You recently launched an online shop for your new ecommerce business selling hand-knitted socks. Your marketing efforts are paying off and orders are coming in. The next step is to fulfill those orders in the most efficient, cost-effective way. Streamlined order fulfillment will help speed up your sales process, save money, and keep customers happy.
What is order fulfillment?
Order fulfillment includes all the steps involved in processing customer purchases, from receiving orders and managing inventory to packaging, delivery, and handling returns, reorders, and complaints.
Order fulfillment checklist
- Receive orders and payment
- Select product from your inventory
- Package the product
- Arrange delivery
- Handle returns
Order fulfillment varies depending on the type of business, but here is a rundown of the different steps involved in a typical ecommerce order fulfillment process:
1. Receive orders and payment
The first phase involves receiving a payment and all the necessary information you need to complete an order, such as the recipient’s name, address, payment information, and phone number. Ecommerce platforms like Shopify offer a variety of tools to handle and track customer orders. Shopify’s administrator pages, for instance, allow business owners to monitor orders and confirm corresponding customer information.
Choose an ecommerce platform with a comprehensive point-of-sale (POS) system for receiving payments, as well as payment processing software that manages and processes financial transactions.
2. Select the product from your inventory
When the order comes in, the next step is to retrieve the product from your warehouse storage space, storefront, or other storage facility and prepare it for delivery.
Inventory management software programs can help streamline this process. Most software programs offer businesses a centralized database for storing information on inventory and automating tasks to manage that inventory. (You can use inventory management software to oversee returns as well.)
3. Package the product
Product packaging can be a good way to effectively communicate your brand to consumers. For example, if you want customers to see you as creative, you might print an activity (like a word puzzle) on the cardboard box. Your packaging can help your company stand out from the crowd.
According to an Ipsos survey, 72% of consumers said that the way a company packages a product influences their decision to make a purchase. Keep this in mind when you decide how to wrap and send out your goods.
4. Arrange delivery
Once you package the product, a shipping carrier will deliver it to its final destination. There are many different carrier options from which to choose, from well-known names like USPS and FedEx to smaller, local operations. Picking the right carrier for your business will depend on the volume, frequency, and destination of your packages (domestic versus international), as well as any special considerations, such as the need for refrigeration.
If you have a high volume of orders and contract with a carrier, you can arrange scheduled pickups for your deliveries. If you are handling fewer or more inconsistent orders, you may be better off sending out the packages on your own through a carrier dropoff location.
5. Handle returns
A good returns policy is an important factor when customers decide where to take their business. Give your customers the ability to track their shipments, and make it easy for them to print shipping labels and packing slips in the event they need to make a return.
Ways to handle order fulfillment
- In-house ecommerce fulfillment
- Outsourcing
- Automation
- Data tracking
There are several considerations to take into account when choosing and setting up the right ecommerce fulfillment model for your business. Here are a few pieces to think about to help your business get the most out of your order fulfillment policies:
In-house ecommerce fulfillment
If you are a small or new business with low order volume, in-house fulfillment (also known as merchant fulfillment or self-fulfillment) will be your most efficient option. In-house fulfillment, where you as the business owner track, manage, package, and ship orders yourself, is a low-cost option for those not wanting to spend on outsourcing.
Outsourcing
If the order volume, shipping, or other logistics of your order fulfillment take too much time, your business has a couple of options. First, you might consider dropshipping, where the manufacturer handles fulfillment themselves. Second, you might have a third-party logistics (3PL) company take on all of the work related to order fulfillment, from managing fulfillment centers to tracking and shipping. Since third-party fulfillment partners handle the entire fulfillment process, you’re free to focus on other aspects of your business.
Automation
Short of entirely outsourcing your order fulfillment operations, there are a variety of solutions that can automate parts of the process. Automation can cut time spent on menial tasks such as package labeling, performing quality checks, and return processing, giving owners more space to focus on important business tasks.
For example, you can automate by using fulfillment software to route orders to fulfillment centers near your customers, or use bar code scanners and RFID tags to locate track inventory in your warehouses.
Data tracking
Stay on top of how your business is doing by keeping and organizing data on various aspects of the order fulfillment process. These metrics—which include key performance indicators (KPIs) such as delivery times, order error rate, and overall customer satisfaction—can help you make informed decisions about where to improve your workflow and ensure quality control.
Order fulfillment checklist FAQ
What is the role of order fulfillment?
As a business owner, one of your goals is to get your products into the hands of customers. A proper order fulfillment system streamlines that process. Without high-quality order fulfillment, your chain of logistics will break down and customer experience will suffer.
What is the difference between order fulfillment and shipping?
Order fulfillment includes all of the steps between a customer placing and receiving an order. Shipping is the process of delivering goods from one place to another, and it falls under the umbrella of order fulfillment.
Can an order fulfillment checklist help with inventory management?
Yes. Monitoring inventory is one of the first steps of order fulfillment. A solid order fulfillment process helps your business have consistent, real-time access to stock levels, which can inform production or ordering policies.
 - Shopify (2024))
