A Detailed Guide to Self Order Fulfillment for Ecommerce
Posted on: November 13, 2021
With more than 40% of Canadians saying they would shop online for the holidays in 2020 and a new survey revealing that that number will rise this year — fulfillment issues are the last thing that should stall the flow of orders for your ecommerce business. However, more often than not that tends to be the case — in turn affecting not only delivery times but also customers' trust and loyalty.
As it is, running an e-commerce business is not a walk in the park. You have a lot of responsibilities to fulfil. With a plethora of ecommerce business tasks to handle, one process that takes up a huge chunk of resources and costs is Self Order Fulfillment.
In this blog, we go into detail about the pros and cons of using self fulfillment for your online business & how to decide if another alternative like 3PL might work better.
What is Self-Fulfillment in ECommerce?
When an eCommerce business carries out the process of inventory storage, packing, and shipping through their own distribution networks or through the comfort of their homes — that's called self-order fulfilment.
As the name suggests, the responsibility of packing, picking and managing orders via software falls all on the online retail store when they pick this route.
Mainly, there are two categories of online businesses that pick self fulfillment:
You are an established e-commerce business owner and you can afford a large warehouse for fulfillment operations.
You're just kick-starting your e-commerce business and all your orders are processed in-house.
What Are the Advantages of Self-Fulfillment?
Economical for Some Businesses
Depending on the size of the business and the volume of orders, some businesses find self fulfillment more economical than the typical dropshipping and most third-party logistics providers.
It is important to note that the low-cost benefits are only valid up to a certain volume. As a business grows, additional investments need to be made in order to sustain a self-fulfillment model -- which can increase those costs.
Boosts Brand Awareness
Orders packaged in a fully customized kit are an opportunity to create brand identity while marketing to potential customers.
Gives You Absolute Control of Your Business
As the entire picking, packing and shipping processes are handled by your team and your distribution network, they allow you to maintain complete control over the experience of your customers.
Lower Shipping Rates at the Right Volume
You can enjoy discounts on your shipping rates especially when shipping lots of orders via couriers or post.
Disadvantages of Self-Fulfillment & Common Logistical Problems Associated With It
E-commerce Self fulfilments have always proven to be a difficult path to tread. Here are a few of the common logistical challenges of self-fulfillment you may face.
Takes a Lot of Time Away from Other Business Tasks
Not only do picking, packing, overseeing, and managing distribution networks take a lot of time — but also require more commitment compared to other fulfillment strategies.
This can take a toll on the efficiency and productivity of your business, while also taking time away from other important business processes, including revenue-generating tasks like marketing and sales.
Difficult to Grow
Having the ability to ship to multiple states in Canada and in some cases, the entire world, is imperative for growing your ecommerce business. But to establish your business on a global scale, you have to set up warehouses in several locations to avoid the cost of shipping and tax.
Most small or medium ecommerce retail stores do not have the resources to do so, and stand to lose market share as a result.
Scaling Can be Challenging
As a local online retail store, you are competing with mammoths like Amazon for market share. Without the resources of these typical large ecommerce businesses, scaling with the demand for orders can be difficult.
To grow, especially when you have surplus orders rolling in for the holidays, you need to come up with some strategy to handle the peak. Else, you may wake up to a house full of scattered inventories, unsatisfied customers, and your business stuck in that stressful time hole.
Quick tip #1: A workable alternative to e-commerce self-fulfillment is through 3PL, also called third party logistics, where your inventories are handled from packing to shipping.
Quick tip #2: If you are an Amazon seller, there's also the Amazon fulfilment program where they take care of your inventories from their facilities.
Hefty Financial Investments & Expensive Shipping Costs for Fast Growing Businesses
As your business grows, you will need to invest in warehouse space, hire staff, manage shipping software costs, and establish a warehouse management system in order to sustain order fulfillment at your facility. That's a lot of financial investment.
The situation is not helped by high shipping rates. The cost of shipping is generally calculated by the distance from the package's origin to the package's destination — and if you're doing cross-country shipping, you’re expected to part way with more money.
