If you’re reading this, you’ve likely heard the term e-commerce fulfillment, but you may not know what it fully entails.

E-commerce fulfillment is the sum of many individual services–some of which businesses choose to handle on their own. For those who outsource it, it’s the part of the supply chain that involves receiving and storing goods, processing and picking orders, and packing and shipping items.

Sounds simple, right? Not exactly. E-commerce fulfillment is just as (if not more) important than the actual product(s) you're selling. If you don’t have a process in place for handling all of the steps listed above, it’s probable your product will arrive delayed–or worse–damaged, and then you’ll have to deal with angry customers.

To make things easier on the e-commerce industry, fulfillment came to be. It’s designed to fast-track everything from orders to returns to give yourself the freedom to focus on more productive and profitable tasks for your business.

For more information on e-commerce fulfillment and how it can benefit your business, continue reading below.

What services are included with e-commerce fulfillment?

Before a fulfillment provider even accepts your inventory, they’ll get your storefront connected to their software. By integrating the two systems, your team can keep track of all the moving pieces required to fulfill orders.

It’s important to note that not every storefront integrates with fulfillment software. That’s why it’s critical to find a fulfillment partner that can plug directly into your processes without disruption or delay.

While most fulfillment companies take three to four weeks to get you set up, some (including GLF) can get you fully integrated within 24 to 48 hours.

For an overview of other fulfillment services, continue reading below.

Receiving

This includes all the services a fulfillment center provides to process your inventory. It’s the process of accepting and managing your inventory at their warehouse, placing the products on  shelves and entering them into your systems. 

Storing

Once the fulfillment partner has received your inventory, they’ll store it at their warehouse. They’ll also organize it for optimal efficiency by placing:

  • Top-selling items nearest the packing stations.
  • Storing items that are often packed together close by (i.e. a product and the accompanying marketing collateral to go with it).
  • Arranging items from top-selling to least-selling.

In doing so, they can cut down the time it takes to gather items for orders.

A reliable fulfillment partner will also offer inventory management as part of their services. This includes 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.

A good fulfillment partner will have an organized inventory management system that directly integrates with your e-commerce platform to process orders as fast as possible. This gives you complete visibility into all of your inventory levels to accurately forecast projections over the long-term to prevent a shortage or surplus of stock, saving you costs down the line.

Processing

When an order is placed, the fulfillment partner will process it. Note, there must be inventory on-hand to start the process. Then, an order is fulfilled.

Ideally, e-commerce businesses should be able to manage all orders in one system, from when they are placed to when they are shipped. This helps to keep track of the individual status of each order. For example, whether the order is being processed or being delivered. This also helps businesses keep track of trends over time, including dips or spikes in order volume.

One critical metric you should continuously monitor is your order accuracy. This is the percentage of all e-commerce orders that are fulfilled and shipped without error. To calculate it, divide the total number of orders you’ve fulfilled correctly by the total number of orders fulfilled. Then, multiple that number by 100.

To give an example, if you’ve fulfilled 500 orders, but 50 of them were incorrect, then your order accuracy rate is 90% (i.e. 500 - 50 = 450 / 500 x 100 = 90%).

While reaching 100% is not always realistic, you should aim for an order accuracy rate of 98% or higher since it has a direct impact on customer satisfaction.

If you notice your order accuracy rate lowers as your business scales, you may want to look into a partner to assist with areas, like pick and pack fulfillment. Many pick and pack partners take quality assurance measures to ensure what was ordered is what was picked. This includes checking everything from the order to the packaging to the label before shipping it out.

Picking and Packing

If you’re not currently outsourcing fulfillment, who picks and packs orders? How long does it take your staff each month? Each year?

Studies show order picking accounts for around 50% of an e-commerce company’s labor costs, but that number can be as high as 65% for some.

With the rise of e-commerce, every second counts when it comes to fulfillment, which is why many businesses find success in outsourcing to ensure products are quickly picked from their respective location in the warehouse and packed into the proper shipping package for each order. Once picked and packed, the shipment is ready to go.

