An order fulfillment service is a business that handles all tasks related to order processing, packing, shipping, and inventory management. Particularly for e-commerce businesses, order fulfillment is an important component of managing overhead costs and satisfying customers. Finding the right order fulfillment service can be a make-or-break task for many online retailers.
What is e-commerce order fulfillment?
E-commerce fulfillment encompasses every step in the process of successfully delivering an online order to the customer. At a high level, these steps include:
- Receiving and storing inventory until a customer places an order;
- Processing an order, including picking the item, packing it, and getting it ready to ship;
- Shipping the package; and
- Processing and managing returns.
Order fulfillment services can handle each of these steps. Many also provide advanced reporting to give you deeper insight into your entire logistics process.
Order fulfillment services are just one option for handling e-commerce orders. Some businesses prefer to do fulfillment in-house or use the dropshipping process, avoiding many order fulfillment logistics altogether. However, there are some key advantages to working with a third-party order fulfillment service.
“With outsourced fulfillment, the process for e-commerce businesses becomes simpler. In many cases, orders can be sent directly to a fulfillment partner, which will handle packing and shipping. All the retailer needs to do is ensure their fulfillment provider has enough inventory to meet order demands,” wrote Shopify.
[Read more: How to Start a Dropshipping Business]
What are the advantages of outsourcing order fulfillment?
Beyond simplifying logistics, working with a third party can help reduce costs, save time, and enter new markets. E-commerce order fulfillment services usually work with many clients at once; they can negotiate for lower shipping rates by leveraging their higher volumes. Plus, your business benefits from their infrastructure—such as warehouse space, employees, and supplies. This infrastructure translates into direct cost savings for your brand.
While choosing a fulfillment solution based on budget is tempting, finding a company that’s a good fit is just as important.Calli Grace, Shopify
Likewise, third-party order fulfillment services give your team time to focus on more high-value activities. “Well-executed order fulfillment is essential to online retail success, but it’s not a top skill for most e-commerce entrepreneurs,” wrote Red Stag Fulfillment. “When you outsource your logistics, you outsource the headaches and the hard labor, giving you more time to focus on the parts of your business where you excel.”
If your company is looking to grow, an order fulfillment service can also help you enter a new geographic area. Shipping your products in-house means you’re limited to your headquarters location, which isn’t ideal when you want to offer two-day delivery or keep your shipping costs low. A third party offers access to many different warehouse locations, so you can expand your reach without significantly impacting your logistics.
What to look for in an order fulfillment service
Outsourcing order fulfillment isn’t right for every company. But, if you’re spending several hours each week packing and shipping orders or if you’re running out of inventory storage, it might be time to find a partner.
Cost will likely be one of the key factors influencing who you decide to work with. But, experts warn that it shouldn’t be the only element to consider. “While choosing a fulfillment solution based on budget is tempting, finding a company that’s a good fit is just as important,” wrote Shopify. “Poor fulfillment creates unhappy customers, which can cost more than shipping overheads.”
Ask for references or reviews to ensure the order fulfillment service has a good reputation. It can be helpful to find a partner in your specific market, too—especially if you have products that require careful packaging. Inquire about any monthly order minimums (or maximums), product size or weight limitations, and warehouse locations to make sure they’re equipped to handle your logistics.
[Read more: The Pros and Cons to Offering Free Shipping for Your E-commerce Business]
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