The Ultimate Guide to Streamlining Your Order Fulfillment Process

Every growing business relies on effective order fulfillment. To put it simply, order fulfillment is the backbone of any successful business.

You can think of it as how a product actually gets from a business to its customers. It sounds simple, but it involves a whole sum of processes that most of us can’t even think of.

By definition, order fulfillment refers to everything from inventory management to shipping to the customer. In simpler terms, it is an entire journey between customers placing orders till they get their products.

In addition, the way a company handles its order fulfilment journey directly affects customer satisfaction and operation costs.

You can consider it a two-way-sword– if you build it well, you can cash. Otherwise, your company’s growth potential can be severely affected.

Key Takeaways:

• Order fulfillment encompasses the entire process from receiving a customer order to final delivery.
• Effective inventory management is the foundation of successful fulfillment operations.
• How a company handles the return request counts as part of building trust among their customers.
• Last-mile delivery remains the most challenging and expensive part of the fulfillment process.
• Adaptable fulfillment strategies should be renowned with technology as it gives a competitive advantage.

The Basics of Order Fulfillment with Example

As I already defined, what is order fulfillment? And for the basis, order fulfillment relies on delivering products efficiently while keeping an eye on customers’ happiness.

Now, let me help you by giving you a clear picture of how order fulfillment works using an example of the Indian e-commerce site Flipkart.

So, let’s say you are a sneaker lover and want to buy Nike sneakers. So, here– in simpler terms– are the steps that are common to any e-commerce business model.

1. You placed an order for your fav. Nike sneakers.
2. The order is received and routed to the nearest fulfillment center. The center could be in your state, district, or even the city.
3. Your order is packed at the Fulfillment warehouse or retailers with centralized quality inspection.
4. Flipkart’s in-house logistics arm, majorly Ekart, picked up the order.
5. Ekart can deliver to you or partner with local courier services.
6. You received the order, and you want to keep it.
7. If you want to return it, the request will be processed through the same logistic network.

I hope you get the basics of order fulfillment. But as I say, it is just basic; more technical terms exist. So, let’s dive deeper into the topic.

7 Stages of the Order Fulfillment Process

Order fulfillment is a 7-step process including:

1. Receiving Inventory
2. Storing products
3. Processing orders
4. Picking
5. Packing items
6. Shipping packages
7. Handling any returns

Each of the processing phases should be carefully planned and executed so that customers get their product fast and conclusively make a profit fast.

Now, let’s discuss each of the processes one by one.

1. Receiving Inventory

The order fulfilment process starts when an order is received at a warehouse, either directly from manufacturers or suppliers. The following are key steps one should focus on when handling Inventory:

1. Unloading incoming shipments.
2. Inspect products for damage or defects.
3. Logging items into the inventory management system.
4. Assigning storage locations.
5. Organizing items for efficient retrieval.

Pro Tip: Use a barcode or SKU scanning system. This will save you hours manually entering data and enhance the efficient check-in and check-out process.

Example: Most reputed warehouse companies have switched to an automated warehouse sortation system. Online stores such as Amazon and Flipkart use a semi-automated sortation system that efficiently stores Inventory based on size, category, and order frequency.

2. Storage and Warehouse Management System

Good inventory storage dramatically affects fulfillment efficiency. Ideally, a warehouse should remain in good condition, and all the products should be easily accessible.

On top of that, there should be a warehouse management system (WMS). Following are some of the requirements for efficient WMS.

• Zone storage: Grouping similar products together.
• Implementing storage systems (shelving, bins, pallets).
• First in, first out: Essential food and dairy items with a short shelf life.
• Conducting regular inventory counts.
• Monitoring stock levels.

Example: Amazon India uses a system called “random stow” that algorithmically determines the best place for products based on available space rather than by category and saves the exact coordinates of each item.

3. Order Processing

Let’s say you placed an order at Myntra. Within a few seconds of payment, your order is routed to an order management system (OMS) that then creates a pick list for the items needed to collect.

Moreover, it also provides the exact location where it can be found.

In most cases, WMS and OMS are connected and work as one. Myntra processes over 25,000 orders per hour during sales with an efficient process.

Now, what can your system learn from Myntra’s OMS systems?

Firstly, integrate your e-commerce platform directly with OMS, which reduces manual order checking. Secondly, prioritize orders based on shipping deadlines.

