Everything You Should Know About Order Fulfillment

Have you ever been surprised at how quickly that new gadget or must-have item arrives at your doorstep after clicking "Buy Now"? Behind that seamless experience lies a complex dance of processes known as order fulfillment.

For small business owners and ecommerce beginners, understanding order fulfillment is crucial. It's not just about getting products from point A to point B; it's about ensuring customer satisfaction, managing inventory effectively, and optimizing shipping times.

A well-executed order fulfillment process can make or break your business, influencing everything from customer reviews to repeat purchases.

How does an order fulfillment work?

An Order Fulfillment Cycle typically works through the following key steps:

1. Receiving the Order

• Customer places an order through an ecommerce platform or other sales channels
• Order information is captured and transmitted to the seller's system

2. Order Processing

• Verification of order details and payment information
• Allocation of inventory to fulfill the order
• Generation of picking lists or work orders for warehouse staff

3. Inventory Management

• Checking stock levels to ensure availability of ordered items
• Updating inventory records in real-time as orders are processed
• Triggering reorder points for low stock items

4. Picking

• Warehouse staff locate and retrieve ordered items from storage locations
• Use of efficient picking methods (e.g., batch picking, zone picking) to optimize the process

5. Packing

• Careful packaging of items to prevent damage during shipping
• Inclusion of packing slips, invoices, and any promotional materials
• Selection of appropriate packaging materials based on item fragility and shipping method

6. Shipping

• Selection of carrier and shipping method based on customer preferences and order requirements
• Generation of shipping labels and documentation
• Handoff of packaged orders to shipping carriers

7. Delivery

• Transportation of the order to the customer's specified address
• Tracking of shipment progress and estimated delivery times

8. Returns and Refunds (if applicable)

• Processing of returned items
• Inspection of returned goods for damage or defects
• Issuing refunds or exchanges as per company policy

Above 8 order fulfillment steps are also connected with order fulfillment status tightly.

What a good order fulfillment can bring you？

A well-oiled order fulfillment process is like a secret weapon for your business.

• It's a customer satisfaction powerhouse. When orders come through quickly and accurately, you're not just delivering products—you're delivering happiness. This gets you great reviews, people coming back for more, and customers who are your biggest fans.

• A more efficient process can really help you save on your operational costs. If you get your inventory management just right, you'll cut down on storage fees and avoid the risk of overstocking or understocking. When you have an efficient picking and packing process, you'll save time and avoid mistakes, which means you'll save money and have fewer headaches.

• A great fulfillment process can really help your business grow. As you get better at processing orders, you can take on more business without getting bogged down in logistics. This scalability is key for growing your product line or entering new markets.

• You'll be able to stand out from the competition. In today's fast-paced ecommerce world, customers want things done quickly and accurately. If you keep up with these expectations, you'll stand out from the crowd and build a reputation for reliability.

Challenges of order fulfillment cycle for ecommerce merchants?

As an ecommerce merchant, setting up an efficient order fulfillment cycle can feel like trying to solve a Rubik's cube blindfolded. Without the help of third-party software, the challenges can quickly pile up, leaving you feeling overwhelmed and your customers unsatisfied.

• Inventory management: Keeping track of stock levels across multiple channels can be a real headache. You might end up selling more products than you have in stock, or you might be stuck with too much inventory and not enough money. Putting together a manual stock count is a long-winded process that's open to mistakes. This can lead to unhappy customers and lost sales.

• Order accuracy: Picking and packing errors result in incorrect orders being shipped, leading to returns, additional costs, and damaged customer relationships.

• Scalability: Handling fluctuating order volumes, especially during peak seasons or periods of rapid growth, can strain fulfillment operations.

• Shipping and delivery: Shipping can be tricky. Without automated systems, you're left trying to juggle multiple carrier options and find the most cost-effective solution for each order. This can lead to shipping times and costs that aren't consistent, which could hurt your profits or drive away customers with high shipping fees.

• Returns processing: It's easy to think that returns management is something that can wait, but it can quickly become a major headache. If you don't have a simple process for handling returns, it can get pretty chaotic. This can lead to inventory discrepancies and delayed refunds.

• Labor management: Finding and retaining skilled warehouse staff, especially during busy periods, can be difficult.

