Your customers’ experience with your business is the key to your long-term success, and in the world of ecommerce, order fulfillment is particularly vital. After all, nobody wants to wait too long for something they order online or wonder if it will turn up at all.
What is order fulfillment?
Order fulfillment is, by definition, the processes companies follow to complete sales orders and deliver products to customers. Fulfillment is a big part of your brand's personality. Expediency, specificity, and communication are the tenants of any scalable order fulfillment strategy.
In-house fulfillment can be a struggle, but it doesn’t have to be. By optimizing your order fulfillment strategy, you can save on operational costs, improve customer satisfaction and avoid some of the biggest headaches involved in operating online marketplaces.
The purpose of a streamlined order fulfillment strategy
Order fulfillment without a strategy can lead to significant headaches, wasted time, and excessive cost. On the other hand, optimizing your order fulfillment process can benefit you in several ways.
Decrease shipping costs
In the world of ecommerce, shipping costs can slash your profitability, but passing those costs down to the consumer will just make it difficult to compete with competitors who offer free shipping.
So, when you build an optimized order fulfillment strategy, shipping costs should be a central focus. This means investigating the different shipping providers, reviewing the costs of various shipping services, and choosing the best option for each product you sell. You might be surprised how much money this saves you in the long run.
Improve inventory management
Inventory can quickly get out of hand when you operate an ecommerce platform, costing you both time and money. Mishaps affecting your inventory can even cause you to lose sales, putting a ceiling on your top-line revenue.
A solid order fulfillment strategy, then, takes inventory management into account.
Part of an effective strategy is following sales trends to get an idea of how long each piece of inventory sits in your fulfillment center before it’s shipped out. This means the days of ordering too much or too little inventory are in the past.
Optimization in this category has the potential to increase sales and reduce storage costs.
Increase fulfillment rate
Every time an order falls through the cracks and goes unfulfilled, you’re losing money! It may be difficult to achieve a 100% order fulfillment rate without a strategy, but with a maximized fulfillment strategy, it’s much easier.
Create a better customer experience
What does order fulfillment mean to your customers? Everything! Human beings crave instant gratification, especially when we shop. That makes order fulfillment a big part of customer service.
The faster and more efficiently your customers can get the gratification they crave, the better your customer satisfaction scores are likely to be. By optimizing your order fulfillment strategy, you can make your customers happier, drive sales, and ultimately increase your earnings.
10 ways to improve fulfillment operations for your business
If your order fulfillment process is less than streamlined, it’s time to make a change. There are so many benefits to maximizing your order fulfillment that it doesn’t make any sense not to.
Here are 10 ways you can start to improve your fulfillment process immediately.
1. Invest in fulfillment software to provide better supply chain visibility
You’ve likely heard the old adage that “it takes money to make money.” This means that you sometimes have to make an investment in your business to improve processes and create growth.
Order fulfillment is one area that deserves such an investment.
One of the best ways to improve your strategy is to get a better understanding of your overall supply chain. Consider investing in a piece of fulfillment software that makes it easy to visualize and optimize your supply chain. Sure, doing so may set you back a few bucks, but not doing so is likely costing you far more.
2. Be strategic with your warehouse layout
After a short while in operation, McDonald’s temporarily shut down, drawing up different kitchen layouts and optimizing the process, becoming one of the first and largest fast food chains in the process.
Your warehouse layout is just as important as the kitchen layout at McDonald’s. Consider the following when planning your warehouse layout:
- Time. Your layout could add time to the shipping process. For example, time is wasted if your employee packs a box and has to walk across the warehouse to get a packing slip. Make sure your layout makes the fulfillment process as efficient as possible.
- Space. Space costs money; the more you maximize your space, the more money you save. Think about how much space you need and how to get the most out of every square inch in your distribution centers.
3. Identify your shipping capacity
There are a few things involved in shipping:
- Inventory. You have to have the inventory on hand to ship.
- Time. It takes time for you or your employees to pack, label, and ship each package.
- Costs. Shipping costs could limit your capacity if you’re experiencing turbulence in your cash flow.
Taking all of these things into account, think about the maximum number of packages you can send in any given time period. This is important to know because you may get close to maximum capacity as your business grows. As you get close, it’s important to further optimize and expand your fulfillment process so no orders fall through the cracks.
4. Pinpoint areas in the fulfillment process that take too much time
Order fulfillment in ecommerce is all about speed. Remember, human beings are hardwired to crave instant gratification. Moreover, processes that take too long increase your overhead costs because you may need to pay for additional hours of labor.
Cut down your operational expenses and get orders to your customers faster by taking the time to carefully review each step of your order fulfillment process.
