A good order fulfillment process is the basis of customer satisfaction in eCommerce. In our second webinar, we discuss in detail the benefits of a smooth, streamlined order fulfillment process that shortens delivery times and also reduces shipping costs for you.
Here’s a quick summary in case you’d like to watch the webinar later.
What is Order Fulfillment?
An order fulfillment service is a logistics process that covers the steps from order placement to delivery.
Order fulfillment partners include packing and/or shipping companies you tie-up with for this process, and order fulfillment associates are staff that help manage this process.
In a store, order fulfillment usually ends at checkout unless the product is brought back for a return or replacement.
But for online sales, the process begins when an online order is placed. It includes
- picking the right products,
- packing them and assigning them to a consignment,
- shipping them safely to the customer (or having them ready to be picked up), and,
- delivering them.
Order fulfillment rate is calculated based on the number of orders marked “Shipped” and “Rejected” over the previous 90 days. The number of “Shipped” orders is divided by the total number of orders, not including “Canceled” orders. The final rate appears to the customers in the form of stars out of five.
What are the order fulfillment components that add up to customer delight?
Broadly, we know that delivering orders fast and in good condition make for successful order fulfillment. Here are a few other components that result in even greater delight:
- Faster order fulfillment time (in comparison with competitors)
- Getting the exact same product they ordered, i.e. the product that matches the online description in form and function
- Low error rate- ensuring the correct items are delivered
How do you receive inventory from suppliers and store it?
Here’s a checklist of steps to follow when you receive inventory at your warehouse or storage location.
- Raise a Purchase Order when stock levels reach reorder levels. You can also automate this process using a good inventory management system
- Receive the shipped product from your supplier, preferably in a central warehouse rather than across multiple stores
- Test the items you receive for quality and accuracy
- Check the expiration or “use-by” date, especially for perishable items made in batches
- Put away: stock your shelves in a manner where older items are at the front and newer/ later expiry items are in the back. This way, you can implement a FIFO- First In, First Out system while selling items
Picking and packing systems for a faster order fulfillment process
This is a system/ flow chart to follow to optimize the time taken for order fulfillment. It enables collecting and packing the ordered items in the most efficient way possible.
- Generate a “Picklist” of orders
- Assign the orders to an individual “picker”
- Use a trolley with empty boxes called “totes”
- Each tote should have a barcode scanner
- Follow the path given by the picklist to pick out the items located throughout the warehouse
- Scan the shelf, scan the items to match it with the picklist
- Collect printouts of the packing slip for each item
- Pack the items using available packing materials
- Assign a shipper and buy shipping labels
- Either drop the item off at your shipper’s location or have them pick it up from you according to the terms of your contract.
You may have a small business with one or two proxy individuals, or you may even be doing the picking yourself. It is still important to have this standard process set up for when you grow.
Quality Check- The secret weapon we almost always ignore
Introduce a Quality Check effort especially in high-return categories. You can use customer feedback to pinpoint orders where the reason for returns is product quality. The best way to deliver good products consistently is to check them at two touchpoints
- when the items are first delivered to your warehouse
- when the items are picked up for fulfilling an order
Adding this basic extra step will prevent you from receiving returns for faulty products.
The key to effective shipping
There is a delicate balance between how much you spend and how fast you can ship items out. It is best to start out on the right foot by setting realistic expectations in the mind of the customer. You can do this by clearly specifying when an item will reach the customer.
Shipping costs come into play if you set too-high expectations, and use premium shipping for deliveries as well as returns.
If many returns occur, you take a hit on the high cost. We recommend classifying the items based on size, weight and packing requirements.
Choose shipping materials, services or partners according to those classes.
How to design your returns policy
It is in your benefit to have a clearly explained return policy. Clearly cover return steps, the terms and conditions for refund, and ways to return the item.
It is important to track the reasons for a return; say through emails or through the return interface on the website. Analyze the data to gain invaluable feedback for your business. It will highlight the steps at which errors are occurring.
You should check items returned for defects or damages and make replacements available immediately.
Take a look at the webinar video for detailed insights on how you can process omnichannel returns and add to customer delight.
Drop-shipping isn’t as great as you think
- You do not control the process or the speed of shipping
- This can result in unnecessary exposure of the customer base, and your vendor may become your competitor
- You may be violating privacy rules by sharing addresses and other info of customers to the shipper
- Be mindful of tax regulations which may vary from state to state
Optimizing margins in the order fulfillment process
Instead of giving an abstract fixed cost, apply FIFO rules to measure your gross margin. Factor in your other costs such as shipping, overheads, salaries, etc. Set your selling price such that it helps you stay above the red line.
One great way to get order fulfillment right is to automate as many aspects of the process as possible. A good omnichannel retail management software like Primaseller can help you fulfill orders faster, keep track of inventory and much more.