It is worth noting that you can’t transfer the burden of those high shipping fees to your customers either. High shipping costs are one of the major factors for the industry-wide prevalence of up to 69% cart abandonment — and you simply can’t sustain customer loyalty without finding a way to lower those shipping costs for both yourself and the end customer.
Shipping and Order Tracking Challenges
The e-commerce shipping process is anything but perfect. We've seen packages get lost, shipments hijacked, and face unforeseen delays from weather. Although that's part and parcel of the shipping challenges, customers don't care.
As many as 69% of all online shoppers are estimated to never buy from an ecommerce business again if the orders are not fulfilled within 2 days of the delivery time. Be prepared to answer more shipment-related questions as you acquire more customers too.
While the shipment tracking number allows customers to monitor their orders themselves — it doesn't stop the fact that you have to communicate with customers who've lost the number in the mailbox.
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Let's assume you have sorted out where you want your inventory stored. Next step is to create a system to kickstart your retail fulfillment process. Here's how to:
Set up an Order Processing Procedure
You need to create a notification system for all orders purchased from you. In other words, find a way to get notified every time you receive an order.
Make sure the notification system is time-sensitive so that there won't be delays from the time customers place their order to when they receive the delivery.
Use High-Quality Packing Materials
Use the right materials. You don't want to get stuck in common packing mistakes like destroying the item, spending too much on shipping, or using the wrong box size.
Apart from the typical protective box, you also need to protect the inventory with other materials like bubble wrap, packing peanuts, and crinkle paper.
Set up an Order Packaging System
During in-house order fulfillment, you need to get the item, confirm that it's what they ordered, carefully put them in the box, add a packing slip, and seal the box.
You want your packaging process to be a reflection of their unboxing experience.
It's worth mentioning that the more customization of the order, the longer it'd take to fulfill the order.
Send Out the Order
As a small business owner, you may need to visit the post office almost every day to post your packaged orders. You will also need to have dedicated transport to do so, and in-house printing facilities to print out those labels.
To save time, we recommend having a printer and other stationery items like ink close by after the items have been packed in protective packaging.
Monitor the Order Until it’s Delivered
So you've dropped your package at the post office. But there's still one more thing to do.
Customers do not like to buy from websites that do not provide a delivery timeline, with as many as 24% abandoning carts if no delivery time is provided. So, if you are self-fulfilling orders, you will also make sure you provide shipping tracking information for each of your orders with an estimated delivery date.
It will also lessen your customer support staff's workload, since without it, you may receive many questions and complaints from your customers.
Scale Your Store with Fulfilment by Ship Expert
Outsource your fulfilment to Ship Expert and get an end-to-end fulfilment solution that integrates directly and seamlessly into your eCommerce store. Ship Expert helps you scale your sales with an automated fulfilment process that lets you focus on growing your business.
The question of when to outsource fulfillment is subjective. There's no right time just as there's no wrong time. It depends on where your business is in terms of volume of orders.
Before you can rent a warehouse, create a warehouse management system or even hire people to assist with your self-order fulfillment tasks, working with 3PLs remains the best option.
Here's when you need to outsource your fulfillment task to a third-party fulfillment expert.
Your Business is Growing
Every small business owner hopes that someday, their business will scale. For those in e-commerce, that could pose a serious challenge of its own.
It could be that you are getting more daily orders. Those increasing orders present the need to double up your efforts — from replenishing inventories to packing additional boxes and acquiring larger storage space, or even running around to the post office every day for shipment.
Those positive changes come with responsibilities you cannot handle alone — and that's where you need 3PLs to take the burden of fulfillment off your shoulders.
3PLs can simplify your order processing challenges while setting up a growth strategy for your business.
Inventory Management is Draining Your Time
When most of your working time is spent on low-value activities that don't convert into revenue — it’s time to outsource some of the processes.
In the case of ecommerce, the majority of stores will benefit from outsourcing their fulfillment. When someone else takes care of your fulfillment, you will have the time you need to do the core business tasks for your online ecommerce store.
For instance, you can track your inventory, replenish stocks, and keep track of your SKU performance and spend more time focusing on checkout optimization to combat cart abandonment — all of which can actually move the needle for your business’s growth.
