An optimised fulfilment process that guarantees both convenience and quick deliveries is one of the standards of successful e-commerce businesses.
With nearly half of consumers valuing fast shipping, it's important to match or exceed the high benchmarks set by giants like Amazon.
This guide navigates the essentials of e-commerce fulfilment, from in-house fulfilment to collaboration with third-party logistics (3PL) partners.
1. What is e-commerce order fulfilment?
Order fulfilment involves storing, picking, packing, shipping and delivering products to customers. It also involves processing returns.
Whether it's for B2B orders sent to large retailers or B2C orders delivered directly to a customer's home.
According to Statista, more than 161 billion parcels were shipped globally in 2022. It is expected to reach 256 billion parcels shipped in 2027.
Customers place orders through a brand’s website or on marketplaces. Once a purchase is made, the e-commerce order fulfilment process starts.
Having efficient fulfilment is the key to unlocking customer trust and loyalty with a seamless shopping experience.
2. The lifecycle of an e-commerce order
Every step, from 'buy' to delivery, is a chance to impress or deceive a customer. Understanding this lifecycle is crucial for any e-commerce business aiming for excellence.
2.1 5 steps in the e-commerce fulfilment process
2.1.1 Inventory reception
The initial stage in e-commerce fulfilment is receiving the inventory, which is essential for managing and preparing stock to complete orders.
The products are then counted, and controlled for quality.
This step is to maintain an organised stock and ensure precise inventory levels.
When working with a 3PL, this involves transporting the inventory to their fulfilment centre.
2.1.2 Inventory storage
Effective inventory storage, or warehousing, is essential for organised and secure product storage.
Each unique product or Stock Keeping Unit (SKU) needs a specific storage location.
Advanced warehousing systems adapt to product needs, using shelves, racks, bins, or pallets. Clothes may be stored on hanging racks and jewellery in secure lockers, ensuring each item is stored accordingly.
Additionally, live inventory management is a modern standard, offering real-time visibility into available items.
Choose warehouse locations strategically, preferably close to end customers, for optimal efficiency.
Implement live inventory tracking for real-time visibility and better management.
2.1.3 Picking and packing
Order processing begins once a customer places an order. It involves picking items from their storage locations and packing them for shipment.
Advanced warehouse management software (WMS) and strategies like single-order or multi-order picking can greatly enhance this process.
Bigblue developed Atlas, our WMS to streamline the picking process in our warehouses. Our system reduces errors, faster picking and gives packaging recommendations.
The use of environmentally friendly packaging can help cater to environmentally conscious standards. And live up to the unboxing expectations with personalised packaging or flyers.
A packing slip, detailing quantities, storage locations, and packaging instructions, is crucial for a streamlined process.
Utilise technological tools for efficient and accurate picking and packing.
Consider the environmental impact and marketing potential of your packaging. A memorable unboxing can make your brand stand out!
Delivery is the phase where the processed order reaches the customer. It is one of the most important parts of the order fulfilment process.
Last mile delivery can add up to 53% of the total cost of a shipment.
38% of shoppers will never shop with a retailer again if they have a poor delivery experience.
It involves choices from a variety of shipping options, including local post offices or courier services.
Flexibility in selecting carriers is crucial, as reliance on a single provider can limit options. Providing tracking information ensures customer transparency. 93% of customers want proactive updates from retailers about their parcels.
Tip: You can integrate an email workflow to provide informative and engaging order-tracking emails!
Sustainable shipping options like carbon-neutral shipping are increasingly important. Many customers are willing to change their buying habits for environmental benefits.
Incorporate standard and express shipping options to meet high customer expectations set by services like Amazon's next-day delivery.
At Bigblue, we have developed a smart carrier solution designed to be the most efficient way to save time and money on logistics. This algorithm selects the most cost-effective carrier while also aiming to minimise delivery problems.
It also encourages customers to buy more for free shipping, increasing sales.
Offer diverse and sustainable shipping options to meet customer preferences.
Consider incorporating shipping costs into product prices for a better customer experience.
2.1.5 Return management
Effective return processing is pivotal in e-commerce logistics. It encompasses handling unsuccessful deliveries and managing customer returns. A positive return experience can significantly increase customer loyalty.
Including a printerless returns option makes the process easier for customers. Adding this to a return label and extended return periods can help lower the overall return rate.
A fulfilment partner can help in quality control and restocking.
Utilising tools like Bigblue's dashboard can also efficiently track returns.
3. Order fulfilment models
Knowing the various order fulfilment models is key for businesses to align their strategies with specific needs and goals. The main models include:
3.1 In-house fulfilment
Customisation: Enables tailored processes to meet unique business requirements.
Quality assurance: Direct oversight ensures rigorous quality control measures.
High initial costs: Substantial upfront investment is required for infrastructure and high volumes are needed to negotiate prices with carriers.
Limited scalability: Expansion may be constrained due to resource needs.
Operational complexity: Managing every aspect internally can lead to increased complexity.
3.2 Outsourcing fulfilment to a third-party logistics (3PL) Company
Cost efficiency: Access to established infrastructure often results in lower overall logistics costs.
Scalability: Allows for quick expansion without significant upfront investments.
Focus on core competencies: Enables focus on core activities while a third-party fulfilment partner handles it.
Less control: Reduced oversight poses challenges in maintaining full control.
Dependency on providers: Business success relies on the efficiency of the chosen 3PL provider.
Communication challenges: Coordination and communication may pose challenges due to physical separation.
3.3 Multi-channel fulfilment
Market diversification: Expanding across channels provides access to diverse customer bases.
Increased sales opportunities: Presence on multiple channels increases market share.