One more thing: Before you generate a pickup list, make sure to verify payment confirmation. In some cases, 4 hrs delay is common. So wait for that time and, after re-confirmation, generate a pickup list.

4. Picking Items

Your staff gets the picklist, and they know what to collect. Is it that simple? No.

Handling an item depends on various measures. One measure is the familiarity of the picker to handle that item.

For example, from one part of the warehouse, a picker needs to pick a TV; from another part, they need to pick fresh vegetables— both items can’t be picked similarly. Sometimes, the person picking items may not have special training in handling or packaging those products.

So, in that case, a company should implement zone picking where pickers specialize in specific warehouse parts. This not only decreases mishandling but also increases efficient shipping and logistics.

5. Packing Items

Picking and packing should be handled by workers who are trained for specific product categories. This helps lower shipping costs and ensures that products reach customers safely without damage.

Some key pointers are:

• Selecting appropriate packaging materials.
• Securing items to prevent damage.
• Including necessary documentation.
• Sealing and labelling packages.

Pro Tip: Follow Nykaa’s Automated Packaging Recommendation Systems. The system suggests the best box size for the packing order. As per the reports, it reduces void fill by 23% and cuts shipping costs by approximately 18%.

6. Shipping and Delivery

The shipping stage in order fulfillment involves selecting and handling packages to the best and cheapest carriers for geolocation.

In most cases, for shipping nationally, you have many options, such as AAJ Swift, Bluedart, Ekart, XpressBees, Ecom Express, etc. For international shipments, you need to go to bigger players such as FedEx Corp, UPS, etc.

If you are new to online platforms and looking for a logistics company in India that handles your warehouse and transport, then you can reach us. In 2023 alone, we distributed 60 million units from our warehouses. You can read our story here.

Lastly, the final mile of delivery brings the product to your customer’s address. The order fulfillment process ends here if the customer is satisfied with the product. Sometimes, customers may not like the product or may be unhappy with the delivery time. In such cases, the final step is return processing.

7. Returns Processing

Before you approve the returns, you must communicate with the logistics partner about the instructions and define the conditions that need to be fulfilled to accept the returns from the customer.

Your company also has a clear returns policy that defines acceptable return conditions and timeframes.

Once the item is received at the warehouse, one should:

• Inspect for condition and restockability.
• Process refunds or exchanges as per the returns policy.
• Return items to Inventory or dispose of them appropriately.
• Analyze the return reasons for product or service improvements.

Pro Tips: When you pack and ship orders, make sure you add a return label, too, which makes the return process more efficient.

Types of Order Fulfillment Service Models

There are several pillars to an order fulfillment strategy, but the first standout component is choosing the best and right fulfillment model for your business. There are a total of 4 main order Fulfillment models:

1. In-House Order Fulfillment Service Model

You manage all processes by yourself or with the help of your team. This means your company is responsible for handling all the fulfillment processes.

In this case, a company has its own staff that does all the inventory management jobs along with logistics operations.

Examples: FabIndia, Patanjali, Titan Company.

2. Third-Party Logistics (3PL)

As the name suggests, the 3PL model requires 3PL Company outsourcing– one or more parts of the fulfillment process– including warehousing, Inventory, order processing, and shipping.

Examples: Nykaa, The Man Company, MamaEarth

3. Dropshipping

Dropshipping– Ships directly to customers and entirely eliminates the inventory holding.

So, when you place an order, it is forwarded to a supplier who ships directly to the customer’s address.

Here, the retailer never physically keeps the products in stock (or in business terms, called Inventory). It only manages the customer relationship and marketing.

Process Flow: Customer Order → Order Transmission to Supplier → Supplier Confirmation → Supplier Picking & Packing → Supplier Shipping → Delivery to Customer → Return Handling (often directly with supplier)

Examples: Meesho, IndiaMART, Shopclues.

4. Distributed Inventory Model (Multi-node Fulfillment)

In Multi-node Fulfillment, Inventory is strategically placed across multiple locations to position products closer to customers’ locations.

It serves faster delivery promises of products that have a high purchase frequency. This model is mostly used by quick commerce companies, which offer 10-20 minutes of delivery.

Example: BigBasket, Zepto, Flipkart Minutes

5. Hybrid Fulfillment

In simpler terms, it is when multiple fulfillment models are combined to optimize warehouse operations based on product type, location, or sales channels.

