Order Fulfillment Guide
E-commerce has replaced physical shopping in some sectors today. In particular, the effects of the Covid-19 pandemic have led to the rapid growth of e-commerce. However, this growth is no longer likely to slow down. E-commerce, which has become one of the most important sectors of today rather than a trend of the future, is also very profitable for investors. With the right management of the processes, it will be extremely possible for you to grow your e-commerce business.
In this article, we will talk about order fulfillment service, which is a service underlying e-commerce processes. You can find answers to many questions such as what is order fulfillment, what stages it consists of, in which cases you should receive order fulfillment services, in the continuation of the article.
Table of Contents
What Is Order Fulfillment?
In short, order fulfillment is the execution of all processes from the moment the buyer places the order to the moment the order is delivered under a single roof for an e-commerce business. In terms of customer satisfaction, order fulfillment must be carried out in a very professional manner.
Why Order Fulfillment Is Important
When you shop on an e-commerce site, your expectation is that your order will be completed as soon as possible without errors. For this, it is necessary to send the right, undamaged product, to do the shipping as fast as possible and to carry out the communication with the customer correctly. In short, it is extremely important that the processes from the moment you receive the order to the delivery are carried out as professionally as possible. Here, order fulfillment is based on the error-free execution of these processes. Many consumers state that they will not shop from the e-commerce platforms they shopped before due to faulty supply processes. Fulfillment services will help you a lot in avoiding these problems and increasing customer satisfaction and customer loyalty.
Order fulfillment processes are directly related to the needs of the buyer. Because the processes you carry out will directly affect the buyer’s decision to buy. A company that promises fast shipping and a company that takes the product out of a location where the delivery takes a long time will not be preferred at the same rate. Order fulfillment processes are one of the biggest factors on buyers’ decisions.
Order Fulfillment Options
Different e-commerce platforms will of course have requirements for their different needs. There are order fulfillment types that will meet all these different requirements in different ways. You can find the most common and most demanded varieties of these types and their descriptions below.
1. Third Party Fullfilment
Third party fulfillment, in short, is the execution of procurement processes by an external partner. These processes generally consist of storage, preparation of products, packaging, shipping and control of returns.
3PL providers are very important for e-commerce platforms that have grown too large to carry out their procurement processes in house. They help you focus on the growth of your company by saving time, money and labor. 3PL companies work to meet different needs. In addition, they help increase customer satisfaction by minimizing errors in supply chain processes.
Choosing a third-party logistics partner can be time consuming. There are so many details that you need to pay attention to. If you want to learn more about 3PL services and choosing the right 3PL provider, you can visit our 3PL Guide.
2. Merchant Fulfillment
Merchant fulfillment is the type of fulfillment that businesses complete their procurement processes themselves. This type of procurement process is the path many e-commerce companies follow when they are first established. This means that you store, prepare, package, ship and handle the returns of your products yourself. No support from any third party.
The management of all processes can be extremely complex. It will be extremely challenging to continue this, especially when your orders increase. Increasing your product capacity means a larger storage area. The increase in your orders will require you to spend more effort and time on the supply processes, and will make it difficult for your company to meet its strategic needs, which are important for its growth.
3. Dropshipping
Dropshipping refers to sending products directly from the manufacturer. This type of supply can generally be preferred by businesses that have just started e-commerce. In this process, orders are sent directly to the manufacturer, the manufacturer sends the orders to the buyer, and the supply chain ends here. The biggest advantage of this type of order fulfillment process is its low cost, and the products you will sell can be diversified with much lower prices.
The biggest problem of this type of trade is the geographical location of the producers. Since they are usually located in different countries, the shipping process is long, and the shipping price can be very high. This can result in lower orders and customer satisfaction may also decrease. At the same time, this method gives you little control over the supply chain.
Process of Order Fulfillment
We talked about the most preferred fulfillment types above. You can find general information about how these order fulfillment methods work in this section.
Let’s start with the easiest one, Merchant fulfillment first. As explained above, this means that the product procurement process is carried out entirely by the business owner itself. The process is quite simple. You receive orders directly. Then you collect, prepare, pack and ship the products. You will also take care of the return processes. At the same time, customer relations are also managed by you. It’s the right way to start for small e-commerce businesses. However it can get complicated as your business grows.