Shipping

After the order is fulfilled, it needs to be shipped. This makes up one of the largest components of fulfillment costs since the size and weight of the package, as well as the shipping method determines the final price. Depending on the distance between your fulfillment partners’ location and the customers’ final destination, shipping fees may flex up or down.

You’ll want to look for a fulfillment partner with access to a global distribution network, so they can pass the savings on to you.

This brings us to our next point–costs.

What fees are associated with e-commerce fulfillment?

All of the services listed above come with their own costs. However, some fulfillment partners also charge administrative fees. They’ll assign a customer service representative to manage your account. This includes handling customer service calls.

Unfortunately, not every rep takes the time to understand your business, so many times your problems go unresolved. These fees can be recurring depending on how many times you and your customers reach out to customer service with questions. It’s important to note that GLF does not charge admin fees. When you work with us, you have a dedicated rep assigned to your account that’s knowledgeable about your business, so questions are answered quickly.

Before signing a contract, talk with your fulfillment partner about the associated costs. Some fees are recurring and others aren’t. Depending on the number of products and bins or pallets, a fulfillment partner may offer bulk discounts.

How are returns handled?

While returns can be costly, it’s an important service you provide for your customers. In fact, free returns and exchanges are cited as the number two reason consumers are more likely to shop online. If your return policy is working against you rather than for you, it may be time to reevaluate your processes.

Instead of having items sit in storage after a return is made, quickly restock those items for resale. Failure to do so will throw off inventory levels, making it difficult to know what is and isn’t available.

If you’re a small- to medium-sized e-commerce business, you may have one or two people handling returns. But that approach isn’t scalable as your sales volume increases. You need a team in place to handle returns and restocks.

An experienced fulfillment partner can help you find a return policy that works for you and your customers. When evaluating your options, look for a partner that has the infrastructure in place to handle a high volume of returns quickly.

When is the right time to outsource fulfillment?

Consumers spent $861 billion online with U.S. merchants in 2020 — up 44% year-over-year. What’s more, e-commerce accounted for 21.2% of all sales in 2020. While the boom is great for business, it can be a bust for bandwidth.

As your online business grows, you may find that the fulfillment process requires increasingly more time and labor. Asking yourself the following questions can help you determine if it’s the right time to outsource:

  • Is fulfillment becoming a burden on my business?
  • Am I focusing my efforts on growing the business?
  • Am I running out of space to store my inventory?
  • Do I want to invest in buying equipment or training staff?
  • What is my order accuracy rate?
  • Do my customers want faster shipping or lower rates?

With all the costs and challenges involved with handling these areas, many business owners find they're better off outsourcing fulfillment. 

Take Assessment

How do you choose an e-commerce fulfillment partner?

When it comes to e-commerce, fulfillment and logistics go hand-in-hand to get items where they need to go. Fulfillment is a part of the supply chain that entails receiving, storing, processing and transporting items. Logistics, on the other hand, is the detailed coordination of all of these individual steps.

As online shoppers demand faster shipping, logistics is becoming an increasingly important component of fulfillment. That’s why you want to find a fulfillment provider with access to a global distribution network. Instead of having to outsource these services, they have partners in place to create personalized solutions for your needs. So, if you need to ship a product across states or countries, they can make it happen with competitive rates and times.

Use GLF as Your End-to-End E-Commerce Fulfillment Partner

With 20 years of experience in e-commerce fulfillment, GLF takes pride in offering transparent pricing, unmatched reliability and personalized services. Our team takes the time upfront to learn your business and work with you as a proactive partner to create personalized solutions that sync with your processes. Plus, our capabilities go far beyond e-commerce fulfillment. Our strategic partnership with IBC and Jet Mail allows us to provide e-commerce businesses with turnkey access to a state-of-the-art print shop, commercial mail house and our global distribution network. For more information about our services, contact us today.

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