The Ecommerce Fulfillment Guide to Grow Your Business

Fulfillment is an essential ecommerce business process involving inventory storage (warehousing), packing and shipping orders, and processing any returns or exchanges. Ecommerce fulfillment starts when a customer checks out from your website and concludes when they receive their order. If a customer seeks an exchange or reimbursement, the returns process is also part of order fulfillment.

Effective, reliable ecommerce fulfillment earns trust with customers and keeps them happy. What if product delivery doesn’t meet customers’ expectations, or items are damaged during transit? Fulfillment problems like these can hurt your business.

There are several options for fulfilling an order, including in-house fulfillment, Fulfillment by Amazon (FBA), and other services.

As a business grows, most ecommerce brand owners reach a crossroads: Should you scale up in-house operations and find a way to store, manage, and ship more inventory, or enlist a fulfillment service? Here are three potential solutions:

Storing, packing, and shipping inventory quickly and efficiently to the customer’s front door becomes even more critical as orders increase. You can scale to a bigger warehouse or storage location or outsource fulfillment for some products to an outside party.

Many ecommerce service providers offer fulfillment solutions, including warehousing, packing, shipping, and handling returns. FBA provides all these services for ecommerce businesses like yours. Through 2019 and 2020, Amazon invested more than $30 billion in logistics, tools, services, programs, and people to help small- and medium-sized businesses.

How do you find the right fulfillment service? Here are some factors to consider when looking for a third-party fulfillment service.

FBA allows you to ship inventory to an Amazon warehouse at a competitive cost. When an order comes in, Amazon delivers the product to the customer. You can take advantage of Amazon’s distribution network, infrastructure, world-class delivery service, returns system, and customer service process.

The best fulfillment solution for your ecommerce business will depend on several factors, including the nature of your business, the types of products you sell, your location, and your approach to satisfying customer demands.

Click the link below for a checklist of important factors to consider if you’re thinking about teaming with a fulfillment service. If you want to learn more about the fulfillment process itself, read on!

Step one is getting your products to your distribution location. This stage of the fulfillment process is known as receiving inventory. The place where you receive merchandise could be your place of business, a warehouse, a fulfillment center, or a storage location.

If you’re working with a third-party service, be sure to pack your products with the right shipping material and clear labeling. Doing so will speed the process of receiving inventory and ensure your product is ready to ship out to customers.

Inventory storage is the location where your orders are stored. If you choose in-house fulfillment, this could be an accessible location such as a home garage or spare room. Businesses with a lot of inventory may require warehousing.

It’s essential to have enough inventory to meet customer demand, especially during seasonal holidays or peak sales events such as Cyber Monday or Prime Day.

Each product should have a stock keeping unit (SKU) identification code to assign it to a dedicated storage place to help you manage your inventory.

Be sure to follow all Amazon requirements for packing and preparation to minimize costs and avoid damaging items in transit.

If you don’t use a service like FBA, shipping products through a major carrier is the next step in the order fulfillment process. For small orders, shipping may be as simple as a quick run to your local postal service or drop-off location. For larger orders, you may want to have a carrier pick up orders in front of your fulfillment location, whether your business premises or a storage facility.

Although not strictly part of the ecommerce fulfillment process, it’s important to integrate a customer relationship management tool to give customers a tracking number and let them know when their orders have shipped. Using email and shipment tracking reduces calls to your customer service center from customers wondering about their order status.

Returns are a normal part of the business and are to be expected. Whether you use in-house fulfillment or third-party fulfillment service, you will need a process for dealing with returns, restocking or discarding defective products, and sending refunds to customers.

Clothing items are the most commonly returned online retail products, accounting for 75% of all returns. Don’t let the returns process discourage you. If you are new to ecommerce, it’s essential to keep high-return product categories in mind and have a policy and process for handling returns. With FBA, Amazon processes returns on your behalf.

The scope of your operations will determine what type of fulfillment is right for your business. If you’re just starting your ecommerce business or handling a low volume of orders, shipping orders from your place of business might be feasible.

As your ecommerce business matures, instead of processing orders yourself, it might make sense to secure dedicated storage space and/or leverage a fulfillment service. Either way, it’s important to have the right amount of inventory available to satisfy orders during peak shopping times.

Does your business sell small parcels of new and used books? Or do you regularly package large orders of heavy equipment? The type of products you sell could determine what support you require from a fulfillment service.

This is especially true of shipping. Keep in mind not all types of shipping are available for all products.

In the U.S., certain products have transport limitations. Shipping for bulky or large items will typically cost more. Hazardous materials or dangerous goods, also known as hazmat items, typically must use ground shipping.

Order management is the process of tracking and fulfilling customer purchases across all sales channels.

If a fulfillment service cannot process orders from one or more of your sales sources, then it may not be the right match for your business. Working with one fulfillment service is ideal for simplicity, but more than one might be needed to cover all your sales channels. Alternatively, you might want to reevaluate your sales channels and consider removing or consolidating some.

