Today, having an attractive website or quality products is not enough for a business to make its customers happy. The real game changer is how effectively it does order fulfillment.
Ecommerce fulfillment is a process by which orders are picked from the warehouse shelves, appropriately packaged, and then handed over to the shipper so they can be delivered on time. There are various e-commerce fulfillment models, including self-fulfillment, third-party fulfillment, and drop shipping. Each fulfillment model has its pros and cons. Businesses should choose the right one depending on their objectives.
What is Ecommerce Fulfillment?
E-commerce fulfillment involves an end-to-end process of fulfilling customer orders efficiently. It starts when a customer places an order on the website and ends when the order is delivered to the customer’s doorstep. Ecommerce fulfillment includes various processes like inventory management, picking, packaging, shipping, and managing returns process.
Every e-commerce business requires a smooth fulfillment model. If we talk about small enterprises, they prefer to choose a self-fulfillment model. Whenever a customer orders, they pick up the product, package themselves, and finally connect with the shipping companies to deliver the product.
However, if we talk about large enterprises, they prefer the 3PL fulfillment model. The businesses send their products in a full-load container to the fulfillment warehouse. The products are unloaded, inspected, and kept on the designated shelf.
The fulfillment warehouse receives the order details when a customer places an order. The warehouse staff picks up the product, does the packaging, and then hands it to the shipper.
How Ecommerce Fulfillment Works? Step-by-Step Process
The e-commerce fulfillment works by step-by-step processes, which are listed below.
1. Receiving
Most of the fulfillment warehouses have receiving bays. The business trucks arrive there to offload products. It’s best if the Company gives advance shipping notice to the warehouse about the product’s arrival and several products. It helps the warehouse fulfillment keep ready staff who inspect the products and maintain their details in WMS.
2. Warehousing
The warehouse staff keeps the received products in the warehouse’s designated place. Fulfillment warehouses have a particular system for placing products on the shelf. The system will generate a picklist and shelf location whenever a new product arrives in the fulfillment warehouse. All the shelves in the warehouse are labeled and barcoded. It makes the picker easily identify that he is in the correct place and pick the proper items from the shelf.
3. Storage
The warehouse stores the products in various ways. For example, it keeps the highly demanding products in the picking area so the picker does not need to walk for the product.
Another way is to organize the products in specific zones. Each picker is allotted to a particular zone. It picks up the ordered product and hands it to the next zone.
4. Inventory Management
The fulfillment warehouse is leveraged with advanced technology like a warehouse management system, barcode, and IoT sensors. These advanced technologies track products in real-time and avoid products of overstocking and understocking problems. Today, e-commerce fulfillment companies are adopting lean practices, i.e., they keep only the required products in the warehouse to satisfy customer demands.
5. Picking And Packaging
Whenever a customer orders, the ecommerce system will send all the product details to the fulfillment warehouse. The WMS will then generate a pick list. The staff will have a list to pick the ordered products in the bin and transfers the ordered products to the packaging area. The staff did the packaging correctly and handed it to the shipper.
6. Shipping
The outbound warehouse staff will check the shopping labels on each packaged product and then put it inside the boxes of the shipping carrier. Many 3PL Companies work with various transport companies. E-commerce businesses can choose the carrier based on their needs and reliability.
7. Returns
The shipping carrier will deliver the product to the customer’s doorstep. Sometimes, the customer does not like the ordered product and places a return request. The delivery partner will return the product from the customer to the fulfillment warehouse. The staff inspects the product and keeps it on the shelf if it is in good condition.
Different Types of Fulfillment Models
There are various types of fulfillment models listed below.
1. In-house Fulfillment
Here, the brands manage the order fulfillment process by themselves.
Pros
- The in-house fulfillment model will have more authority over the entire order fulfillment process.
- They earn higher profit margins on each sale.
Cons
- The brands feel challenged when the business grows and receives more customer orders. Again, in-house fulfillment requires a high initial investment in infrastructure, buying equipment, and many more.
- Managing the entire fulfillment process is an even more time-consuming and labor-intensive process.
- There are high risks of errors in shipping, inventory management, or wrong product delivery, which can lead to negative reviews and dissatisfied customers.
2. Third Party Fulfillment Model
The ecommerce brands outsource transportation, shipping, and warehousing activities to the third-party fulfillment model.
Pros
- Outsourcing will eliminate the need for high initial investment in infrastructure, equipment, software, etc.
- Third-party fulfillment models are usually leveraged with advanced technology, such as warehouse management systems, which manage warehouse operations efficiently. They will fulfill orders quickly and enhance customer satisfaction.
- Third-party fulfillment providers provide scalable solutions, meaning they can occupy the goods and products when the business expands.
- Outsourcing enables businesses to focus on key business areas like sales, marketing, and product development.
Cons
- Businesses will have less control over the order fulfillment processes.
- Miscommunication between the business and third-party fulfillment providers can cause delays in product delivery.
3. Dropshipping
Start-up and small business owners usually follow the drop shipping method. They will acquire products from a third party and immediately ship them to the customers. Dropshipping does not involve storing products in warehouses.
Pros
- There is no need for an initial investment in buying equipment or infrastructure.
- Here, the supplier manages the logistics process. So, businesses can focus on key areas like sales and marketing.
Cons
- Low profit margins.
- Businesses do not manage the logistics process. So, there is a chance of packaging errors or shipping delays.
How to Choose the Right 3PL Fulfillment Model For Your Business?
We are listing a step-by-step guide to choosing the right business fulfillment model.
1. Provide All The Necessary Information
Third-party fulfillment models are the storage facilities for the business inventories. The products will be dispatched from here to the customer’s doorstep. Businesses need to provide complete details of their product size, volume, and many more. It will help the third-party fulfillment provider identify the business’s storage requirements.
2. Strategic Warehouse Location
Businesses must research to identify the key places where they receive most of their orders. This will allow companies to choose fulfillment centers near their customers. This will make order fulfillment faster and enhance customer satisfaction. Businesses even needed to scale their inventories, which means they needed to determine whether they needed one or several fulfillment centers to fulfill customer demand.
3. Identify The Business Requirements
The third-party fulfillment model will not provide the same facilities, so the business needs to identify its requirements and select the fulfillment center.
Most third-party fulfillment centers provide warehousing facilities. They are even equipped with advanced technology like a warehouse management system. However, some fulfillment centers have customized 3PL logistics solutions and specific storage bays for hazardous materials.
4. Inspect the Quality And Price Of Different Fulfillment Centers
Various third-party fulfillment centers in the market provide storage and order fulfillment processes. You need to inspect the quality, compare the prices of multiple fulfillment centers, and select the one that best suits you.
Let’s discuss this with an example. A third-party fulfillment center provides an order fulfillment process at a low cost. However, it does not offer scalable solutions, which means it cannot accommodate the products if the business grows in the future.
So, the business has to assess its long-term and short-term goals while selecting a third-party fulfillment provider.
Final Words
Choosing a reliable e-commerce fulfillment model can streamline the supply chain operations, improve customer satisfaction, and reduce high initial investments. AAJ Supply Chain Management Company is a leading 3PL provider in India. AAJ warehouses have advanced technology like warehouse management systems and real-time inventory tracking. This company seamlessly processes orders and delivers products nationwide, manages logistics, and allows businesses to focus on core activities.
AAJ Supply Chain Management
