Here’s Everything You Need To Know About Order Fulfilment

What Is Order Fulfilment?

Order fulfilment is the entire process that takes place from the moment a customer places an order to the moment they receive their purchase. It encompasses every step necessary to get the ordered goods into the customer’s hands.

Order fulfilment is a crucial aspect of ecommerce and retail businesses, as it directly impacts customer satisfaction and loyalty. Efficient order fulfilment processes can lead to faster delivery times, accurate order processing and positive customer experiences.

There are different approaches to order fulfilment:

• In-house fulfilment (merchant fulfilment): From storing inventory to shipping orders, businesses handle the entire process.
• Third-Party Logistics (3PL): The business outsources the fulfilment process to a specialised company that handles inventory storage, picking, packing, and shipping.
• Dropshipping: The business sells products without holding any inventory. When an order is placed, the supplier ships the product directly to the customer.

How Does The Order Fulfilment Process Work?

The order fulfilment process can be broken down into five key steps:

• Receiving Inventory: The process begins when a business receives inventory from suppliers. This involves checking the shipment for accuracy and quality and then updating inventory records to reflect the new stock.
• Inventory Storage: Once received, inventory is stored in a warehouse or fulfilment centre. This involves organising and tracking inventory to ensure efficient picking and packing later.
• Order Processing: When a customer places an order, the order fulfilment process kicks in. This involves verifying payment, checking inventory availability, and generating picking lists for warehouse staff.
• Picking & Packing: Warehouse staff use the picking lists to locate the ordered items in the warehouse. They then pack the items securely for shipment, often including packing slips and return labels.
• Shipping: The packed orders are handed over to a shipping carrier for delivery. The carrier transports the packages to the customer’s address, often providing tracking information for both the business and the customer.

How Does Order Fulfilment Impact Customer Experience?

Order fulfilment has a significant impact on customer experience, influencing their overall satisfaction and perception of the brand. 

A smooth and efficient fulfilment process can lead to positive reviews, repeat purchases, and customer loyalty. Conversely, a poor fulfilment experience can result in negative feedback, lost sales, and damage to the brand’s reputation.

What Are The Benefits Of Outsourcing Order Fulfilment?

Outsourcing order fulfilment to a third-party logistics (3PL) provider can offer numerous benefits for businesses of all sizes, especially those experiencing rapid growth or expanding into new markets. The following are some key advantages:

• Cost Savings: 3PLs can often negotiate bulk discounts with shipping carriers due to their high volume of shipments, resulting in lower shipping costs for businesses. Additionally, outsourcing eliminates the need to invest in warehouse space, equipment, and staff, reducing overhead costs.
• Focus On Core Business Activities: By outsourcing fulfilment, businesses can free up valuable time and resources to focus on their core competencies, such as product development, marketing, and customer service.
• Scalability: 3PLs can easily scale their operations to accommodate fluctuating order volumes, ensuring businesses can meet demand during peak seasons without overextending their own resources.
• Expertise & Experience: 3PLs specialise in logistics and fulfilment, offering expertise and experience that most businesses lack in-house. They can optimise processes, implement best practices, and leverage technology to improve efficiency and accuracy.
• Faster Shipping & Delivery: 3PLs often have strategically located warehouses across the country or even globally, enabling them to ship orders from the closest warehouse to the customer, resulting in faster delivery times.

When Is In-House Fulfilment Right For Business?

In-house fulfilment, where a business handles the entire order fulfilment process itself, can be a viable option for certain businesses, depending on various factors. Here are some scenarios where in-house fulfilment might be the right choice:

• Startups & Small Businesses: In the early stages, when order volumes are low and resources are limited, in-house fulfilment can be a cost-effective option. It allows businesses to maintain control over the process and learn the ins and outs of fulfilment before scaling up.
• Businesses With Unique Products: If a business sells products that require special handling, customisation, or complex assembly requirements, in-house fulfilment provides greater control over quality and ensures specific needs are met.
• Businesses With Fluctuating Demand: If a business experiences unpredictable or seasonal fluctuations in demand, in-house fulfilment can offer greater flexibility to adjust resources and operations accordingly, without being tied to the commitments of a 3PL provider.
• Businesses with Specific Fulfilment Requirements: Some businesses may have unique fulfilment needs (such as same-day delivery or specialised packaging) that might not be easily accommodated by a 3PL provider. In such cases, in-house fulfilment can be a more suitable solution.

Before deciding on in-house fulfilment, businesses should carefully consider the following:

• Cost: In-house fulfilment can be cost-effective initially, but as order volumes increase, the costs of warehousing, labour, and technology can rise significantly.
• Scalability: As the business grows, in-house fulfilment might become challenging to scale, leading to potential delays and errors.
• Expertise: In-house fulfilment requires expertise in inventory management, logistics, and shipping. Businesses need to ensure they have the necessary knowledge and experience in-house or invest in training staff.

What Are The Different Types Of Fulfilment Centres?

Fulfilment centres come in various types, each specialising in different aspects of order fulfilment or catering to specific needs.  

Distribution centres focus on storing and distributing large volumes of inventory. Ecommerce fulfilment centres handle online orders, receiving, storing, picking, packing, and shipping individual items.

Smart warehouses use automation to streamline operations. Cold storage centres handle perishable goods. On-demand storage warehouses offer flexible solutions for businesses with fluctuating inventory needs. 

Bonded warehouses store imported goods. In-house fulfilment centres are owned and operated by businesses themselves, while third-party logistics (3PL) fulfilment centres are operated by specialised companies offering fulfilment services to multiple businesses.