Unpacking the eCommerce Fulfillment Process
How does the eCommerce fulfillment process work? It's a question we hear from startups - and sometimes even established retailers - quite often. The world of fulfillment has some fairly straightforward steps that are underpinned by a whole lot of technology and expertise, which along with logistics terminology can make the process feel impenetrable.
Where possible, we like to keep things simple and share what we do in an accessible way. That's why our "Unpacking" articles exist.
In this one, we'll explain some fundamental steps in the eCommerce fulfillment process and walk you through the terms associated with each stage.
Let's dive in!
How Does the eCommerce Fulfillment Process Work?
An overview of the constituent parts is usually best for folks who are new to the topic. The terms used here are familiar to most in our industry, though they can still be opaque in terms of their detail and how each is enacted.
As a critical section of your eCommerce supply chain, the fulfillment process covers everything from the job of physically storing products to managing online orders, selecting the requested items from inventory, and ensuring safe and speedy delivery to the final destination (i.e. your valued customer!)
But it doesn't stop there. Post-order service can be just as important as the shipping piece, which is why delivery confirmation and returns management must also be considered.
Having established the breadth and importance of this activity, the bare bones of the eCommerce fulfillment process can be summarized as follows:
- Receiving
- Order Submission
- Order Fulfillment
- Ship Confirmation
- Returns
Next, we'll take a look at each of these pieces of the eCommerce fulfillment process in greater detail.
You can also hear more from our CSO Thom Campbell, about the fulfillment challenges solved by a 3PL, in the video below.
Receiving Product
Goods need to move from the manufacturer to your provider. Most product makers have no order fulfillment capabilities, leaving this first phase of the eCommerce process to in-house teams and any external partners they employ.
That provider will need a scheduled delivery and advance setup of SKUs (Stock Keeping Units) in their systems. If they don’t already have that available, it's probably time to step away and find another provider! Additional items to consider are things like a packing slip or receipt order (R.O.), so that your chosen service partner understands what they are authorized to receive on your behalf.
Once the goods get to the selected storage facility or distribution center (DC) and are put away, it's time to move on to the order submission stage.
Order Submission/Transmission
To set the eCommerce fulfillment process in motion, orders will need to be transmitted to your provider. This can happen in various ways. The most common options are:
- FTP (File Transfer Protocol) Ideally FTPS, the secure version, - short definition
- API (application programmer interface) which is increasingly prevalent; or, - short definition
- XML (Extensible Markup Language) or EDI (Electronic Data Interchange) - These acronyms form the basis of many integrations mapped through the protocols used by most major retailers to transmit orders.
Fulfilling eCommerce Orders
So your fulfillment provider has stock, they have an order, and now they should be ready to pick, pack and ship that order. If it’s drop-ship for a retailer, there will be numerous requirements for that retailer (custom packing slip, shipping on the retailer’s account, etc.)
If the product is ordered from your website, you’ll want a branded packing slip. The shipping method should also be economically aligned with your brand experience. High-margin items and luxury brands warrant a larger shipping price tag than everyday products, for example.
You probably shouldn’t ship Gucci loafers via USPS (no disrespect to the Postal Service, of course, which does a great job for many types of fulfillment!)
Ship Confirmations
Since most consumers have been trained by Amazon to expect a tracking number within minutes and delivery in 2 or less days, you better be prepared to get them a tracking number. FAST.
But not before the goods actually ship, or that tracking number will just show ‘label created’ in the carrier’s online portals, which may also lead to consumers being less than delighted.
You will want a way to get a ship confirmation back from your fulfillment provider with tracking information as soon as the goods ship. You will then want to send that to your consumer, or perhaps have your fulfillment provider do it for you.
Returns
Nobody likes to discuss this, but if you ship eCommerce you are likely to have to handle returns. It’s a larger topic and not for this discussion, but know it’s out there lurking.
Product type generally determines return rates. Think sneakers vs. toys... one has a much higher rate of return. We're willing to bet you can guess which, based on your own online shopping habits (or those of your more picky family and friends).
While eCommerce fulfillment isn't as glamorous as high-profile influencer campaigns that drive order spikes or praise from the media outlets that cover your product, it is an essential part of connecting that initial promise with long-term brand success. Fail to meet early customer expectations due to delayed orders or poorly packed items and all that effort on building your brand could be for nothing.
A wave of bad reviews on social media or a subpar unboxing experience for a single influencer could quickly torpedo even the most promising brand.
Ensuring you understand the eCommerce fulfillment process - or engage a service with the key qualities of a 3PL fulfillment partner - will help your brand avoid these pitfalls and set the stage for success.