A Complete Guide to E-Commerce Fulfillment

Simplify your e-commerce order fulfillment process with Orderful

Whether you want to sell on Target, Amazon, Shopify, or another platform, electronic data interchange (EDI) integration empowers you to automate core fulfillment processes and streamline operations.

Orderful can help you effortlessly integrate EDI into your fulfillment system. Talk to an expert and ask about our innovative solutions to learn how we make EDI simple.

Onboard trading partners in DaysTalk to an expert

E-commerce success requires more than just a high-quality product. Customer service and prompt delivery are equally important.

This guide breaks down the six steps of e-commerce fulfillment, answers common questions, highlights the best fulfillment partners, and outlines the benefits of outsourcing this essential business function. 

Along the way, you’ll get answers to common e-commerce fulfillment queries like what Amazon FBA is and how to use dropshipping to fulfill your orders. Soon, you’ll be fulfilling shipments like a pro.

What is fulfillment in e-commerce?

E-commerce fulfillment is the process of managing, storing, receiving, picking, packing, and shipping goods. Returns processing also falls under this umbrella. 

Broadly speaking, there are three order fulfillment methods. Each approach has pros and cons, so carefully weigh the benefits of these options before choosing a solution for your business.

In-house fulfillment

With this approach, you fulfill orders using rented or leased warehouse space and an internal team.

If your e-commerce company is still in its early stages, you may fulfill orders in-house. Although this approach can minimize costs as you work on building your brand, it’s incredibly time-consuming, as you’ll be responsible for everything. 

Dropshipping

If you don’t want to manage your own fulfillment processes but need to keep costs low, consider dropshipping.

With dropshipping, you place the manufacturer or distributor items on your digital store, but you don’t buy inventory. Instead, orders are fulfilled on-demand by the manufacturer, which will ship goods directly to the consumer. Many businesses selling on Shopify use dropshipping due to its convenience and low costs.

Outsourcing with 3PL services

Outsourcing involves hiring a third-party logistics or fulfillment services provider who manages packaging, shipping, and warehousing processes. You may still be responsible for other aspects of e-commerce fulfillment.

3PL services allow you to add a logistics expert to your team and tap into an established network of shipping, warehousing, and receiving resources.

What is a fulfillment service, and what does it do?

A fulfillment service is a third-party warehouse network that manages picking, packing, and shipping functions on your behalf. They also frequently deal with returns processing and inventory management.

Fulfillment services perform many of the same functions as a 3PL. However, they typically offer more comprehensive support than your standard 3PL, making them an excellent option for rapidly growing businesses.

For example, you can take advantage of Fulfillment by Amazon (FBA) services if you sell on Amazon. Amazon maintains a vast logistics network, enabling streamlined delivery and end-to-end support. However, warehouse space can be limited, especially during peak shopping seasons.

6 steps of the e-commerce fulfillment process

When you employ an e-commerce fulfillment service, the process generally includes the following six steps:

1. Inventory management

An e-commerce fulfillment service provider will manage your inventory and track your stock levels. Depending on the terms of your agreement, they’ll either notify you when it's time to reorder or place an order on your behalf to maintain adequate inventory.

2. Warehousing and storage

The service provider will store your goods, ensure they’re organized and easy to locate, and provide scalable warehouse space based on your current needs.

3. Receiving

Fulfillment warehouses have dedicated receiving teams responsible for offloading products when they arrive. Your carrier should provide the warehouse with an advance shipping notice (ASN) prior to arrival so they know exactly what they’ll be receiving. 

4. Pick and pack

The fulfillment provider will initiate the pick-and-pack process after a customer places an order. Picking involves retrieving the requisite stock from the shelf, whereas packing is preparing the goods for shipping.

5. Shipping

Next, the fulfillment center will ship the package to the consumer. Leading fulfillment providers support a wide range of shipping options, including next-day air, overnight, and two-day express. 

6. Returns

Although shipping is often considered the end of the e-commerce fulfillment cycle, some customers will return their products. The best fulfillment services providers will handle this function for you as well

3 signs you need to outsource your fulfillment 

Consider outsourcing your e-commerce fulfillment if any of these conditions apply to your operations:

You lack structure or resources

Outsourcing is an excellent solution if you don’t have the resources or structure to fulfill orders in-house. You can connect with industry experts and tap into an existing fulfillment network. 

You’re overwhelmed 

Fulfilling orders in-house can distract you from other vital business functions. To avoid this, outsource and let your logistics provider take over critical fulfillment processes. 

Your sales are uneven or cyclical

Maintaining a huge inventory doesn’t make sense when sales are inconsistent or cyclical. Instead, work with a 3PL, fulfillment partner, or dropshipper to reduce costs and simplify inventory management.

Advantages of outsourcing e-commerce fulfillment

You can reap the following benefits by outsourcing e-commerce fulfillment processes:

Focus on other aspects of your operations

Outsourcing allows you to refocus on your core business goals. You can better serve your customers, explore new product offerings, devise new marketing strategies, and pursue business growth.

Leave tough logistical challenges to experts

When you outsource, logistics experts are just a phone call or email away. They’re ready to help you navigate logistical challenges as they arrive.

Reduce your shipping costs

E-commerce fulfillment service providers have large logistics networks. Allowing them to ship goods and provide warehousing services at a reduced cost. You’ll save thousands and strengthen your profit margins.

How to choose a fulfillment company

Your e-commerce fulfillment is only as strong as the partner you choose. Ensure any potential fulfillment partner offers the following:

Relevant industry experience

Does the fulfillment partner understand the nuances of your industry? An experienced partner can help you navigate challenges and progress toward your growth goals.

Clients in your vertical

Determine whether the prospective fulfillment partner works with other brands in your vertical. If so, they probably have relationships with manufacturers and distributors you can use to expand your product lineup. 

The latest tech 

Leading fulfillment service providers use robust technologies to provide real-time inventory monitoring. They also leverage these technologies to streamline order processing and deliver a better experience to your customers.

Great support

Although it’s tempting to choose the cheapest e-commerce fulfillment services provider, you get what you pay for. Look beyond the price tag and consider the value and quality of their service. Ideally, you want an end-to-end services provider that handles everything from inventory management to returns processing. 

4 top e-commerce fulfillment services

Here are some of the leading e-commerce fulfillment companies:

1. Fulfillment by Amazon

If you primarily sell on Amazon, FBA is a great outsourcing option for your business.

New FBA clients can access numerous free perks, including zero-cost returns processing, free storage, and Prime shipping options. The two-day Prime shipping is particularly beneficial, increasing your products’ appeal for Amazon Prime’s tens of millions of customers. 

2. Shopify Fulfillment Network

Shopify Fulfillment Network is built for small businesses that already sell on the platform. SFN doesn’t charge any upfront storage fees for your first six months, so you can get started with no out of pocket. However, there is a small per-order delivery fee.

3. ShipBob

ShipBob is an e-commerce fulfillment service that works in conjunction with your Shopify store, although it’s also compatible with several other digital commerce platforms. ShipBob lets you use branded shipping materials, engage in retail dropshipping, and support omni-fulfillment across multiple marketplaces, including eBay and Amazon.

4. Red Stag Fulfillment

Red Stag Fulfillment offers a 30-day free trial and same-day fulfillment services. The provider integrates with various digital commerce platforms, including Shopify. Red Stag also provides real-time inventory and warehouse monitoring to prevent stock-outs and keep customers happy.