Ecommerce has rapidly developed in recent years, requiring enterprises to improve their operation and management system. One of the key factors in the system is order fulfillment. Efficient order fulfillment process is a vital part of any successful online business and is considered as the backbone of eCommerce as well as online shopping.
Table of Contents
- 1 Overview of order fulfillment
- 2 Forms of order fulfillment
- 3 Why is order fulfillment important?
Overview of order fulfillment
Online shopping or e-commerce is becoming more and more popular, and gradually replacing traditional sales forms. The development of eCommerce leads to an increase in demand along with orders. While competitive advantages are increasingly confirmed by service quality, to offer the best service to customers, enterprises have to optimize their logistics system and freight forwarding activities. Order fulfillment is the solution to help enterprises improve their logistic system. If enterprises can effectively apply fulfillment for eCommerce, they can bring the products to customers in a timely and cost-effective manner.
What is order fulfillment?
Fulfillment refers to the process of preparing and delivering a customer’s order. Order fulfillment means all the steps that enterprises take from receiving a new order to placing that order into the customer’s hands. The process involves fulfillment warehouse, package, shipment, and an arrival notice (by automated email) to the customer to let them know the order is in transit.
The order fulfillment service is born as inevitable with many outstanding advantages, promising to be an indispensable factor in many business activities. It is gradually thriving and becoming popular thanks to the explosive development of e-commerce. As a result, it requires a prompt and timely response from the logistics and supply chain industries to satisfy customers’ needs and optimize the operation.
Details of fulfillment processing
A fulfillment process should entail the following steps:
Receiving goods from the supplier -> Storage -> Handling orders -> Delivery -> Collecting payment -> Handling after-sales requests (such as return, exchange).
The steps in the fulfillment service processing are specified as belows:
- Receiving goods from the supplier: The fulfillment service staff comes to the supplier to receive the goods and deliver to the warehouse.
- Storage of goods and inventory management: Once goods are received, they are indexed and stored in a warehouse. Inventory management is crucial to provide full visibility into stock availability, where to find specific items and eventually order fulfillment speed and accuracy.
- Order processing: Order processing is fully standardized from emailing to buyers, confirming orders, picking up goods, checking product integrity, and delivering goods to the packaging department. The fulfillment order process performed by the fulfillment order center is often less error-prone because everything has been clearly and thoroughly managed by its management system.
- Delivery and collection: The company delivers the package to the buyer at the correct address and time. Besides, if the order isn’t paid in advance, the fulfillment company will collect it on behalf of the seller if there is a request from the seller.
- Handling after-sales requirements: Online purchases might lead to problems of exchanging goods or returning goods after purchasing, possibly due to defective products, or customers dissatisfaction with the product,etc. The fulfillment company accepts the request of delivery and directly handles the request following the seller’s policy and decision, ensuring the balance of the interests of the buyers and minimizing damage to the seller. A big plus in the fulfillment service process is that sellers can keep track of inventory and order status; And buyers know the shipping status and get assistance whenever needed.
Forms of order fulfillment
We have known of the fulfillment process as mentioned above. Then who needs fulfillment service? The answer is all businesses operating on e-commerce platforms, online sellers on social networks and e-commerce platforms such as Amazon, Shopify, Lazada, Tiki, etc. The seller can choose the following fulfillment forms: in-house fulfillment, dropshipping, or outsourced fulfillment:
In-house fulfillment is also known as self-fulfillment. In which, the company owns its inventory, and at the same time manages activities related to inventory management, order handling, and fulfillment. This form is suitable for two types of companies:
– Large-scale companies who are willing to spend a large budget to own their warehouses, hire employees to manage the warehouse, and complete the order process. Thus, to use in-house fulfillment, enterprises must ensure to build a complete fulfillment process to avoid goods disturbance, congestion orders resulting in dissatisfaction of customers.
– Start-up companies who do not have a big database of customers and orders, so warehouse management, order processing, and delivery can all be performed by themselves. However, when a start-up has been operating for a period of time and receiving more orders, the self-fulfillment form should be reconsidered.
Dropshipping means that the seller doesn’t own the goods. Instead, the seller contacts the supplier to ship the item directly to the buyer using the seller’s information. Dropshipping activities happen regularly on e-commerce sites Ali express, Shopify, Amazon,…
Dropshipping is suitable for businesses that sell a variety of items and do not want to spend money on warehouses and goods handling activities, but only invest in marketing activities to increase brand reputation. However, there might be a risk which comes from the supplier’s side in the case that the product quality is not up to par with the standards or advertisement. And if not handled carefully, business might lose customers and reputation.
This is a method in which the sellers outsource the process to a service fulfillment company. The fulfillment company performs all cargo-related operations including picking up, storing, order processing, delivering, and collecting payment on behalf of the seller.
Thus, sellers, especially small and medium companies, can save a lot of storage and transportation costs and human resources, allowing maximum focus on business activities in the market. However, outsourcing fulfillment to a third party also means that you cannot fully participate in cargo management and be rest assured of the whole process. So choosing the right supplier to outsource your order fulfillment is crucial to guarantee a smooth service delivery.
Why is order fulfillment important?
The arrival of fulfillment is an inevitable result of the strong growth of the internet and e-commerce. There are three areas that businesses need to pay attention to when it comes to order fulfillment:
– Managing and reducing inventory costs
– Improving customer experience
– Cross-border sales
Managing and reducing inventory costs
As the revenue coming from the e-commerce sector has continuously increased in recent years, e-commerce is considered as a huge potential profitability by businesses. This also means that during expansion where demands surge, companies have to import more goods into their fulfillment warehouses, recruit more employees to manage the goods, and ensure orders reach consumers on time. Businesses will have to balance different areas of their operation including marketing, sales activities, inventory management and more. Staff salary and warehouses’ rent and management costs have to be taken care of even though business is not profitable at certain times. To minimize the risks, make sure to choose a reliable partner to handle your order fulfillment or if you prefer in-house fulfillment, find yourself the right logistics software or solution.
Improving customer experience
Timely delivery is one of the most important factors in selling online as it directly affects buyer satisfaction. Effective fulfillment is the solution to ensure the customer experience. Professional service can help to arrange and handle orders to deliver on time and in the right quantity to buyers and collect money for the seller if required. Thus, the seller can sell the goods and make a profit without wasting time and resources for handling and delivery while the buyer is satisfied when receiving the goods on time.
In the ecommerce “era”, more and more businesses are interested in gaining a share of the market. The competition is tougher which requires businesses to resort to different solutions to compete and make profit. Many are finding their ways to tap into unmet demands like expanding service coverage to international clientele. An effective order fulfillment process will play a significant role in making this happen.
Order fulfillment has become an integral part of the operation system of any enterprise that joins the eCommerce market. Enterprises will significantly benefit from the order fulfillment process if they know how to effectively run this process or use the right partner to outsource the work to. Cost and human resource optimization as well as customer experience improvement and sales increase are among the most important indexes to evaluate the effectiveness of this process. If done correctly, e-commerce companies will successfully stay ahead of the curve and improve their positions in the market.