Thanks to the online retail giants and gradually convenient and fast global transportation, and with the rapid popularization and development of mobile devices like smart phones, the global ecommerce market saw its sales soar 18% to 2.86 trillion dollars in 2018.
As consumers, when we buy something online, we want it now. As sellers, fulfilling orders that meets buyers’ demands is easier said than done.
China, the world’s NO.1 ecommerce market and manufacturing country, has become many ecommerce sellers’ sourcing priority alternative. While complete order fulfillment isn’t the most exciting part of your ecommerce business, especially when your store and ship your orders from somewhere outside of the destination countries, like China, it will have a direct influence on your bottom line.
Did you know that the shipping speed, shipping cost and shipping experience are the most important factors when it comes to cross-border online shopping? The taxes and tedious refund and replace process is next.
61% of shoppers will abandon their cart if shipping, taxes, and other fees are too high.
53% of shoppers say that speed of delivery is an important factor when it comes to evaluating their online orders.
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.
Getting order fulfillment right has never been that important for ecommerce business
But you need to understand how it works before you can set up the right fulfillment strategy for your business.
What’s Order Fulfillment?
Order fulfillment is the process of storing products, receiving orders, pick & pack and ship to customers, which can be performed in-house by an ecommerce company or outsourced to a third-party (3PL) logistic provider.
Order fulfillment can apply to both business-to-business(B2B) orders- where larger quantities of products are shipped to larger-scale retailers and business-to-consumer(B2C) orders.
For B2C, orders fulfillment process begins after the buyer places orders on seller’s online marketplace store or website.
Understanding the Order Fulfillment Process?
There are several steps – from inventory management to pick up the right package material and method for the most cost-effective shipping (shipping cost is charge by the package weight and volume) –that make up the whole order fulfillment process.
Every steps of fulfillment process can be complicated if you are new to order fulfillment and haven’t put much thought into it.
Whether you outsource your order fulfillment work to a third-party logistic (3PL) company or do it yourself, receiving the inventory from the manufacturer to the warehouse is the first step toward getting orders to the end customers.
If you are sourcing from china, you might think of storing your products in China-based warehouses and ship your orders directly from China or shipping them in bulk to local fulfillment centers where your products will be sold.
For sellers who have solid and large customers base in each region, we suggest store products in local fulfillment centers then ship orders out with significantly cheaper shipping rate to cover the initial freight cost.
But for small and medium business, getting order shipped directly from sourcing country is more reasonable, which won’t require heavy initial shipping input for small sellers who just start their business.
Before putting the merchandise on shelves, product quantity and quality inspection will be carried out to ensure the inventory accuracy. And each unique product or SKU will be designated a barcode for smooth fulfillment process.
After inventory has been received by fulfillment warehouse, then the inventory data will be stored into a warehouse management system and the inventory level will be updated in a real-time manner, which provides sellers with a good sense of product selection and inventory management.
Inventory accuracy is a crucial part of order fulfillment process, with a good warehouse management system, your inventory can be updated accurately and automatically, which is an important function that order fulfillment should benefit ecommerce sellers. Otherwise, orders may be delayed due to inaccurate inventory, what’s worse, it will hurt your customer experience and account performance.
Once the buyers complete their purchase, the order processing begins. Order fulfillment company or third party logistic company(3PL) generally has an order management system that integrate with almost all popular shopping carts like Amazon, ebay, shopify, woocommerce, etc., which will automatically download the paid orders on your store or website to their system for further process.
After an order is received by order management system, fulfillment warehouse operatives will pick and pack the order and sometimes apply some value-added services like custom packaging, marketing insert, etc.
Once the pick and pack operation is done, the order is ready for delivery. The order management system allows sellers access to the real time tracking and also can update the tracking number to end customers.
It’s important not to forget about return handling when it comes to order fulfillment. A good return experience has a good influence on repurchase rate.
Products returned should go through careful inspection and be handled properly at fulfillment warehouse depending on a case-by-case basis.
To sum up, an ideal order fulfillment process should be empowered by warehouse and order management system to fulfill orders automatically and efficiently.
Sourcing from China? Deciding Which Ecommerce Order Fulfillment Model to Use
Making the right fulfillment choice for your business depends on several factors, including your order volume, your product and more.
There are 3 options to choose for order fulfillment—see which is best for you.
In-house order fulfillment
In-house fulfillment, also known as self-fulfillment, this method can range from small order volumes fulfilled from home to investment into expensive facilities for a larger operation scale.
Many ecommerce sellers manage and pack orders in their home when they just start their business, at this stage, a lot of valuable time will be spent that could otherwise be used on developing new products, executive marketing campaigns and acquire more customers. Once the business grow to a certain point, this method can be an obstacle for your business if not operate properly. At this stage, sellers are faced with either outsourcing fulfillment work or building up the fulfillment infrastructure themselves.
For sellers who sourcing from China, unless you have a large and consistent order volume, in-house fulfillment is not suggested since no matter you set up your own warehouses in China or in destination countries, there will be a huge initial cost.
Handing off ecommerce fulfillment to a third-party often occurs when a merchant is spending too much time packing boxes and shipping orders, has run out of space to store their inventory, needs more time for strategic projects, and has no interest in managing their own distribution infrastructure.
When you outsource fulfillment to a 3PL company, they handle the entire fulfillment process for you — from receiving your inventory from your manufacturer to restocking returned products.
Because 3PLs work with many merchants and typically operate a number of fulfillment centers, they have the logistical expertise and capacity and are able to negotiate substantial discounted bulk shipping rates from carriers due to the pure volume of shipments they are shipping out each day.
Sourcing from China and outsourcing to a China fulfillment company, you can manage all your inventory and order through their web-based software without being in China in person.
Dropshipping means that the merchant never holds the products they sell in their online store; instead, the products are produced, stored, and shipped by the manufacturer.
When a customer places an order on the merchant’s online store, the order is forwarded either manually or automatically to the manufacturer.
Then, the manufacturer dropships the product directly to the end customer.
With dropshipping, the shipping process is completely in the hands of the manufacturer, who is often overseas.
This means that your customers might have to wait for a product to be shipped from across the world.
In addition, dropshipping does not necessarily allow you full control over inventory management and order fulfillment.