Efficient and effective fulfillment is the backbone of customer success. The ecommerce fulfillment process plays a critical role in delivering customer satisfaction, improving operational efficiency, and reducing costs. In this comprehensive guide, we'll explore the world of ecommerce fulfillment, examining its processes, benefits, various models, factors to consider when choosing a strategy, software integration, best practices, and addressing common challenges.

What is Ecommerce Fulfillment?

Ecommerce fulfillment is the process of completing the delivery of an order to an online customer. It encompasses the entire process from the time an order is placed until the customer receives their order. It encompasses a series of vital steps, including order processing, picking, packing, and shipping. The ultimate goal is to fulfill the customers' orders accurately, quickly, and cost-effectively.

Customers have high expectations: they want their orders processed promptly, their products arriving without damage, and their deliveries expedited. To meet these demands, it is essential to have a robust ecommerce fulfillment strategy synchronized with your business objectives.

The Changing Ecommerce Fulfillment Landscape

Ecommerce is quickly becoming one of the most important purchasing avenues for consumers. In 2023, 19% of global retail sales were made up of ecommerce sales. By 2027, experts predict that 25% of sales worldwide will be from ecommerce. (Statista) In addition to their increasing reliance on ecommerce, customers' expectations are more demanding than ever. In 2022, eCommerce database found that customers were only willing to wait an average of 2.36 days to receive their products, and by 2023, this number had decreased by nearly 10% to 2.15 days. That same study found that 48% of consumers prefer faster delivery, even at the expense of higher costs. 

Everywhere you look, it’s clear that ecommerce fulfillment is becoming more important and more competitive. To retain their customers, businesses must be able to comply with customer demands to offer fast, accurate ecommerce fulfillment. With this picture in mind, it’s easy to see why having an efficient, cost-effective ecommerce fulfillment process is so valuable.

The Ecommerce Fulfillment Process

The ecommerce fulfillment process encompasses a variety of complex processes and strategies that all work together to get the right products to the right places at the right time. To explore these processes, let’s first dive into fulfillment logistics and warehouse basics to get a better idea of how inventory is handled before and after customer orders are placed. Then, we’ll dive into the fulfillment process.

Warehouse Layout & Fulfillment Logistics

Much of ecommerce fulfillment relies on warehouses, where inventory is stored, prepared, packaged, and shipped. These warehouses encompass several important stages of ecommerce fulfillment. There are a variety of warehouse layout options, but each warehouse likely has most of the following areas: receiving, storage, shipping, and returns processing. 

Warehouse Receiving: Inventory’s first contact with the warehouse happens in receiving. Most warehouses feature designated receiving bays where semi trucks unload cargo. These receiving areas are equipped to unload and track incoming products that will be prepared for customer orders.

Inventory Management: Hand in hand with warehouse storage, inventory management is important in making sure inventory is accurately tracked as it moves throughout the warehouse, and is able to be quickly found when needed. An organized inventory management system provides structure to where things are stored, and takes into account the types of inventory that is received, where it will need to go to be stored, and the most efficient way to get it there. Inventory management involves labeling systems that help both humans and robots quickly locate products. 

Warehouse Storage: Warehouses must be equipped to store at least some quickly accessible inventory in preparation for customer orders.  Storage options vary based on the space constraints, turnaround times, and type of inventory being stored. They range from automated robotic storage like an AS/RS to carousel storage to storage racking. A smart storage system stores inventory efficiently to make the most of warehouse space. Effective storage is also logical, allowing products to be stored in an organized way that makes it easy to sort products as they’re received and to retrieve them when needed. 

Warehouse Shipping: All warehouses will also have an outbound area where products that have been prepared to be shipped are stored, organized and loaded. This stage also involves printing and affixing shipping labels, sorting orders by location so they’re ready to meet the customer who ordered them.

Returns Processing: In addition to outbound shipments, warehouses must be prepared to handle product returns. Returned items are processed separately from traditionally received items as they’re assessed, categorized, and either re-integrated into the inventory or moved to another stage of the returns process.

Ecommerce Fulfillment Lifecycle

Once an order is placed, the components we’ve just discussed all spring into action to fulfill the customer’s order. To understand this fulfillment process, let’s outline the steps involved in the ecommerce fulfillment lifecycle. 

1. Order Placement: The process begins when a customer places an order on your ecommerce platform. This initiates a chain of actions that lead to the fulfillment of the order.
2. Order Confirmation: After an order is placed, customers receive an order confirmation, setting clear expectations regarding the products ordered, delivery timeframes, and pricing.
3. Order Picking: Now that the order is confirmed, the business is responsible to fulfill that order. This is a crucial stage where items are picked from your inventory to fulfill the order. Accurate and efficient order picking is essential for reducing errors and speeding up fulfillment.
4. Packing: The picked items are carefully packaged, ensuring they are well-protected during transit and include any additional material relevant to the order or business goals. Proper packaging reduces the risk of damage during shipping and minimizes delivery costs by minimizing package size and weight whenever possible.
5. Shipping Label Generation: Shipping labels are generated and applied to the package.
6. Shipping: The packed orders are dispatched through chosen shipping methods. This can involve coordination with various carriers to reach customers located in different regions or carriers to meet required service timelines.
7. Delivery: The culmination of the process is the successful delivery of the order to the customer. Timely and accurate delivery is vital to ensure customer satisfaction.

8. Tracking and Alerts: Real-time tracking and delivery alerts throughout the entire process keep customers informed about their order's status, enhancing the customer experience.