Our title question is very clear… what is included in the eCommerce order fulfillment process? We will do our best to take it step by step and go over what various tasks must be done to complete an eCommerce order fulfillment process. Before we go into this process we do need to review what eCommerce is.
Any time we purchase goods or services online, we are engaged in eCommerce (electronic commerce). How many people worldwide purchase products and services online? The number is estimated at more than a billion. Amazon, for example, is a shopping center for more than 200 million people who are Prime members. We can safely say that when it comes to commerce, with our phones and computers, we do live in an eCommerce world.
eCommerce businesses can be an individual with a start-up, a small business, a medium-sized business with a brick-and-mortar store, a large big-box company, or a giant like Amazon – any business that sells online. Some of these companies receive and fulfill orders themselves, some hire an order fulfillment company to complete the fulfillment process.
eCommerce businesses will sell products at retail and wholesale, they will sell services, data, and information; they may have one or many physical locations and some drop-shippers may not handle a product at all. The thing they all have in common is an order fulfillment strategy and an online presence on a website and a process to use to fulfill orders.
The website is the storefront, displayed on the computer or phone, offering the product or service. A great deal of attention goes into creating a space in which to showcase the products, collect information and facilitate payment. If the business is promoting a brand image, of course, that will be featured.
Some websites have thousands of products of all types, some will feature products that are on sale in the brick-and-mortar store, some will sell wholesale items in larger amounts, some cater to many different sellers, and some feature products of a manufacturer of a particular brand. The customer shops and buys and the fulfillment process comes next. Every eCommerce business needs their orders filled.
Let’s look at two examples of eCommerce order fulfillment just to get a grasp of how large and diverse eCommerce is:
Dropshipping is another interesting form of eCommerce which Amazon provides, as do several other platforms. In this form of eCommerce the person or company doing the selling never has the product in hand. In dropshipping, the business outsources the task of procuring, storing, and shipping the product to a supplier. The business has a presence online through which customers do their shopping, and that is it – another order fulfillment strategy and another type of eCommerce fulfillment.
The question is often asked, what is the main process of eCommerce order fulfillment? The main process is fairly simple – the fulfillment company must receive the products, store the products in the proper location in their warehouse, pick products that have been ordered and pack them in the appropriate box or package and ship the product according to the client’s wishes. This is the main process. In addition, there are more than a few services that can be performed by the fulfillment company. We will go over the process beginning with receiving and ending with a satisfied client and customer.
Receiving doesn’t begin with the truck pulling up at the warehouse and unloading the products. Before there can be any fulfillment process there must be very comprehensive discussions and meetings between the fulfillment company and the eCommerce business. The eCommerce business needs a fulfillment company that can fulfill all of its needs, and the fulfillment company also needs a client that it can properly serve. The discussions to determine if there is a ‘fit’ are called the onboarding process. We might assert that the onboarding process is the time in which everything that needs to be discussed is discussed and decisions are made that will be carried out by both companies. So onboarding just might be the main process.
Fulfillment companies must find clients or clients must find fulfillment companies. Clients must be onboarded, which means the fulfillment company satisfies all of the client’s needs, and the client must be one that the fulfillment company can successfully serve. For example, if the client sells frozen foods, the fulfillment company must have the capacity to fulfill frozen foods. So, can the fulfillment company fit the eCommerce business, and can the eCommerce business fit the fulfillment company?
One of the main concerns when onboarding is the integration of the software. Integration is a core feature to make the operations smooth. So, the onboarding process would be a consultation phase, where the client and fulfillment company discuss the needs, and a visit to the warehouse will take place. The next phase would be the integration of technology. Once this is achieved, the next step would be receiving.
Before the manufacturer or seller ships their products to the fulfillment center, all of the information on these products is available to the fulfillment company because the data of both companies are integrated. Every SKU is on record as in transit, and the arrival time is estimated. Before the products even arrive, their location in the warehouse is determined based on several factors. Products being sold by one business to another (B2B) will be in bulk and the fulfillment process is quite different than for products being sold to individual consumers (B2C), so the location in the warehouse is suitable for the fulfillment process.
When the products arrive, the fulfillment company’s warehouse management system (WMS) will contain all of the needed information. In step #1, the fulfillment company conducts a count of all of the boxes and pallets that have been sent by the seller. If the count matches what is on record as shipped, a second count will be done to make sure the number of SKUs is correct – the boxes will be opened and the contents confirmed. Once this count is done and all of the inventory is verified, it will be properly labeled, marked as received and put in its proper location in the warehouse per the warehouse management system.
