Everything you didn’t know you needed to know about e-commerce fulfillment

By Oleg Mikhailenko
Published in Solutions
April 05, 2022
4 min read
Everything you didn’t know you needed to know about e-commerce fulfillment

You may have amazing, innovative products and an eye-catching website customers can’t help but browse, but unless your ecommerce logistics and fulfillment operations are first class at expertly fulfilling every online order, you’re not going to keep those customers’ interest for very much longer. E-commerce shipping and fulfillment may not have been the thing that got you into selling products online, or the thing that gets you excited about putting in the work on your business each and every day, but it’s definitely one thing you have to have down pat in order for your company to grow.

Let me give you an example. A recent study found that out of all features an online shop could possibly offer, free shipping ranked first among customers. A whopping 83% of shoppers were influenced to fully complete the order process by the tantalizing offer that all of their products would be shipped entirely for free. What’s more, shipping costs are a major factor in cart abandonment. 54% of respondents indicated they had aborted the checkout process in the past because of too-high shipping fees. Fast shipping is also a major concern, with 25% stopping orders that would take too long to arrive. It’s simple: efficient, reliable fulfillment operations make for happy (and returning) customers.

But it’s difficult to refine your operations into a well-oiled machine before you even understand all the moving pieces that go into e-commerce merchandise fulfillment. What are fulfillment services, and what do all of these different terms mean? What are all the different steps that go into fulfilling and processing an e-commerce order? Never fear. Although the process can seem complicated at first, it’s all very simple when broken down.

Simply put, e-commerce fulfillment is the part of your operation where the products are delivered to your customers. This includes everything from getting your products onto the shelves of the fulfillment center in anticipation of online orders, to picking and packing, to the final shipping and delivery through a third-party logistics company. It’s something even the smallest of businesses have to contend with. The merchant just starting out, packing orders of handmade products in their garage, is engaging with their own form of fulfillment. Namely, self fulfillment. As their business grows, they may decide to branch out into third-party fulfillment. And then there’s the case of dropshipping, where the seller never engages with the products at all, and rather acts as a curator and middleman between the manufacturer and the customer.

When broken down, there are four major steps every seller has to go through before their goods land on the customer’s doorstep: E-commerce distribution center integration, inventory management, the actual order fulfillment itself, and any and all returns processing.

First, integration. In the digital age, the vast majority of e-commerce retail outlets have their shops directly connected with order fulfillment companies that service those orders on the merchant’s behalf. Having good, effective omnichannel fulfillment technology is key to ensure there’s no interruptions or issues with phantom inventory.

Then comes inventory management and receiving. Pallets of your merchandise are shipped to dedicated warehouses that specialize in e-commerce fulfillment, which are then subsequently logged into inventory. If your fulfillment company starts slacking on intake, however, your goods can sit in the loading bay for hours or even days, hanging in limbo as they won’t be marked as available to customers until they’re defined as received by the distribution center. Then there’s the matter of shrinkage to deal with - shrinkage being a polite way to refer to lost, damaged, or stolen inventory, which is often baked into your contract with a fulfillment company and can represent anywhere between two and ten percent of the merchandise housed at the facility. Best practices insist you ought to make sure your received goods are logged into inventory within only a couple days, and you should have access to real-time updates to make sure your stock is sitting at optimum levels.

Now comes the most important part - the actual picking, packing, and shipping. When an order is placed and is routed directly to the distribution center (you did directly integrate your shop with the warehouse, right?) your fulfillment partner is responsible for picking the right items from the pallets, selecting the right box, cushioning them with a fair share of packing materials (or dunnage, for those in the know), and sending them off to be delivered. Mistakes in picking can lead to dissatisfied customers, so it’s essential your distribution partner gets it right the first time, every time.

Finally, returns. As much as you wish your customers would be 100% satisfied 100% of the time, the simple fact is that returns can’t be avoided. It’s important to have infrastructure in place to support the exchange or returning of goods for a refund. Customers that aren’t burdened by an overly lengthy or obtuse returns process are far more likely to shop from you again in the future - for goods they’ll keep.

The competition among e-commerce retailers and merchants has only gotten stiffer over time. Not only do we live in a post-Amazon world where customers not only expect but demand free shipping and delivery within two days, the aftermath of the Covid-19 global pandemic has created never-before-seen growth in the online retail industry. This has created a do-or-die environment for sellers, who now not only have more opportunity to grow their business and bring in more revenue, but higher stakes and competition as well. Things are far more intense than they were even two years ago. This means it’s more vital than ever to have a warehousing and fulfillment partner you can trust. One that makes sure your goods are properly taken care of and the right products are delivered, on time, to your loyal customers.

Enter P2Pseller. By leveraging the power of the shared economy, we allow literally anyone to offer warehousing and fulfillment services on an open and democratized marketplace. This takes power out of the hands of the giant corporations who have opaque business practices, hidden fees, and stacks of forms for you to fill out, and back into the hands of the merchants and fulfillment partners in your local community. With your P2Pseller account, you can directly connect all of your selling channels, fulfillment partners, and multi-channel management tools to make sure each and every one of your orders is fulfilled without a hitch. What’s more, our round-the-clock real-time updates mean that wherever you are, whether you’re at the office, on the bus, or sitting on the couch, you can check on the status of every one of your orders until the moment it lands on the customer’s doorstep. We’re ecstatic to partner with you as you take the next steps to grow your business bigger and better than ever before.


Tags

#logistics#fulfillment#ecommerce#distribution#center#order#process#operations#services#online#companies#shipping#retail#distribution#definition#warehouse#customer#picking#packing#third#party#logistics
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What are SKUs and How are They Used in Retail?

Oleg Mikhailenko

Co-Founder, CEO P2Pseller

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