The Shipping Cost is Becoming Overwhelming
Shipping costs plus the total fulfillment cost can be expensive. From the cost of warehousing to purchasing equipment, paying for liabilities, and hiring staff — the financial investment can be overwhelming for most small ecommerce shops.
Logistics warehouses are predictably expected to experience a 10% hike in price in 2022 due to warehouse construction costs. When you use 3PLs, they can transform your fulfillment process, in some cases saving you a lot of money on those additional costs associated with self-order fulfillment.
When You Need Professional Help for Fulfillment
As an e-commerce biz owner, you need your customers to trust you, and that means your business needs to run professionally — no matter how small the size of operations.
This includes everything from customer acquisition to shipping orders. By partnering with a 3PL, you benefit from the expertise of working with professionals who know what they're doing and have years of experience dealing with fulfillment issues. They understand the fulfillment process and how it works so you (and your customers) can have an experience that's as close to seamless as is possible.
You are no longer the only party responsible for the logistics, which can also be a big relief for some online shops.
When You Need to Expand to New Markets
It predicted that by 2021, over 25% of the world population (that's about 2 billion people) will shop online.
In other words, it is the right time to target global digital buyers if you want to scale your business. A fulfillment company that has solid distribution networks across the world with a solid understanding of how their shipping and market requirements are can be an asset here.
You can ship your orders anywhere in the world and gain global recognition without having to set up systems large enough to tackle international shipping and the costs associated with it.
When You Need to Stay Organized and Focused
When more orders start rolling in, you need to have more inventory processed which also ultimately requires more storage space.
A lot of business owners get it wrong here and the workspace becomes disorganized, resulting in unproductivity and delays. Unloading all this to the fulfillment center can help you focus on other areas of your business.
Many startup e-commerce business owners practice self-fulfillment during their early days, which is logical and understandable. But as a business continues to grow, managing them through self-fulfillment can become unsustainable and costly. At such a point, it's best to hand over to 3PLs who have the expertise and resources to supplement your business growth.
What does it mean when an order is in fulfillment?
Regardless of whether you're B2B or D2C, the sale isn't complete until the customer receives the goods. Order fulfillment is the process of completing a sales order to the specifications of the customer. In other words, the delivery of goods as promised at the time of sale. The status "in fulfillment" means that your order has been processed and is currently being prepared for shipment.
What is eCommerce order fulfillment?
The fulfillment component of your eCommerce business refers to all the processes that are put in motion after an order is received. Products are picked, packed, shipped, and delivered to the customer.
What are the six steps in the order fulfillment process?
Order fulfillment appears to be a one-time event when the package is delivered to the customer. However, from the company's perspective, this process looks very different, since it involves several backend operations.
The following steps are involved in fulfilling orders:
Receiving inventory shipments This refers to receiving incoming inventory, whether at a warehouse, distribution center, or a retail store.
Inventory storage Once everything is double-checked, employees can begin storing inventory in their proper places around the warehouse. Products should be kept organized to minimize travel time for product pickers.
Picking The fulfillment process officially begins when a customer places an order. When businesses have an ordering solution established, pickers are automatically alerted about every request.
Packing When the order's items are at the packing area, workers begin wrapping the products to ensure they aren't damaged during transportation.
Shipping When the package is sealed and given a shipping label, it is ready to be shipped to its final destination.
Returns processing Every retailer will experience a return at least once in their lifetimes for one reason or another. To clarify when and how returns can be initiated, businesses must implement comprehensive return policies.
What is a fulfillment strategy?
Simply put, a fulfillment strategy is a blanket term for business strategies deployed by a business to get products or services to the end consumer. Considering all the complicated parts of an ecommerce business, a fulfillment strategy must be updated (or created) if you are scaling your business for the first time or if years of steady growth are testing your company's ability to fulfill orders.
Following factors determine the fulfilment strategy:
Size of Business and Order Volume
How Sales Are Made and the Technology Involved
What is the order fulfillment rate?
Over a given period, usually 90 calendar days, fulfillment rate is the number of orders marked as shipped. This number is separate from the fill rate. Fill rate is the percentage of packages that have been successfully picked and packed; fulfillment rate refers to the number of orders that have been shipped.