As you can see, receiving is a very detailed and very important process. All information needs to be exchanged, and the locations are determined according to fulfillment and pick-and-pack needs. The incoming orders must be filled quickly, efficiently and accurately, and receiving is preparation for that. The fulfillment company’s inventory management system has to be top-notch, as there are thousands of SKUs, and thousands of incoming orders, some of them B2B and some B2C.
Our next question is, “What is the fulfillment process in order processing?” We’re going to cover picking and packing next, but before we do, we’ll try to explain what is involved in order processing. Order processing covers everything from warehousing to receiving to picking and packing the product for shipment and shipping it. But there is quite a lot more that can be provided beyond these basic services. Full-service fulfillment companies provide customer service and business process services which are very beneficial to eCommerce sellers who would rather focus on product development. And there is more: does the product need assembly, or will the seller want to sell bundles or kits? The fulfillment company handles this as well as the management of returns.
And there is more we will get into, but first, let’s look at the process of picking the item and packing it for shipment. Picking and packing is what is done in B2C fulfillment, when there is one product or a batch of products combined into one, ordered by the consumer. B2B eCommerce fulfillment is handled differently, orders are received differently and products are shipped in larger amounts with different rules, different documentation, and different shipping. First, we’ll talk about B2C picking and packing.
When a consumer places an order, it will come into the fulfillment center via the integrated information systems. The warehouse management system will locate the product that needs to be picked and the system will verify, the fulfillment employee will verify, scan the SKU, pick the product and bring it to the packing station.
The packaging that the fulfillment employee will use will be per the client’s wishes. Some sellers provide custom packaging to satisfy the customer’s expectation of packaging associated with the brand. The inner and outer packaging will be designed to increase sales, promote the brand and provide customer satisfaction, so in this case, the packaging is a product as well.
Other clients put packaging in the hands of the fulfillment center, with recyclable or bio-degradable packaging being a definite plus. The item will be protected by the inner materials, called dunnage. The package itself will likely be chosen and designed for the best shipping rates, fitting the product well, with no wasted space. Customer expectations and customer satisfaction come into play here as well. No one wants to receive a damaged product. The package will meet the shipping company’s size/cost requirements according to the client’s wishes. All of the choices of packaging are geared toward either creating brand promotion, or protection of the product or products during shipment, as well as environmental concerns, and/or most importantly shipping costs.
Business to Business (B2B) eCommerce order fulfillment process is quite different as the transactions will likely be done through electronic data interchange (EDI), the amounts will be larger, shipments will be in boxes or pallets, the paperwork involved will be far more substantial and the shipping services will be different as well. B2B and B2C fulfillment will be in the hands of different teams at the warehouse, and at different locations.
If no other services are desired by the client, other than receiving, warehousing, filling orders, picking and packing the orders, and shipping them, the next step will be affixing the right labels. The shipping label is full of information and the fulfillment company’s system of warehouse management has to contain the information for hundreds of clients and thousands of SKUs. The label will be automatically printed and affixed by the fulfillment team and it must be accurate as well as contain all information for domestic and international destinations.
Since a successful order fulfillment process depends so much on an excellent system of technology, the fulfillment company will need an in-house technology team. The warehouse management system (WMS) not only has to know the location of every SKU, know what orders have been placed, know what each client prefers, get the right barcode on the label for every package and all info in all shipping zones, and sometimes package contents must be listed as well. Even more vital, the system has to protect data and provide security and confidentiality for all client and customer information.
The client and fulfillment company’s data will be integrated and communicated from onboarding to receiving to warehousing to order fulfillment to picking and packing to labeling to shipping. This information is shared from the moment the product leaves the manufacturer or seller’s hands to the moment it is in the customer’s hands. The fulfillment company’s in-house team will be tasked with creating operating technology that is fully automated and fully secure from receipt of the order to when it is fulfilled.
Before we go over the entire process, listing the additional services to answer the title question… what is included in the eCommerce order fulfillment process, let’s take a look at the complete list of services that a full-service fulfillment center includes in the eCommerce order fulfillment process.
Some clients will want the service of kitting or bundling products, as kitting and bundling are sales and marketing tactics, for example, ‘buy two for the price of one’s sales and so forth. Assembly is another service, and value-added services (VAS) are another that includes industry-specific services such as hand tagging, placing garments on hangars, and so forth.
We will also go into business process services and customer service which some eCommerce sellers very much appreciate, and a very important service of managing returns. We also will need to mention various services having to do with freight and international customs.
