How Does Order Fulfillment Work?
Customer expectations around shipping cost and speed are continually shifting, thanks to other retail giants following Amazon Prime to offer two-day free shipping. As a result, when consumers want something, they want it now. However, fulfilling those demands as a seller is easier said than done.
Order fulfillment is a function that impacts the bottom line of an online merchant directly despite not being one of the most glamorous aspects of running an online store. Customers hold more power now more than ever. They also have become more informed. Your ability to retain clients, your company’s profit, and your brand’s overall reputation depend highly on the order fulfillment process’ efficiency.
There are no sales without order fulfillment. Without sales, there’s no business. The key is to improve your order fulfillment wherever part of the process is possible. But, before you can do that, you need to understand the basics of order fulfillment, particularly how it works.
What’s Order Fulfillment?
Order fulfillment is the process of receiving orders online, packing ordered items, and shipping orders to customers. Merchants can take care of the process in-house, which means that they’ll fulfill orders themselves. However, they can also choose to outsource the job to a third-party service provider. Check this site to know how outsourced order fulfillment works with the storage, people, and technology to efficiently and quickly fulfill online orders.
Order fulfillment applies to both business-to-consumer or B2C orders that have to be shipped to a single shopper’s home directly – as well as business-to-business or B2B orders where a merchant ships a large number of products to big-box retailers.
The end consumer in B2C transactions may place the order through an online marketplace or the merchant’s website. The fulfillment process begins after the customer completes the purchase.
Many moving pieces make up the entirety of the fulfillment process. Below is a closer look at each step of the process.
Online merchants need an inventory before they can fulfill orders from their sales channels. Your inventory must be on-hand if you decide to fulfill orders yourself or in-house. You must send the inventory to the provider to perform order fulfillment on your behalf if you choose to outsource.
- Inventory Storage
Goods are inventoried and either disbursed immediately or sent to long – or shorter-term storage once received in the fulfillment center. Ideally, you should only store items long enough to help in organizing the orderly goods distribution for existing sales, rather than holding products for future sales.
The order begins being processed the moment it’s placed online. Picking is the first step to take when preparing an online order for proper shipping. You can do it electronically using inventory management software. If manually, merchants may use a picking list or paper picking list. The list should include the quantity ordered and where each item is located. Such details will ensure that you’re quickly yet accurately picking the right item(s).
To achieve the lowest possible practical dimensional weight, automated fulfillment robots or a packing team selects the packing materials. The lowest practical dimensional weight is calculated by multiplying the package length by the width and height. Optimizing dimensional weight is essential to potentially lower shipment costs, especially as delivery truck space is at a premium. Optimizing dimensional weight also speeds transport.
Furthermore, return shipping materials and labels are also often included by packing teams in case the end customer wishes to return the item to get a refund later or exchange it with another product.
The merchant must ship the order once it has been processed and prepared for sending. This step may involve having your partner carrier pick the orders up from the fulfillment location or a run to your place’s local UPS store or post office. Don’t forget to keep customers up-to-date by sharing with them the tracking information.
- Returns Processing
This process must be carefully executed to ensure that it’s appropriate to restock a product when a consumer returns an item for a refund or an exchange. Obviously, you can’t restock a product if it malfunctions. That’s why returns processing requires sorting returned products accordingly and quality control checks. Return products will then be restocked, sent to a recycling center, or returned to a manufacturer or vendor for a distributor credit or refund.
Models for order fulfillment have been refined over many years, but the basics, such as those discussed above, still hold true. Choose a strategy for fulfilling your customers’ orders according to your company’s resources and skills. Outsourcing the process may be a better idea if fulfillment and logistic resources and skills are scarce.