The internet has drastically changed the world’s approach to many things and fast-tracked processes that were mere ideas years ago. One of the most impacted spaces is e-commerce. People worldwide can place an order from anywhere and deliver it to their doorstep.
As the e-commerce landscape changes, customers become more knowledgeable and expect more from businesses. This is why e-commerce retailers can’t afford to joke with order fulfillment.
What Is Order Fulfillment?
Order fulfillment is satisfying a customer’s needs, from receiving orders to product delivery. The process involves product sourcing, inventory, supply chain, and customer support.
Customer satisfaction for product companies is essentially based on excellent order fulfillment. How fast and cheap are you delivering your orders? Startups that have mastered order fulfillment grow brand loyalty and increase sales steadily. In short, order fulfillment is the spine of business order management.
Order fulfillment varies across different industries, and the organization’s size can impact the modalities. Organizations with internal capacity might want to handle it in-house. At the same time, some might opt to outsource or even a hybrid system. All in all, there isn’t a one-size-fits-all approach to order fulfillment.
Choosing the right fulfillment solution requires an evaluation of various factors like scalability, geography, product type, and more. Let’s take a look at some of these factors in detail.
In-House Order Fulfillment
This is when a business handles all phases of order fulfillment without external help. New e-commerce startups mostly use this method. These small businesses have to handle inventories, pick and pack, procure, store, and ship orders by themselves. It is usually cumbersome and deprives the business of valuable growth time.
In-house order fulfillment can benefit small enterprises as it saves third-party costs. It allows businesses to oversee quality control. E-commerce startups can customize to suit personal specifications compared to more general patterns of bigger establishments.
However, keeping up with in-house order fulfillment can be difficult as the business grows. Most small businesses can’t also afford a warehouse, which further complicates the in-house fulfillment process. Small businesses can be prone to human errors as they lack the capacity to automate the fulfillment process.
Dropshipping
Dropshipping is an order fulfillment method in which the retailer does not keep products in stock. Instead, when a store owner receives an order from a customer, they simply contact the supplier, who will then ship the products directly to the customer’s door. Dropshipping apps automate this process and make it easier for store owners to run their business.
Owning a warehouse is expensive, and dropshipping allows small businesses the opportunity to jumpstart their entrepreneurial journey without one. It eliminates inventory and order fulfillment costs. Businesses can take more risks by trying new products without worrying about stocking costs. This gives the business more flexibility and a wider product offering.
As of 2020, the dropshipping market size was worth $149 billion and is estimated to reach $558 billion by 2025. It has a projected annual growth rate of 28% until 2025. This is in no small measure due to the increase in online shopping preferences.
However, there are some disadvantages to dropshipping. Retailers have little or no control over order fulfillment times and stock. You won’t be able to solve customers’ complaints directly, which could result in fewer profits. Also, when suppliers mess up, you take the brunt.
Third-Party Logistics
Third-party logistics or 3PL, compared to dropshipping, involves a business outsourcing its logistics processes to a fulfillment company. A 3PL is a logistics firm that owns a warehouse and caters to the inventory management, warehousing, and supply chain process of e-commerce businesses.
A 3PL receives your goods, stores, picks, packs, ships, and returns products on your behalf. This process allows for more efficiency and allows businesses to focus on growth.
Studies show that 24% of customers have canceled their orders due to slow delivery time. You save time and money by outsourcing rather than struggle to handle overwhelming customer orders. 3PLs are seasoned professionals with years of logistics experience powered by advanced data analysis.
By leveraging a 3PL, you save yourself delays and are assured of a successful e-commerce order fulfillment process. A successful ecommerce order fulfillment process helps you expand your reach to international markets. It helps give you a distinct look by customizing and knitting your products to specifications.
The Right Fulfillment Model for Your Business
Your customers’ satisfaction is the main factor in determining the right option for your business. You’d need to factor in the type of product you’re offering. Are you selling to businesses, individuals, or middlemen? All these must be considered alongside speed of delivery and price.
You’d want to observe what your competitors are doing. Are there gaps in their approach you can exploit? Analyze the cost and benefits of all approaches before settling on one. Give preferences to your selection and room for growth.
Optimize Your Choice
Whatever option you settle for, you need to find ways to optimize it. If you settle for in-house, introduce automation software to save time. For drop shippers, you need to select a competent supplier. And if you choose 3PLs, ensure they’re experienced and have technical expertise.