A central monitoring system on customer orders is a crucial part of order management. It will allow you to record all customer orders, shipments, and returns (for example, read about how FBA order tracking works). Knowing the status of each customer order is especially helpful when dealing with customer service calls. Order tracking can also allow you to analyze customer purchasing behaviors.

Be sure to monitor how a fulfillment provider processes your orders. Work closely with your fulfillment service to manage orders from all your sales channels. Above all, you need to be able to immediately spot issues such as insufficient stock levels or delayed shipments.

Every business needs a system for dealing with customer questions. Some fulfillment partners like FBA can take on customer service. Others don’t, so you’ll want to check into this when you evaluate fulfillment providers.

Do you want to outsource customer service or keep it in-house? Either method comes with a cost. A fulfillment service that also responds to order inquiries can free up you and your resources to focus on other matters. But some businesses prefer to build their own customer response team.

Shipping time is among the top factors customers weigh when deciding whether to buy a product from you or one of your competitors. In a recent survey, nearly 84% of people polled regarded shipping as an important part of their online shopping experience.

Shipping is an essential step in creating a good customer experience and staying profitable. A daily run to the post office may be feasible for smaller operations, but customer needs and expectations will likely change as your brand grows.

Fulfillment services typically have fast and affordable shipping rates due to the large volume of shipments they process. But every fulfillment service will offer different rates, and those rates may fluctuate based on product type, order location, and other variables.

Also, if you use a fulfillment service, consider the cost and time to deliver your inventory to a distribution center. Learn more about how businesses send and replenish inventory with Fulfillment by Amazon.

A sound storage system will ensure quick and easy access to products once customers place orders. The right solution likely involves a safe, temperature-controlled environment, with well-labeled shelves and bins for easy retrieval.

Proximity to customers is another factor when considering inventory storage. A distributed network of fulfillment centers can reduce shipping costs, if your customer base is geographically broad.

Every business with an ecommerce channel needs a way to process returns. Standard returns processing can help provide an easy way for customers to ship items back to your business premises or the fulfillment center with prepaid address labels. It should also incorporate a notification system to let customers know when they can expect replacements or refunds.

As part of the returns process, you may need to inspect items to ensure they are undamaged or unworn, restock products as necessary, and document or discard defective products. The ability to track returns and faulty items is also useful in product planning. Look at dissatisfied customers as one of the best ways to discover flaws in your manufacturing or product design.

Small ecommerce businesses may handle the order fulfillment process with manual admin processes and organized spreadsheets. Larger operations will require sophisticated fulfillment software. Certain programs can benefit businesses of any size with tools for organization and fulfillment tracking.

Some fulfillment software solutions allow you to unite your ecommerce ordering system and automatically forward orders to fulfillment centers.

You will also need up-to-date inventory levels to restock products or offer discounts to offload stagnant inventory.

Ecommerce is a global activity. If you want to reach international customers, research special sales conditions such as regulations, tariffs, and taxes. You will also need to build a process to ship your orders across the world reliably.

A fulfillment service will likely help with these complexities, but if you want to fulfill worldwide orders, check to ensure how your fulfillment provider manages international shipping.

For example, Amazon operates stores on multiple continents, and serves customers in more than 180 countries worldwide.

To shorten shipping times, you will want to find a way to store your products in a location as near as possible to both your store and the customers who will place orders with your business. For some sellers, this means using multiple fulfillment centers to ensure each order’s quickest delivery.

This fulfillment strategy is known as distributed inventory because you send merchandise to multiple locations. By dividing shipments and placing them with various distributors, you can shorten the delivery routes to all customers who place orders.

The FBA Inventory Placement Service uses this method to get your products to customers as quickly as possible.

Making it easy for customers to select add-on items through your online store is a good way to increase your cart values. Your fulfillment process should anticipate what products are likely to be purchased together and prepare them in advance.

Common types of include pick and pack fulfillment and kitting assembly.

When an order is placed, warehouse workers select it from storage and prepare it for shipping. A reliable warehouse management system makes this process quick and efficient by pre-packing items that frequently ship together.

For items sold in a set, like product samples or cosmetics, a fulfillment service that offers kitting and assembly could be important. In the kitting process, packing specialists pre-bundle products that arrive separately at the storage center into single units and assemble them for quick shipping. Kitting gives customers the flexibility to save money on items, which may increase your average order value.

Many businesses offer their products through a subscription service, a popular model that can come with logistical challenges.

Subscription boxes may include multiple items from different storage locations. You may pack the products yourself or outsource the process to a fulfillment service, where packing specialists will tackle this step. Either way, the presentation of the final product to the customer is important.

Not all distribution centers can process subscription products. If your business sells subscription packets, be sure to check this component before you decide on a vendor.