Adaptability: Allows businesses to adapt to changing market trends.
Inventory management complexity: Coordinating inventory across channels can lead to increased complexity.
Logistic challenges: Managing diverse shipping processes requires careful coordination.
Brand consistency challenges: Ensuring consistent brand representation becomes challenging.
Low initial investment: Minimal upfront costs as the business does not need to hold inventory.
Product variety: Access to a wide range of products without extensive warehousing.
Low risk for new businesses: A low-risk entry into e-commerce is especially beneficial for new businesses.
Limited control over inventory: Lack of control over stock levels and potential product shortages.
Dependence on suppliers: Reliance on suppliers' inventory and shipping capabilities can impact operations.
Lower profit margins: Profit margins may be lower due to additional costs associated with dropshipping.
Each fulfilment model presents unique opportunities and challenges.
Businesses should match their priorities and resources with the right fulfilment model to suit their strategy.
4. What constitutes a successful fulfilment strategy?
4.1 Same-day fulfilment
In the world of e-commerce fulfilment, speed is key. For a logistics partner to be deemed dependable, it is imperative that they ensure the quick processing of orders. Ideally, the delivery should happen on the same day as the purchase or, at the latest, the next day.
Same-day delivery can result in a 2X increase in conversion rates for online businesses.
Tip: Evaluate the cut-off times for same-day fulfilment when selecting a fulfilment partner.
4.2 Precision in order fulfilment
Speed in the order fulfilment process loses its value if accuracy is compromised. A low error rate in fulfilment is essential. Accept nothing less than a 90% accuracy rate, aiming for even higher standards.
4.3 Handling high order volumes
Managing small quantities might be straightforward, but the real test for fulfilment centres comes with high order volumes.
The best fulfilment companies maintain efficiency even during peak periods like Black Friday or Christmas, as well as during sales campaigns.
For instance, influencer or UGC-driven sales can trigger a surge in orders within hours. Here, the ability to handle the influx without errors is critical.
4.4 Fulfilment costs
Cost considerations are vital for entrepreneurs. Outsourced order fulfilment may seem more expensive initially. However, its scalability and growth potential often outweigh the advantages of in-house operations.
Rapidly growing businesses can benefit from shifting from in-house operations to 3PL. It allows them to leverage the broader capabilities of fulfilment centres.
For smaller enterprises with lower shipping volumes, in-house fulfilment might still be advantageous.
5. What are the main challenges in e-commerce fulfilment?
5.1 Integration with multiple platforms
Integrating the fulfilment process with different e-commerce platforms and systems like CMS and CRM is complex.
Different platforms like Shopify or Magento have their own integration challenges, impacting a store's fulfilment management. The main challenge is ensuring consistent data and timely updates across platforms for smooth order processing and inventory management.
5.2 Customisation and Personalisation
Fulfilling customer expectations for customised and personalised products adds layers of complexity. Tailoring products to individual preferences often requires flexible and adaptive fulfilment processes, which can be resource-intensive and time-consuming.
5.3 Global and regional challenges
Cross-border e-commerce is complicated by varying tax regimes, customs regulations, and shipping restrictions in different countries. Adaptable fulfilment strategies are necessary to comply with these diverse regulations, ensuring efficient and compliant international operations.
5.4 Sustainability and eco-friendliness
The increasing consumer demand for sustainable and eco-friendly practices in packaging and shipping presents a challenge. To meet these consumer expectations, businesses must adapt their packaging and shipping processes to be more environmentally friendly, often without significantly increasing costs.
5.5 Customer expectations and experience
Providing excellent customer service with quick responses and effective problem-solving is key to keeping customers. However, this can be resource-intensive, requiring dedicated support teams and efficient customer service processes.
5.6 Product nature
The type of products being sold also significantly influences the fulfilment strategy. Perishable goods, for instance, require different handling and storage conditions compared to bulky items. This requires specialised storage solutions and shipping methods tailored to maintain product integrity and ensure safe delivery.
6. Scaling with a 3PL: Bigblue clients’ success stories
SmartWorkout, aspiring to make bodybuilding accessible in Europe, partnered with Bigblue for efficient continental deliveries.
Over 50% of international orders were shipped seamlessly. Fast-Tags enhanced conversion by 22% and Bigblue's Amazon integration accelerated SmartWorkout's growth across countries.
"Bigblue enabled us to expand into new markets and ensure efficient delivery throughout Europe." - Christelle and Lucas, SmartWorkout founders
Detective Box achieved a phenomenal 3,000% growth, overcoming logistical challenges with Bigblue's tailored e-commerce logistics platform.
The collaboration extended beyond logistics, enhancing the post-purchase experience with personalised 'Gift Notes'.
Efficient real-time tracking contributed to a 92% delivery customer satisfaction rate!
Émilie Bernier O'Donnell, founder, takes us behind the scenes of Detective Box and reveals how Bigblue became a key partner in their meteoric success. Have a look at the interview!
Believe Athletics, led by Regina Rodriguez, experienced transformative success with Bigblue's logistics platform. The Fast Tag feature boosted the conversion rate by +25%, providing transparent delivery dates.
Regina achieved 100% customer satisfaction with eco-friendly packaging.
The returns portal with the store credit option led to a +15% increase in average spending. Bigblue turned logistical challenges into growth opportunities for Believe Athletics.
E-commerce order fulfilment is more than just handling logistics and supply chain. It is key to gaining customer trust and loyalty.
The goal is to ensure a smooth and enjoyable shopping experience.
With the right process, technology, and know-how, efficient order fulfilment can boost your business growth and customer satisfaction.