The e-commerce fulfillment process starts when an online shopper places an order and ends when they receive their package, but several steps occur along the way. These steps can be handled in-house, outsourced or a combination of both.
In this guide, we’ll cover everything online retailers need to know about e-commerce fulfillment, including:
- Receiving and inventory management.
- Order processing.
- Packaging and shipping.
- Returns processing.
- When to outsource e-commerce fulfillment.
E-Commerce Fulfillment: Receiving and Inventory Management
Receiving is the process of accepting and managing inventory. Once inventory is received at a warehouse or storage facility, it will be inspected (also known as quality assurance), assigned a SKU and placed in the most efficient location of the warehouse.
Inventory management involves monitoring inventory levels to know how much you should have on hand. Too much inventory and you risk paying too much for storage or having outdated products. This results in poor cash flow. Too little inventory and you risk missing out on potential sales and frustrating customers. This results in lost business.
It’s critical that your inventory management system integrates with your e-commerce platform to process orders as fast as possible for customers. This also provides online retailers with real-time reporting of inventory levels, orders and returns.
E-Commerce Fulfillment: Order Processing
Once the inventory has been received and integrations are complete, it’s time to start processing orders.
Once an online order has been placed, the first step is to pick items from the warehouse, and then pack the items in a box or envelope (also known as pick and pack).
This is one of the most important parts of order processing–it’s also one of the most expensive.
The pick and pack process accounts for 50 - 65% of labor costs when handled in-house.
Since order accuracy and fast shipping are critical to customer satisfaction, many online retailers decide to outsource the task of pick and pack to an e-commerce fulfillment vendor to keep costs down.
There may be additional steps prior to shipping the package, such as kitting and assembly.
Kitting is when you combine two or more products and assign them to a single SKU, such as a shampoo and conditioner set. Kitting can also refer to marketing collateral inserted into the package, such as a personalized coupon or instruction brochure.
Assembly is the process of arranging the individual items in the kit.
Once an order has been picked, packed, kitted and assembled, it’s time for packaging.
E-Commerce Fulfillment: Packaging and Shipping
The packaging process deserves substantial thought, as it directly impacts customer satisfaction and shipping costs.
Be sure to choose durable packaging that ensures, without a doubt, that items will be delivered without damage. If profit margins don’t allow for ornate packaging, delight customers with thoughtful marketing materials tailored to their order.
Guides, tips, instructions, recipes and other helpful resources will make customers feel like you went the extra mile to personalize their shipment.
It’s important to also consider that packaging can impact shipping costs.
Shipping costs are calculated by carriers based on the dimensional weight or the actual weight of a package. Many online retailers are surprised to learn that carriers always charge the higher price of the two.
Shipping carriers will use the dimensional weight of a package for lightweight and bulky shipments since they need to make up for the loss in income that they would receive from a heavier and smaller package.
Knowing how to navigate the nuances of dimensional weight and actual weight can substantially reduce shipping costs, which is why it helps to partner with a fulfillment company.
After an order is processed and packaged, it’s ready to be shipped.
As all online retailers know, shipping can be a headache.
In fact, the number one cause of shopping cart abandonment is due to shipping. Nearly half of all shopping carts are abandoned due to shipping-related issues, including:
- High shipping costs.
- Slow delivery times.
- Shipping costs exceeded the cost of the items they wanted to purchase.
- Complex or non-existent return policies.
- Limited shipping options, such as expedited or overnight delivery.
- No international shipping options.
Consumers expect fast and free shipping these days, and often purchase from stores that offer those options.
Unfortunately, shipping is nuanced and there isn’t a one-size-fits-all shipping solution for e-commerce businesses.
To find the best shipping solution for e-commerce, online retailers need to factor in the following to create the perfect “shipping formula” for their unique business needs:
- Size and weight.
- Shipping distance.
- Shipping method.
- Profit margins.
The optimal shipping solution for one e-commerce business may be completely different for another.
The good news is that online retailers can easily find the perfect shipping formula for their business by partnering with an e-commerce fulfillment company. They have long-standing relationships with carriers. and can create a custom shipping solution that meets the needs of your customers and budget.
E-Commerce Fulfillment: Returns Processing
Online shoppers return products three times more often than in-person shoppers, mainly because they can’t see or touch merchandise like they can in a brick-and-mortar store.
Even with the best policy in place, returns are a headache to manage in-house. They’re costly, time-consuming, and, when not done well, can result in negative reviews and lost customers.
Online retailers frequently partner with an e-commerce fulfillment service that can handle all aspects of the returns process, including:
- Dealing with return shipping logistics.
- Physically inspecting and processing returns.
- Restocking or disposing of items.
- Inventory management.
Outsource E-Commerce Fulfillment with Jet Mail
If you’re wondering if it makes sense for your business to outsource fulfillment, consider these questions. If you can answer yes to any of the following, it might be time to look for a fulfillment partner:
- Is fulfillment becoming a burden on my business?
- Am I running out of space to store my inventory?
- Do I want to invest in buying more equipment or hiring more staff?
- Are order errors, high shipping costs or slow delivery times resulting in lost business?
Since 1993, Jet Mail has delivered customized solutions for fulfillment, direct mail and digital printing to businesses across the U.S. While we deliver at jet speed, we always take the time to understand your business and work with you every step of the way as your hands-on, proactive e-commerce fulfillment partner.
Contact us today and let us create the perfect fulfillment solution for your e-commerce business.
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