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Order fulfillment is a big challenge for ecommerce businesses of all sizes, and optimizing the order fulfillment process is an ever-changing task. Online shopping customers are getting more demanding as businesses like Amazon offer free, quick delivery and excellent customer service. 

In fact, 88% of customers are more likely to shop with a brand that offers free delivery, and 83% are more likely to shop with a brand that offers regular customer contact. 

This is why optimizing the order fulfillment process is crucial for online stores, as customer expectations have gotten higher and higher. If you want to impress your customers, build brand loyalty and avoid bad reviews, you just need to keep up with customers' needs.

In this guide, I’ll outline eight tactics to optimize your order fulfillment process, so let’s dive in.

What Is The Order Fulfillment Process?

I talked about the global order fulfillment process before, but it’s important to define it so we know what we are talking about when discussing optimizing. 

The order fulfillment process covers every part of the order journey from the point of purchase to the customer receiving (and returning) the product and all the steps in between. The main steps are:

1. Stock management: The customer must know whether there is inventory before placing an order.

2. Receiving the order: Once the customer places an online order, it must be received by the warehouse or fulfillment center.

3. Warehouse management: The warehousing staff needs to know where the stock is, and if you are outsourcing the management, you need to integrate with their systems.

4. Picking and packing: Once the stock is located, the staff need to pick and pack the order, then the inventory management software needs to update.

5. Shipping and fulfillment: The packaged product must be sent to the customer. This might be outsourced to a third party or managed in-house. There may be multiple fulfillment options that third-party logistics (3PL) manage.

6. Customer service: The customer service team needs to know the status of the order, and the customer might also want to see when their product will arrive.

7. Returns: These are an inevitable part of ecommerce, and the customer needs to know how to return a product if it's not quite right.

All of these steps will be part of your order fulfillment strategy and need to be monitored and optimized regularly.

8 Easy Tactics To Optimize The Ecommerce Order Fulfillment Process

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1. Update and integrate all your systems 

The best way to optimize your ecommerce order fulfillment operations is to update your systems. Depending on the size of your business, there are different order fulfillment software options you can use to upgrade your workflow. 

Large enterprise online businesses could consider implementing ERP (Enterprise Resource Planning) software. The benefit of an ERP is everyone in your business can get good visibility of the order progress end to end, and it integrates all your various systems. 

But even smaller start-up ecommerce retailers could upgrade their order management software. Even the most basic OMS tools offer good visibility of the supply chain and customer orders and integrate with major ecommerce platforms such as Shopify. 

When you update your systems, choosing software that integrates with whatever systems you use is important. It is also a good idea to use software that can grow as your order volumes grow. This way, you aren’t paying for unnecessarily expensive software until you need to.

2. Improve customer visibility

Customers love knowing where their order is, and it can be very frustrating for customers if a shipment is late or lost and there is no explanation for where the order is. 

Even for international orders, the customer wants to know why an order is late or when it will be released from customs. It is also important that the customer service team track the status of the order, and the status of the order must be the same for both the customer service agent and the customer.

Luckily, it is quite simple to improve order visibility, as most order management systems also include customer tracking and integration with third-party shipping companies.

You should also choose a system that can automatically send updates to customers via email, text, or an app so customers know exactly when their order will arrive. This is excellent customer service, and it’s a small change you can make to have a big impact on the entire process.

3. Reduce overall shipping times

Over 90% of customers say that next-day shipping will increase the chance of them making a purchase with a brand. You are also competing with marketplaces such as Amazon, which have Prime shipping options offering same-day, 1-day, or 2-day delivery free for Prime members. 

The easiest way to get fast shipping times is to work with warehouses or third-party logistics companies (3PL) that can store your stock in multiple locations so the stock is closer to your customers. 

Another alternative is to embrace using Amazon FBA, so you can both take advantage of their fulfillment network and also have access to their 300 million customers.

4. Review your warehouse management

Using the right warehouse is important as the warehouse team will be the final point of contact between the product and the customer receiving the products. They will be responsible for picking the product quickly, packing it securely, and liaising with the delivery company. 

If you have many SKUs, it becomes even more important to know where your stock is and how to track it. There are a lot of steps here, and any delays can result in your parcel arriving a day later, which is a bad customer experience. 

It is also a good idea to choose warehouses that can store your inventory in multiple locations to reduce shipping times. Still, choosing a warehouse that integrates well with your fulfillment system is just as important. Having good visibility of the order's progress will help you solve any problems with the order and ensure it arrives on time.

5. Use data to optimize inventory levels

Having the perfect amount of inventory doesn’t just save you money in over or understocking issues. It also improves your order fulfillment. 

With a fully integrated inventory management system and order management system, you can give your customers real-time updates on stock levels. If you know where the stock is held, you can give real-time updates on shipping time. 

When you know where your stock is, you can automate the delivery time to the customers on the front end of your website. This gives the customer confidence that their item can be delivered within a certain time frame.

6. Measure your performance and improve it

Even if you have created what you think is the perfect fulfillment system, it could fall behind and disappoint your customers if you don’t keep on top of your performance. 

Some of the most important bits of data to track are:

  • Average shipping time
  • % of deliveries on time
  • Return or refund rate
  • Return reasons
  • Order accuracy

Tracking these KPIs, you can identify where you are falling behind and make improvements. This will help keep your supply chain cost-effective and also increase customer satisfaction.

Also, if you are doing well in any particular area, you could use it as a marketing tool by telling customers that 100% of your deliveries were delivered the next day for free. This is a great message to tell your customers.

7. Plan for customer returns

Customers are 62% more likely to purchase if you offer free returns, but you are much more likely to have increased returns by offering free returns. You can plan for this by improving your returns process. The best ways to improve your returns process are:

  • Have a super clear returns policy on your website.
  • Make the returns instructions easy to understand and easy to use.
  • Consider providing free shipping return labels.
  • Make sure your listings are showing accurate information.
  • Implement a quality inspection process to make returns quicker at the warehouse, and ensure more stock goes back on the shelf for sale.

8. Work with the best shipping companies

Different shipping companies offer different shipping speeds and rates for last-mile delivery

It is quite easy to change which company you use, and the best shippers will integrate well with your overall order management system and warehouse management system (WMS), giving you and the customer excellent visibility of the order. 

The best logistics providers will also be able to arrange pick-up times directly with your warehouse team, saving you the task of organizing delivery slots.

Consider using a fulfillment service or third-party fulfillment provider that can integrate with your warehouse and shipping company systems. Each provider will have a different workflow and shipping process, so the integration is important if you want your order fulfillment process to have no disruptions.

You can also reduce your shipping costs by changing providers, so it is worth reviewing your current costs to see if anything is too expensive.

Always Evolve To Stay Ahead Of The Competition

Your order fulfillment process should always evolve as new technology and trends emerge in ecommerce. A few years ago, next-day delivery was an expensive and luxury option, whereas now it is almost seen as standard as customer expectations have grown. 

By keeping your systems and processes up to date, you can optimize your order fulfillment process to make your customers love your brand and become loyal shoppers who buy from you again and again.

For more tips and strategies for order fulfillment and best practices for your ecommerce business, subscribe to The Ecomm Manager newsletter today.

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Teddy Smith
By Teddy Smith

Teddy Smith is an ecommerce brand founder and a former Senior Ecommerce Consultant for Accenture. He is also an independent ecommerce consultant, specializing in selling on Amazon and marketplaces. Teddy has 13 years of experience working with both enterprise and small scale ecommerce brands, and has provided over 3,000 hours of independent ecommerce consulting sessions.