Resources / An Introduction to Order Fulfillment

Chapter 1

An Introduction to Order Fulfillment

What Do Customers Expect?

With ecommerce giants like Amazon raising the bar when it comes to same-next day delivery expectations, efficient and successful order fulfillment is now a vital part of being a retailer today.

Whereas six years ago, customers would happily wait 5.5 days for items to be delivered to them, customers now expect their items within 48 hours on average; with 88% of consumers also willing to pay for same-day or faster delivery.

The ability to satisfy a customer’s needs through the order fulfillment process can greatly affect whether a customer even places an order with you, both now and in the future.

In fact:

  • 72% of shoppers value on-time delivery as the primary reason to frequent a retailer above all else

  • 38% of shoppers will never shop with a retailer again if they had a poor delivery experience

  • 25% of shoppers have canceled an order because of slow delivery speeds

Yet, despite the apparent opportunity that can come from an effective ecommerce order fulfillment process, we’ve found that ‘Goods not arriving on time’, ‘Item not arriving at all’ and ‘Lack of delivery updates’ remain the highest causes of dissatisfaction among consumers of all ages.

In this article, we aim to provide best practice advice for your own fulfillment process, so that you can better satisfy your customers, improve reviews and ultimately, drive more sales.

What is Order Fulfillment?

First things first, what exactly is order fulfillment? And what does the typical order fulfillment process look like?

Order fulfillment refers to the sequence of steps that businesses must take in order to successfully deliver an item to the customer.

It starts when the order is first placed with the merchant and usually ends with an order being received by the customer (unless a return or exchange needs to happen).

Retail businesses can vary widely in their approach to sales and order fulfillment, but for the sake of this article, the most common online fulfillment process looks like this:

  1. Customer order is received (whether online, via email, phone or EDI)

  2. Order confirmation is sent to the customer

  3. Pick list is sent to the warehouse

  4. Warehouse operative finds and picks the ordered item(s)

  5. Order is packed and prepared for shipping

  6. Order is shipped out to the customer

  7. Dispatch confirmation is sent to the customer

  8. Order is delivered and received by the customer

There may be a final step at the end to capture any refunds or exchanges the customer requests, which is still considered to be a part of the order fulfillment process.

If a merchant is using retail ERP or a retail operations platform, then along the way, the system would capture the order and invoice details, update the necessary inventory and accounts reports, and take care of any reverse transactions in the event of a return or exchange. If there’s no automated technology in place, then these additional steps must be handled by the merchant.

The process listed above is typically for a B2C company, however, B2B order fulfillment is much the same. The main difference is that the steps involved will be for much larger orders, with different payment and credit terms in play as well.

Discover more differences between B2C and B2B ecommerce strategies here.

Order fulfillment can be completed in-house by the merchant and their staff, or by a specialist third-party logistics (3PL) provider. We’ll discuss the pros and cons of each further on in this article.

The Challenges You’ll Face With Inefficient Order Fulfillment Processes

1. Running out of inventory and risks of overselling

If your processes fall short of the mark when it comes to efficiency, then you’ll also fall behind the volume of orders you have to process.

Inventory won’t be allocated and reserved to orders in time, inventory levels won’t be updated across your sales channels, and you’ll likely oversell the inventory you do have.

Resolving overselling issues is still one of the core reasons why businesses consider retail operations software, like Brightpearl, yet it’s one of the easiest fulfillment challenges to overcome once this technology is in place.

2. Lack of scalability and revenue growth

Too much time and resource spent on inefficient order fulfillment also means less time for focusing on strategic initiatives that will drive traffic, brand awareness and ultimately, sales and revenue.

By gaining efficiency in your operation, you can easily move staff from the back office to the front of house.

3. Mismanaged sales order peaks

The holiday season, flash sales, and unprecedented product popularity have the power to make or break a business.

Handled correctly, these one-off shoppers could become loyal long-term customers; mismanage sales order peaks however, and it could be detrimental to your business.

The power to successfully handle sales peaks lies in the efficiency of your core operation so that orders only need to be handled by exception.

“While the overnight popularity of the product was obviously very exciting, the sudden and unexpected spike in demand left us with a dilemma of how to continue to operate without being completely overwhelmed. Fortunately, we’d recently moved to Brightpearl. The solution helped us to adapt and manage the surge in demand; processing thousands of orders without missing a beat. With our sales now coming into one central ‘hub’ automatically, it allowed us to view everything in one place, cutting down on admin time.”

– David Lochhead, Commercial Director, Finlay London

4. Slow time to ship

We already established in this article’s introduction that customers now expect to receive their items within 48 hours on average.

If you’re fulfilling all your orders manually and inefficiently, then there is little hope of adhering to these expectations – especially once you’re processing hundreds of orders per day!

This slow time to ship could also have the power to negatively impact your online marketplace seller ratings that call for fast shipping and great customer service.

“Automation has saved us so much time operationally. The main use we have for it is for allocating and fulfilling orders, which leaves our orders ready to print without any manual intervention. We’re now flooded with 5* Trustpilot reviews, most of which quote ‘fantastic, ‘great’ or ‘excellent’ customer service. We don’t just meet our customer delivery expectations, we’re now exceeding them, with an experience that both surprises and delights our shoppers. It has become a key competitive differentiator for our brand.”

– Andy Lockley, Head of Ecommerce, Love Shopping Direct

5. Dissatisfied customers and negative reviews

Overselling, running out of inventory, a lack of time spent on your front of house strategy, mismanaged sales peaks and a slow time to ship each have the power to upset your customers.

Put them together and this really could be detrimental to your business.

With customers now more likely than ever to leave negative reviews after a poor experience, your business must resolve these challenges and keep fighting fit against the Amazons of the world who are nailing it when it comes to a customer-first approach.

6. Multichannel fulfillment becomes nigh on impossible

Fulfilling orders manually on just one channel is complex enough as it is.

But multichannel fulfillment across different ecommerce platforms, online marketplaces and offline channels adds a whole new layer of complexity.

With multiple touchpoints, there are more opportunities for delay, human error and bottlenecks – and you risk losing control of your business.

You’ll need to have a centralized view of orders, instant inventory updates across all channels, perhaps even triggered by multiple warehouses, and the freedom to report on which channels are performing better than others.

These are just some of the challenges you’ll face without an efficient order fulfillment process in place; to address this, follow our best practice advice below for gaining efficiency in your operations.

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