• Technology integration: Implementing and integrating robust warehouse management systems (WMS) and other technologies to streamline operations requires significant investment and expertise.

• Customer expectations: Meeting increasingly high customer expectations for fast, accurate, and transparent order fulfillment puts pressure on ecommerce merchants.

• Last-mile delivery: Optimizing the final leg of delivery to customers, which accounts for a large portion of shipping costs, remains a significant challenge.

The reality is, that establishing an efficient order fulfillment management without specialized tools is an uphill battle.

Best Practices for order fulfillment

Optimizing your order fulfillment process is essential for maintaining customer satisfaction and operational efficiency. One of the best ways to achieve this is by integrating a third system like AfterShip. This tool can easily boost the efficiency of your order fulfillment process, from pre-shipment to returns, ensuring a seamless experience for both merchants and customers.

Key Practices to Implement:

1. Complete Order Visibility: Integrate your backend operations to achieve full lifecycle order visibility. This allows you to bridge online and offline channels, providing a true omnichannel retail experience that spans from fulfillment to returns.

2. Pre-shipment Engagement: Customize pre-shipment statuses and provide visibility into the pre-shipment progress on tracking pages and notifications. This is particularly useful during peak seasons or for businesses with longer processing times, such as print-on-demand (POD) services and pre-ordering scenarios.
   

3. In-transit Communication: Utilize rule-based notification workflows and multi-language branded tracking pages to keep customers informed throughout the carrier's transit process. This includes updates on in-transit status, out-for-delivery notifications, and managing shipment exceptions.
   

4. Expedited Returns & Exchanges: Offer transparent tracking and expedited processing for returns and exchanges. Use automation rules to address exceptions quickly and reassure customers with proactive updates through branded emails and SMS.
   

5. Omnichannel Integration: Connect online and offline customer experiences by swiftly locating, picking, and packing orders with the latest order information. Notify shoppers and allow them to track their orders on branded tracking pages when they are ready for collection, enhancing the omnichannel experience.
   

If you adopt these best practices and use AfterShip's lifecycle order tracking, you will be able to ensure a simple order fulfillment process that your customers will love and which will make your business a success.

How to measure the success of the order fulfillment ?

To measure the success of the Order Fulfillment Process, several key performance indicators (KPIs) can be used. Here are some of the most important metrics:

1. Perfect Order Percentage: This comprehensive metric looks at multiple factors to determine what percentage of orders are shipped on-time, complete, damage-free, and with correct documentation. It provides an overall view of order fulfillment success.
2. On-Time Shipping Percentage: This measures the percentage of orders shipped within the promised timeframe. It's crucial because late deliveries significantly impact customer satisfaction.
3. Order Accuracy: This metric assesses the percentage of error-free orders out of the total shipped orders. It reflects how reliable your order picking processes are and directly affects customer satisfaction.
4. Total Order Cycle Time: This measures the average time from when a customer places an order to when they receive it. It's calculated as:
   Total Order Cycle Time = Order Deliver Date – Customer Order Date
5. Order Fill Rate: This indicates the percentage of orders fulfilled completely without stockouts. It reflects the efficiency of inventory management.
6. Shipping Cost Per Order: This metric helps track the efficiency of your shipping processes and can highlight areas for cost reduction.
7. Rate of Return: This measures the percentage of orders returned by customers, which can indicate issues with product quality or order accuracy.
8. Inventory Accuracy: This compares inventory records against actual stock levels, ensuring you can fulfill orders as promised.
9. Orders Picked Per Hour: This productivity metric measures the efficiency of your warehouse operations.
10. Dock-to-Stock Cycle Time: This measures how quickly incoming inventory is processed and made available for order fulfillment.

Conclusion

Don't let inefficiencies get in the way of your business's growth. Get started on optimizing your order fulfillment process today and see the difference it makes for your customers and your bottom line. If you put the right tools in place—like AfterShip — and follow best practices for order fulfillment, you can make sure customers always know where their order is, keep them happy, and make your business more efficient from start to finish.

Please don’t hesitate to ask if you have any questions or need more help. We’re here to help you figure out the ins and outs of order fulfillment and reach your business goals.