There are many moving pieces of the fulfillment workflow for an order to end up at the customer’s doorstep – including receiving inventory, warehousing products, picking and packing items, and shipping orders.
Let’s take a look at the overall steps involved in order fulfillment:
- Receiving: Merchants receive orders that are already placed by customers
- Warehousing: Proper inventory storage gives merchants visibility into what is available to ship to customers.
- Order processing: Ordered items are picked from the warehouse and packed to ship.
- Shipping: The carrier picks up orders from the fulfillment center while customers receive shipment notification and tracking info.
- Returns processing: Exchange or refund initiated by customers due to items’ quality or malfunction.
Which Order Fulfillment method to use?
1. In-house fulfillment
In-house order fulfillment is when a business handles all parts of the eCommerce order fulfillment process on its own. This model is the easiest fulfillment framework to get off the ground. It offers you total control over getting products to the customer, so long as the order volume is manageable.
The entire process can be quite cumbersome as it takes merchants lots of time to manage a warehouse, picking and packing orders, and ultimately, shipping the items to customers. For those just starting a business with a tight budget, fulfilling in-house can be a good option. But when the business expands, it probably makes more sense to outsource the process and pay an eCommerce order fulfillment expert to handle everything. Therefore, a merchant’s time can be better spent on other matters such as acquiring more customers or developing new marketing strategies.
Dropshipping means that the merchant never holds the products they sell. Instead, the products are shipped from the manufacturer directly to the end customers without the business ever storing the product itself. In a way, dropshipping is the anti-inventory and affordable eCommerce order fulfillment method. Merchants will not have to worry about paying rent or storage, no excess stock, no storage fees as well as risks related to product quality due to storage such as mold, spoiled or fire. The convenience of a hands-off product fulfillment experience thereby enables businesses to focus on other priorities, which is especially advantageous to new companies.
Dropshipping can pose an advantage to businesses that don’t have their own storage space. But because you’re not managing your deliveries yourself, communication with the shipping party is critical to delivering products on time and keeping customers happy.
3. Hybrid fulfillment
This is the combination of in-house fulfillment and dropshipping methods. A company may process some orders in-house and at the same time outsource some of their sales to a dropshipping service provider. Some companies choose to use dropshipping for items that are infrequently purchased or those that they don’t want to store in-house, such as large or expensive items. This is ideal for regional brands that are expanding their presence to reach a wider number of customers with faster shipping options.
Challenges of Order Fulfillment
1. Inventory management
As your business grows, it will inevitably become harder to manage inventory – especially if you’re an eCommerce merchant, whose customers expect to see a product’s availability and status at every point in the buying process. Therefore, running out of stock is a one-way ticket to a sales disaster as it deters customers from shopping with you. Companies that succeed in maintaining optimal inventory levels won’t have to worry about losing customers to their competitors due to stockouts.
2. Logistics dysfunctions
The right things should be in the right place at the right time. Or else, you risk late, broken, or missing packages, which can hurt your reputation and sales even more than not generating the sale. The shipping process is just as important as the sale itself. Another challenge to make a smooth eCommerce order fulfillment process is to ensure the shipping method, speed, and product quality.
3. Customs restrictions
The local merchants may not be familiar with customs selling processes and shipping overseas restrictions. Help yourself clear the issue with documents or declarations that involve costume restrictions. It is essential that you get a picture of the whole process before selling out your first international order.
Best practices for Order Fulfillment
1. Decide what best suits your business
The best eCommerce order fulfillment model, whether it’s in-house or dropshipping, should be flexible enough to handle the order volumes without unnecessary delays.
2. Be transparent
With better supply chain visibility, merchants can set clear expectations with customers about deliveries. Let your customers know the actual delivery date or any anticipated delays as well as returns processes. Detailed information makes up secured and satisfied customers.
3. Use the right tools
A smooth eCommerce order fulfillment closely relates to product availability. Of course, maintaining an ideal storage level requires insightful control and precision in every stage of the supply chain. But what if there is any deviation from your smooth logistics process or unexpected spikes in demand? Luckily, there are numerous tools that integrate with an eCommerce website and help you monitor stockout situations. You’ll thank yourself later for finding and implementing the tools that will make your fulfillment process run smoother.
Your easy-win solution for out-of-stock
With no doubt, stockout causes serious consequences: your regret at out-of-stock revenue and the dissatisfaction of customers – but with the BackOrder application, it is preventable. The app’s core value is that it allows customers to make purchases even when out of stock or before stock arrives. This utmost functionality is what drop shippers and Bigcommerce merchants really need. With the full-featured design for easily managing stock, the BackOrder app allows merchants to keep track of every detail regarding product inventory and customize their storefront. You can perform regular inventory audits, review inventory storage options, manage SKU creation, and especially mitigate inventory loss. Other than that, BackOrder is also a great tool to test out new product demand. The market can be validated based on the number of products that were back-ordered.
Revenue loss due to out-of-stock items will no longer be a worry with BackOrder.
To avoid your fulfillment process being broken off by the unavailability of products, you can try out the Free Plan of BackOrder right away with a one-click install, explore at:
Our products and services: Shopify automation, BigCommerce automation, Backorder management