Secondly, we can talk about the dropshipping model. Dropshipping is a less demanding form of fulfillment. Because the order is sent directly to the manufacturer, the preparation and shipping of the product is done by the manufacturer. The e-commerce platform has little control over the process. Dropshipping can be a good option for those new to e-commerce, but if you want to grow your business, you may need to choose a different order fulfillment format.
Third, we can examine the 3PL order fulfillment processes. This type of order fulfillment is more complex than the other two. For your business, it can often be the most advantageous. The 3PL order fulfillment processes are as follows:
• Receiving
This step refers to the acquisition of products by 3PL providers. First, your products are received and stored by the service provider. Thus, your orders are prepared directly in 3PL warehouses and can be easily shipped.
• Picking
It is the beginning of the order process. When an order comes to the 3PL system, this order is sent to the picking team and the products are taken from the warehouses and made ready for packaging.
• Packing
It refers to the packaging stage of the products. At this stage, the orders are packed and made ready for shipping. Classic packaging products can be used as well as special packaging for your brand if you request the use of products specific to your brand.
• Shipping
This is the stage of sending orders. Many 3PL companies work with professional shipping companies and they can send orders in the fastest and error-free way. In addition, there are 3PL providers who undertake the submissions themselves.
• Return Processes
Third-party logistics providers also deal with returns processes. In cases where any of your products are returned, the processing of the returns and the correct management of the process are provided by the third party logistics service.
We talked about how third-party logistics services work. So how is a 3PL logistics service priced? There are many different factors that affect 3PL pricing. Different services may charge different prices. It is also possible to request different services. For detailed information about 3PL, you can visit our 3PL Guide.
How To Design An Order Fulfillment Strategy For your Business
We talked about the different forms of order fulfillment above. So how do you decide which order fulfillment format to use? The points that we will talk about in this part of the article are extremely important for you to decide. You need to pay attention to these points in order to determine an order fulfillment strategy that is suitable for your business:
1. The size of your business and your order quantity
How many orders do you ship in a month? What are your order forecasts for the next month and/ or next year? These questions are very important questions in determining your strategy, even the first stage of this process.
The amount of product that you send monthly is very important. If your business is small, for example, if you ship less than 100 products in a month, it is possible to carry out order fulfillment yourself and it may be more advantageous for you. But if you’re shipping more than 100 products in a month or your business is growing rapidly, then it’s time to develop a different strategy.
2. Your sales channels
Which sales channel are you using? Do you sell on your own website, do you use a market place, or do you run both together? Questions such as which sales platform you are selling on will help you determine your strategy.
For example, on some platforms, the dropshipping model can be much more advantageous if your order capacity is small.
If you are selling through many different platforms, it will take more time and effort to manage the entire order fulfillment process. Proper execution of customer communication can also be another challenge at this point. If you are selling on different platforms at the same time, you may need third-party support.
3. Geography and Location
The location where you send and the majority of your orders come from is very important. 23% of online shoppers cancel their orders due to slow shipping. In order to avoid this, you may need to have warehouses in different locations.
It will be very costly for your business to have a warehouse in different locations, so it can be very profitable to hire a third-party logistics provider to take care of this issue for you.
What Are The Benefits of Improving Your Order Fulfillment Strategy?
We now know that the whole process from the moment the order is placed to the moment it is delivered to the buyer is called order fulfillment. As we mentioned in the content, order fulfillment processes have a direct impact on the decisions of your buyers. Fast delivery of orders, low margin of error in order fulfillment and correct management of customer relations will positively affect your business. So, what kind of contributions does the improvement and development of order fulfillment processes make to your business? You can find the answer to this question briefly in the list below.
- It keeps your shipping costs down
- Allows you to focus on sales strategies
- Plays a role in the development of your customer relations
- Allows you to expand your customer base
Conclusion
Order fulfillment processes can be extremely complex and require a lot of time and effort. Since order fulfillment covers the entire process from the moment the buyer places the order to the moment they receive the product, it directly affects your relationship with the customer and the customer’s loyalty and views to your company/platform.
How you manage order fulfillment processes directly determines whether buyers will buy products from you, and improving fulfillment will have many benefits for your business. There are different types of order fulfillment, in order for your business to be successful, you need to choose the most suitable one for you. When making these decisions, you may need to consider the data relevant to your business, consider how to respond to your customers’ needs and requests, and improve the sales channel and technologies you use. A correct fulfillment method will allow your business to grow by responding to the needs of your buyers.