With hybrid models, businesses can leverage the strengths of different models to get more products while maintaining customer satisfaction.

Examples: Flipkart, Myntra, Amazon.

How to Choose an Order Fulfillment Model Service?

The following table helps you choose the best order fulfillment model and strategy for your business.

Fulfillment Model	Key Characteristics	Best For
In-house Fulfillment	Complete control; Direct quality oversight; Customized operations	Specialized product handling; Premium unboxing experience; High-value items requiring security
Third-Party Logistics (3PL)	Outsourced operations; Professional logistics management; Reduced operational burden	Growing businesses; Seasonal fluctuations
Dropshipping	No inventory holding; Supplier handles shipping; Minimal operational requirements	New businesses; Product testing; Wide assortment with limited capital
Distributed Inventory	Multiple stocking locations; Proximity to customers; Faster delivery capabilities	Fast delivery promises; Competitive urban markets
Hybrid Fulfillment	Multiple fulfillment methods; Optimized by product type or channel.	Multi-category retailers; Diverse product requirements.

Best Practices in Order Fulfillment

1. Automate Order Validation and Fraud Screening: For automatic order validation, you can use government-approved payment gateways, such as Razorpay, Pay, and Paytm, to collect payments from customers. Moreover, fraud screening rules should be created, and any suspicious orders should be transferred for manual review.
2. Batch Similar Orders: Amazon does this, and you should, too. Group orders with common items or shipping addresses.
3. Prioritize Orders: Make a prioritization system that promises faster delivery dates by saving time on warehouse capacity and customer loyalty status (such as premium members).
4. Implement Quality Control Checkpoints: Before getting shipped, all products must undergo a rigorous quality check to catch any damages or wear and tear in products.
5. Offer Flexible Delivery Options: Every customer should be given choices for delivery dates and timing so that he/she checks their products and reports any damages or mishandling.
6. Streamline Returns Processing: A company should have an efficient workflow for handling return items. You can create a dedicated area in your warehouse that checks and processes the returned items after inspecting them for damages, wrong items, or other comments about customer dissatisfaction.

Challenges in Order Fulfillment Services

The following are the challenges any current order fulfillment service might face:

1. Allocating limited Inventory across multiple sales channels efficiently and predicting how much Inventory will be needed.
2. Recruiting, training, and retaining qualified warehouse personnel.
3. Implementing new technologies while maintaining ongoing operations.
4. Warehouse labor costs continue to increase due to competitive labor markets, minimum wage increases, and the specialized skills required.
5. Identifying and addressing process bottlenecks that limit throughput, especially in India.
6. Autonomous mobile robots, AI-powered sorting systems, and predictive picking algorithms will fundamentally alter warehouse operations.

Why does AAJ Supply Chain Management Stand Apart in Order Fulfillment?

Every business leaves its logistics footprint, and as e-commerce entrepreneurs, we must recognize the patterns of excellence. This is the defining moment for your supply chain strategy.

Thanks to the innovative approach pioneered by AAJ Supply Chain Management, businesses can now access seamless order fulfillment solutions.

Their strategic decision to establish technologically advanced warehouses across India creates a foundation for reliability that might otherwise be compromised in traditional logistics networks.

Moreover, I can confidently state that AAJ’s integration of cutting-edge technology and on-site optimization techniques has conclusively transformed how businesses (even B2B) approach order fulfillment in India’s competitive market.

In addition to this:

• Precise-Level Accuracy: Their precision-driven warehouse and inventory management system ensures the highest order accuracy, virtually eliminating costly errors.
• Strategic Distribution Network: Their methodically positioned fulfillment centers across tier 1, 2, and 3 cities create a critical advantage for reaching 95% of India within 48 hours.
• Intelligence-Powered Systems: Under leadership with MicroMasters training from MIT, their proprietary analytics platform doesn’t just track Inventory—it predicts potential stockouts before they occur.
• Elastic Operational Model: As your case volume grows, their dynamic resource allocation system automatically scales without the performance degradation common to rigid fulfillment models.

While examining the operational aspects, we see an increasingly important pattern – where visionary leadership from founders like Anil Kumar Jain, Anamika Jain, and Atishay Jain enhances a company’s ability to make timely delivery decisions regardless of business size.

And that’s all.What are your thoughts? Does your business need this level of order fulfillment expertise, or are you managing with different solutions?

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