As you review each step, look for any aspect of the process that takes too much time. Such delays may have to do with a lack of efficiency in your warehouse layout, the product itself, or even unnecessary steps that could be completely removed from the process.
5. Take your shipping options into consideration
When you think about shipping, the first names that likely come to mind are UPS, USPS, and FedEx, but they’re not the only shippers around. It’s important to compare all of your options before you decide which shipping carriers you’re going to work with.
Keep in mind that shipping companies are in business to make money, and there’s no law dictating what services they have to provide and at what cost. As a result, some carriers offer different shipping methods than others and prices can vary wildly from one to the next.
It’s also important to note that one carrier might have a lower cost for standard shipping and another may have a lower cost for express or other services. So, your best shipping strategy is likely to work with multiple providers.
Think about each product you have to offer and look for the lowest cost and most efficient shipping options. You stand to save a significant amount of money if you play your cards right.
6. Understand the relationship between incoming inventory and fulfillment
Ecommerce is cyclical. The cycle is simple:
- You spend money on inventory.
- Inventory sits in your warehouse waiting to be sold.
- You sell the inventory.
- You ship the inventory.
- You collect money.
- You repeat the process.
Every step in this cycle is related to the overall order fulfillment process. It’s important to think about the timeframes of each of these cycles.
Having a detailed understanding of this process could mean you never run low on inventory and never miss out on sales. It could also mean you’re not paying for valuable square footage to store inventory for excess amounts of time because you ordered too much.
On the other hand, if you don’t take the time to learn about the relationship between incoming and outgoing inventory, you may end up with delayed shipments, unfulfilled orders, and missed money-making opportunities.
7. Take a look Into your packing materials: are they cost-effective?
Shipping, inventory, and manpower aren’t the only expenses involved in the fulfillment process. You also have to think about your packaging materials.
Some custom packages can cost anywhere from a few bucks to $45 just for the box your product sits in. If these costs are excessive, your customers end up having to pay higher price tags (limiting your sales) or you have to accept smaller profit margins.
Although packaging is important, it shouldn’t be such a financial burden that it’s impossible for you to compete in your market. Think about the materials you use for product packaging and how much it costs you to pack each one. Are there opportunities to reduce these costs? If so, you could increase your margins, offer more competitive prices, or both.
8. Seek out a fulfillment partner to help you scale
As your company grows, it can become more and more difficult to handle the fulfillment process on your own. The good news is that you don’t have to; there are several fulfillment options out there.
When your company has grown to the point of growing pains in the fulfillment process, consider bringing a fulfillment partner in to relieve some of the hassle.
When you compare potential partnerships, think about:
- The Cost. The company that fulfills your orders for you will want to be paid for their work. Fulfillment partner pricing can vary wildly from one provider to the next, so pay attention to pricing.
- Reliability. Your fulfillment partner’s reliability has a meaningful impact on your brand. You don’t want customers to be upset because your partner’s taking too long to ship orders.
- Capacity. It’s important that the fulfillment partner you choose has the capacity to meet your requirements. Be sure to ask about the company’s capacity before you sign any contracts.
9. Understand your needs: do you need a warehouse location?
Every ecommerce business is unique – including yours. That means your business has unique needs that you should consider when making big decisions like how to maximize your fulfillment strategy.
If you’re a smaller company and you own a home with a garage, shed, or other storage space, you may be able to cut down on overhead expenses by foregoing a warehouse location. After all, why would you pay to store your inventory when you can store it for free at home?
On the other hand, if you have a larger business, you don’t want to be weaving your way through inventory when you go to the bathroom, so a warehouse is necessary. If that’s the case, consider your unique needs and choose a warehouse location that fits those needs. Don’t invest in a building that’s too big, or you’ll waste money. Stay away from spaces that are too small, too, or you’ll encounter other difficulties.
10. Plan ahead for seasonal sales spikes
Prepare yourself for sales cycles.
For example, most online businesses can rest assured they’ll experience sales spikes during the holiday season as consumers purchase gifts for one another. Other businesses may have different seasonal sales spikes. For example, an online nursery may see a spike in sales at the beginning of spring and another at the beginning of fall.
Review your sales trends and get to know when your sales spike. That way, you can prepare before the rush of business comes flooding through your website.
Improve your current fulfillment model for your ecommerce business today
If you haven’t already maximized your order fulfillment strategy, chances are good that you’re losing money, sales, or both, and you could be losing hundreds or thousands per month. Don’t let this money fly out of the window.
It’s time to take control, reduce your costs, improve your customer satisfaction, and relieve countless fulfillment headaches. Although the process likely seems cumbersome at first, it’s actually quite simple, and when it’s done, you might be surprised at just how efficient your business has become.
If things still seem difficult, Cart.com can help.