As mentioned, kitting and bundling are processes where a client’s products are combined in ways that are attractive to consumers, done for various reasons, sometimes to sell a product that isn’t selling well by itself, sometimes to deal with overstock and a very good price is offered to meet customer expectations. Kitting and bundling are value-added services and can be part of the order fulfillment process upon the wishes of the client. The fulfillment center employee will scan the SKUs, pick the products and perhaps shrink wrap them together according to client requirements, and pack the kitted or bundled products, preparing the package for labeling.
Assembly can refer to the process wherein the employee assembles a bundle or a kit. Assembly can also refer to an order fulfillment process where the fulfillment employees assemble the client’s product before packing, labeling, and shipping. All assembly is per the client’s requirements, accomplished with a trained team to handle the task. Kitting, bundling, and assembly involve different SKUs being shipped as a new SKU, and this process is organized by the warehouse inventory management system.
Among the very much appreciated services that a fulfillment company offers are back-office support or business process services. Several eCommerce companies outsource their business processes and focus on marketing, product development, and growth as part of their eCommerce order fulfillment strategy. What are these processes? It’s quite a list – ranging from accounting to sales rep support to payment of commissions.
Let’s start with the eCommerce client outsourcing its accounting service to the fulfillment company – seems a smart idea. It will require close collaboration and the trust and reliability of a partnership. This is an important point as fulfillment companies, top-notch eCommerce fulfillment services providers, do look upon the relationship with clients as a business partner collaboration. Starting with accounting and financial and operational reporting, the fulfillment team will build profiles, and prepare for order entry. The eCommerce seller can turn these vital processes over to their business partner, the fulfillment company.
So, what else happens in the back office in addition to accounting? Customer service is an important offering of a fulfillment company where a team handles these communications as well as communications regarding returns, which we will cover more fully. Fulfillment companies can also handle all methods of payment processing, EDI fulfillment management, and order routing. Anything else? Sales rep support, commission payments, and eCommerce development are back-office business processes that a fulfillment center can provide as well as support with operations and inventory allocation management, which we will cover more fully.
All of these services are part of the eCommerce order fulfillment process that a full-service fulfillment company can provide for its eCommerce clients.
There are additional services that are considered value-added services (VAS). We have previously mentioned kitting, bundling, and assembly and these are value-added services. There are also some industry-specific services such as attaching a tag to certain garments, putting garments on hangars, or handling garments on hangars. Some items will need to be re-packaged and this would be considered a value-added service. Some very specific labeling requirements are VAS as well, such as carton labeling and validating barcodes, or application of stickers. And, are there special routing requirements? These will be handled as VAS as well.
Many eCommerce sellers rely on their fulfillment service provider to handle product returns (also called reverse logistics), and the customer service required for returns management. Of course, returns are what eCommerce businesses don’t want, but do have to handle. Fulfillment service companies have teams dedicated to returns management, and these teams will examine the returns and make decisions about whether the product can be re-packaged and returned to inventory, whether it needs to be repaired and returned, whether it cannot be repaired and must be donated, recycled or disposed of. If it does require disposal, is there an environmentally conscious way of doing it?
These are decisions the returns team will make, per client instructions and wishes. The process is referred to as reverse logistics, as of course the product is moved in reverse with the customer returning it. While this process is going on, the fulfillment company’s customer service team will process the return and provide the refund, or authorize the refund for the seller, leading to customer satisfaction, which of course is the first goal.
In most cases, the product will be able to be returned to inventory and re-sold. This would be the second goal – to return the product to inventory quickly, as some sales are seasonal. If the product cannot be returned to inventory, donation or recycling options are sought. An environmentally conscious fulfillment company, and client, will try all options before resorting to a landfill. As always, in the partnership approach to order fulfillment, the fulfillment provider will make every effort to reduce the cost damage of product returns to the eCommerce store.
Before we cover shipping, which is one of the most important processes sellers depend upon fulfillment companies for, we will cover two more order fulfillment processes that deserve mention – inventory management and order management. What is the fulfillment process in order processing? We’ll attempt to answer that and we will also focus on technology, as this is where top-notch makes a big difference – it takes excellent technology to do excellent order processing and order management.
When we covered the receiving process, we mentioned the warehouse management system needing to know exactly where hundreds of thousands of SKUs were located. This must be maintained as sales are made and orders are shipped, so the team has firmly outlined procedures to make sure of accuracy, doing checks and balances from the moment the SKU is received to where it is put away to when it is pulled to fulfill an order to its replenishment. Any problems or inaccuracies must be researched and resolved. The fulfillment client will have access to this data and make their decisions based on accurate data on what is available to sell. Strong inventory management also provides security for the inventory.
