Online shopping has skyrocketed in the last decade and shows no signs of slowing down. In fact, e-commerce sales in the United States are projected to grow to over $560 billion in 2025. With the growth of online shopping, your order fulfillment process is vital to the growth and success of your business. Whether you use a third-party logistics provider, or your order fulfillment is in-house, you want to make sure you understand the entire order fulfillment process so you can run it effectively.
But what does order fulfillment mean? Order fulfillment is the process of receiving and processing goods so that they can be distributed to your customers. You are fulfilling an order that has been placed with your company by a customer. Even if you have a physical storefront, having an efficient e-commerce order fulfillment process will help you expand your customer base and improve your customer experience. E-commerce sales continue to increase each year and are taking up a bigger slice of the market. By 2025, e-commerce sales will reach 23.6% of total retail sales.
The Order Fulfillment Process
Step One: Receiving
In the order fulfillment process, receiving is generally the first step. Receiving is when either your 3PL or your fulfillment center accepts incoming inventory. This step makes sure you have the inventory on hand to fulfill any new orders. Once the order is received, it will be counted, inspected, and then inventoried. Most fulfillment centers do this using SKUs or barcodes on the incoming product.
Once the items are inspected, they will then need to be stored in the fulfillment center or warehouse. Where the items are stored will depend on both what the products' needs are and how the fulfillment center is laid out. Products may need to be kept in a temperature-controlled environment or they may be fragile and therefore cannot be stacked. If the item is ordered frequently, it may be placed close to the packing station so that it is easily accessible.
Where the items are stored and the amount of inventory you have can be tracked using a warehouse management system. This software will help keep track of inventory, including current, outgoing, and incoming inventory.
Step Two: Processing
In the processing stage, the order is processed and sent to your order fulfillment center. Once the order is processed by your order fulfillment software, it will be sent to the fulfillment center floor so it can be picked, packed, and shipped to your customer. For this stage to be successful, you want to make sure your order fulfillment software integrates with your e-commerce platforms and online marketplaces, so as soon as an order is placed, it will be pushed to the floor.
When the order is processed, it will list out the items that need to be picked, the number of items, and any specifics for the items. It will also have the customer information and address and will let you know if the order needs expedited shipping. Customers may pay more to have their orders shipped faster and so you want to ensure those orders are fulfilled accordingly.
Step Three: Picking
Once the order is processed and then sent to the floor, it will be given to a member of the picking team to go and pick the items from the warehouse. This is essentially when order fulfillment begins.
The team member will pick items according to the packing slip they receive. The packing slip will include each item that needs to be picked and its warehouse location. Therefore, in the receiving stage, you want to document the location of items so that the fulfillment team knows where to go to pick an item.
With the packing slip in hand, the team member will go and pick each individual item. When they pick an item, they will double-check that the item is not damaged or expired. Some 3PLs have a Lot Control system in place so that the items that expire first will be picked first. This can help ensure you never have inventory expiring on your shelves. Once all the items are picked, the team member will bring all the items to the packing station.
Step Four: Packing
Now the items have made it to an important step in the order fulfillment process. After the item is picked, it will come to the packing station where a team member will prepare the items for shipment. The first thing they will do is double-check that they have all the items ordered and the correct quantities. After checking the items, they will start to bundle the items together in the appropriate packaging. The packaging used will depend on a few factors.
- Does the product need to be kept cold or frozen? If the item needs to be kept at a certain temperature, dry ice or other coolants like gel packs need to be added. It may need to be lined with specific wrapping to help the temperature stay consistent and keep hot air out.
- Is the product some type of liquid or could melt? If the item could leak or burst, it may need to be packed in waterproof packaging or sealed bags to keep liquid from seeping through.
- Is the product fragile or breakable? If the item is fragile, it may need to be packed with packing peanuts or in Styrofoam to help protect it during transit. The package will need to be labeled as fragile as well.
Some 3PLs will allow you to customize your packaging. This could mean specific types of boxes, colorful packaging, or your logo on the packaging. Packaging is an important part of your order fulfillment process because it helps you achieve customer satisfaction, and it also can be costly. You want to make sure you’re choosing the right packaging and boxes so that the item gets to your customer intact and undamaged and you do not waste your money on incorrect packaging.
Step Five: Shipping
Shipping may be the most costly and trickiest part of the order fulfillment process. How you handle your shipping can make or break it with your customer. High shipping costs are the #1 reason for cart abandonment by customers. A knowledgeable 3PL provider or good connections can help you be successful with your shipping.
In the shipping stage, once the items are packaged and ready for transit, a shipping label will be printed and placed onto the package. From there, it will be picked up from your order fulfillment center by the carrier. Some 3PLs have established relationships with different transportation carriers and can get discounts that they can pass onto you. Once the item is shipped, tracking information can be sent to the customer and the business. Good software allows this to happen automatically once the shipping label is created.
Step 6: Returns Management
The most difficult part of the order fulfillment process is dealing with returns. If a customer is not satisfied with the product or the product arrives damaged, it will need to be returned. In most cases, the item will come back to the fulfillment center with a return label on the package.
Processing returns must be executed carefully to help ensure that your inventory levels are correct and that the customer is either refunded or the product is exchanged. If the product is damaged, soiled, or malfunctioning, it cannot be restocked and should be returned to the vendor, manufacturer, or distributor.
Why Is Order Fulfillment Important?
Order fulfillment is vital to any business that wants to grow its footprint and ensure customer satisfaction. With the e-commerce world continuing to grow at an expedited rate, businesses should look at their order fulfillment process to see if it is efficient and will it be able to keep up with the fast-growing market. Having a solid order fulfillment process helps you make sure you are leaving your customers satisfied while keeping your costs low.
How Can Smart Warehousing Take Over Your Order Fulfillment?
Having a 3PL take over your order fulfillment process can help cut down costs and save you a headache as a business owner. With Smart Warehousing you can give us your product and we will make sure it gets to your customers as quickly as possible. With over 20 years of experience, Smart Warehousing has the fulfillment centers, relationships with transportation carriers, and the manpower to meet the needs of your business and your customers.