be located in another country, which means that shipments can take much longer and are more expensive than orders fulfilled locally.
The primary purpose of dropshipping is to eliminate the need to keep goods on hand. The approach is particularly popular with consumer goods such as clothing, electronics and furniture.
What is Involved in the E-Commerce Fulfillment Process?
Fulfillment involves more than picking and packing orders. The best E-Commerce fulfillment providers will help your online retail business run seamlessly.
Think of your third-party E-Commerce fulfillment provider as an extension of your business. Outsourcing your fulfillment makes your business more fluid. You can expand and contract warehouse space as your business needs change. Outsourcing lets you minimize your expense and risk.
There are four basic components of the e-fulfillment process:
- E-Commerce store and fulfillment center integration
- Receiving and inventory management
- Order fulfillment
- Returns processing
7 Processes in the Third Party Fulfillment of E-Commerce Business
Find out what to expect from a fulfillment company. Here are the basic 7 processes it offers.
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Receive Inventory
Receiving is the step of acceptance and storage of incoming stocks. The fulfillment center manages the inventory in hand before they can handle orders.
At Flex Logistics, we organize all received and stored inventory and complete proper documentation, counting and inspection. Also, we use SKUs and barcodes for proper checking, sorting and storage.
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Inventory Storage
Proper storage is essential for the fast-paced process of an online business. Plus, retrieving goods from internal storage is more accessible.
Products are designated for short-term and long-term storage. Items are inventoried so stored items are suitable for existing sales. Stocking up too much might cause a loss of income instead of earning for future sales.
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Process Orders
A fulfillment center works by checking out all the orders and stocks. Then, it initiates the order processing for every received customer order. Therefore, it takes over picking and packing activities for you.
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Pick Items
The process of a fulfillment center starts in the warehouse. An assigned picking team begins to work once it receives an order. It includes order details such as the SKUs, product variation (size and color), and quantity. The picking team checks the designated location of the goods. Then, collects the ordered items based on the packing slip.
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Pack Orders
The expertly trained packing team works based on the picked items. They pack the order securely at the lowest practical dimensional weight. This way, the goods will travel with protection. Thus, reach its buyers in excellent condition.
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Shipping
Once an order is entirely ready, it is time to ship. Shipping labels play a crucial role in delivering the buyer’s order. When the order ships out, merchants receive an order tracking detail. With technology, you can share it with customers manually or automatically.
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Delivery
The carrier picks the order from the fulfillment center and delivers direct to the destination.
Meet Customer Expectations with E-Commerce Third-Party Fulfillment Support
With growing online sales, more companies are finding it a challenge to go it alone and manage their E-Commerce order fulfillment center with internal resources because the pillars discussed above can be challenging to manage with internal resources.
Another driver behind using an expert third-party provider is shifting consumer expectations. Online shoppers want it all – great prices, free shipping, fast delivery and flexible and easy-to-follow returns process.
The FLEX Logistics Team is Here to Help!
The primary goal is to deliver any order at any cost. On occasion, this might even be done through individual shipments. Therefore, flexible fulfillment has become a logistics strategy seen more often in firms in sectors as diverse as the consumer goods, food and retail industries. It is time for your distribution centers to work in unison to deliver more orders.
Make fulfillment stress-free for your customers, and win both new and repeat business. This past year saw a number of customer engagement trends accelerate. E-Commerce took off as consumers became comfortable shopping for more, and more types of, goods from their homes. Manufacturers learned how to sell directly to consumers, and many traditional retailers doubled down on their already effective omnichannel approaches.
Our team understands the importance of getting your products to the market. That is why we aim to understand your business and build lasting relationships with you and your team. Whether you are looking to add a new warehouse to your existing operations, growing and need to increase your distribution efforts, or starting a new company, FLEX has the solutions to meet your supply chain needs.
Contact us today to discuss your current and future warehousing and logistics needs. We will work together with you to understand your requirements and develop a solution that will set you up for future success.