Order processing once again depends on excellent technology. The fulfillment company and the eCommerce business will exchange data through electronic data interchange (EDI) and the management of orders does depend heavily on EDI for the exchange of business documents. There are types of orders and the various types all have their electronic records. Some orders are picked from inventory and shipped, some are routed and held for pick-up, some drop-ship orders may have timing requirements and rules and all of these will be accomplished through shared technology and EDI.
Change requests, advance ship notices, receipts and order acknowledgments and labels, which we mentioned earlier, will depend on their success upon the shared technology between the fulfillment company and the eCommerce business. Inventory management and order management must be handled by a skilled in-house IT team and the top quality fulfillment companies do have their own IT teams with systems created by those teams.
Before we go into shipping, we will make one more mention of technology and the shipping label. The label contains a great deal of information needed for the shipping process as companies have requirements, domestic shipping and delivery have requirements and international delivery has requirements. There are requirements as well for shipping larger bulk orders by freight and requirements for any materials that might be considered dangerous in any way. So labeling is but one more vital task in order management that requires an in-house IT team.
Shipping costs and the shipping process is one of the services that fulfillment clients go to fulfillment companies for. Shipping costs, labeling, shipping accuracy, speed, and reliability are among the many reasons fulfillment companies are experts at shipping.
Over the past few years, shipping options have increased. When a client chooses a fulfillment company as a business partner, decisions are made concerning the shipping order fulfillment processes. For years the choices in shipping were USPS, DHL, FedEx, and UPS. Today there are several options due to a greater number of carriers that have come onto the scene. Because of the increased choices, shipping costs can be lowered for many clients. The fulfillment company negotiates cost and delivery times and also will utilize software created for rate shopping. It is beneficial if the fulfillment company has bi-coastal locations for its warehouses, putting clients closer to their customers.
Order fulfillment providers can offer many carriers, including international, national, and regional carriers. Shipping services are chosen on an order-by-order basis, taking into account the location of the warehouse and the customer, the size and weight of the package, the speed of delivery desired, and so forth. Because of the relationship the order fulfillment company has with carriers, rates are negotiated and the best possible outcome is found for the client. Consumers expect fast delivery, in many cases 2 or 3-day shipping, and it takes a fast and accurate fulfillment company to provide this at a reasonable cost.
Shipping costs and shipping speed are negotiated for eCommerce sellers that are business-to-consumer (B2C) and fulfillment providers are experts in this process. Fulfillment companies also handle shipping for business-to-business (B2B) clients that ship bulk orders through different processes. Some of their considerations and shipping options include freight forwarding, cross-docking, customs brokerage, less than truckload or full truckload, and freight consolidation and deconsolidation.
In addition, for both B2C and B2B clients, the fulfillment company will audit the transactions checking for any invalid fees and determining if the carrier delivered the packages or bulk shipment accurately and on time.
In this writing, we have undertaken the question, “what is included in the eCommerce order fulfillment process.” We have begun with onboarding and receiving and have followed the process through warehousing, picking and packing, labeling, and shipping. We have then included in the process kitting, bundling, assembly, and value-added specialty services.
We covered business process services, sometimes called back-office, including accounting and customer service, and we covered returns processing. We went through inventory management services and order management, and we emphasized the importance of technology and EDI compliance in the order fulfillment process. All of these things are included in the eCommerce order fulfillment process.
If you are searching for a highly qualified, highly experienced, bi-coastal fulfillment services provider, we recommend AMS Fulfillment Services, headquartered in Valencia, CA with offices and warehouses on both coasts. All of the services mentioned in this writing are available at AMS and there is one more additional benefit that few fulfillment centers can offer – AMS is a B Corporation.
What is a B Corporation, and do you want to partner with one? A B Corporation is a for-profit company that has made a legal commitment to put people before profit. A B Corporation has four stakeholders that take precedence over profit.
The B Corporation will consider its employee’s stakeholders in its decisions and it will respect its employees by creating opportunities, benefits, and a safe environment. The B Corporation will consider the environment a stakeholder in its decisions, doing everything it can to reduce its negative impact on the environment concerning materials and energy use. The B Corporation will consider its community a stakeholder in its decisions and it will strive to have a positive impact on the community in which it does business. And finally, the B Corporation will consider its clients as stakeholders in its business decisions, treating its clients as its business partner – when the client does well, we do well.
We invite you to connect with AMS Fulfillment as a potential partner in the fulfillment of your eCommerce orders.