E-commerce Fulfillment: The Ultimate FAQ Guide

If you want to skyrocket your online business through E-commerce fulfillment, then read this guide.

It covers everything that will help you achieve all your business goals.

This guide will take you through the basic concepts – from definition, how it works, benefits and maximizing profits through E-commerce fulfillment.

Let’s dive right in.

What is eCommerce Fulfillment?

An eCommerce fulfillment involves several activities that ensure your goods reach your final customers.

Such activities include taking your products to an eCommerce fulfillment center and packaging it appropriately.

It also involves shipping products to the final consumer and have a return policy in case of any defects on your products.

How does eCommerce Fulfillment Work?

To understand the working process of an eCommerce fulfillment, you have to understand the steps involved.

These steps are:

1. Ordering from your Manufacture

This step involves placing an order from your manufacturer and agreeing on the due date.

The agreement that you set up between you and your manufacturer determines the shipment method to use.

Some situations may force your e-commerce fulfillment center to pick your goods from the manufacturer to their premises.

You, therefore, have to ensure that your commerce fulfillment center has proper logistic solutions.

2. Product Receiving and Preparing an Inventory

From your manufacturer, the products arrive at your eCommerce fulfillment center.

The staff here pick your products and conduct a proper inventory on them.

Certain issues normally arise at the point of receiving your product and inventory preparation.

For instance, the lack of proper inventory results in no sales leading to financial loss.

There is also an issue with shrinkage.

Shrinkage refers to the occurrence of theft, breakage, and loss of your products.

A reputable e-fulfillment center gives you shrinkage allowance when you are signing a contract with them to minimize shrinkage.

Such a shrinkage allowance normally ranges between 2 and 10 percent of your total warehouse inventory.

It is important to consider certain aspects of your e-fulfillment center before selecting them.

For instance, your center should have a proper inventory record within two days upon receiving your order.

You need to access your inventory record remotely.

This allows you to understand your stock level in real-time and make adjustments where necessary.

Remote access minimizes the chances of your stock running out without replenishing it or having excess inventory.

The shrinkage allowance for your center should be minimal.

This gives your center credibility and assures you that your products remain the same while in a store.

3. Order Fulfillment – Picking, Packing, and Shipping

This is where the actual process takes place.

When you receive an order, your eCommerce fulfillment center picks the products for you, package them properly, and ships them to your customer’s destination.

Accuracy and turnaround period is critical in ensuring the success of this step.

Picking the right product, packing it using the correct packaging material, and shipping it to the right customer ensures accuracy.

Minimizing the turnaround period for your customer to receive their product in time.

This affects customer satisfaction and prevents their change of mind.

Having your eCommerce fulfillment warehouse at a central point to your customer.

This reduces the turnaround period, thus satisfying the customer.

4. Processing Return and Reverse Logistics

There are cases where a customer is not satisfied with the product they order or has some issues.

This necessitates a return of the product and a replacement if possible.

It is important to have a quick turnaround for your returns, facilitating a refund or replacement of the product to your customer.

There are several ways that your eCommerce fulfillment center can facilitate your return processing.

For instance, they need to have a faster turnaround period for your returns.

You can also allow them to handle your returns.

This gives you time to increase your sales while retaining the existing customers.

Which Pick Methods can I Employ in eCommerce Fulfillment Order?

There are different pick and pack methods available for selection in the eCommerce order fulfillment process.

The choice of which method to use depends on your preference and how you want your fulfillment process to operate.

Another consideration to make when selecting the pick method to use is your warehouse’s size and the number of staff you have.

These methods include:

· Piece Picking Method

The process of piece picking involves finishing one order at a time before moving to the next one.

Here you take the order invoice and move around the warehouse searching for that order’s products.

After collecting every item on the invoice, you start packing the products.

This is the best method to use if you have a small business to operate due to the few orders you receive per day.

· Batch Picking

The key consideration for this method is the organization of all the products into batches.

You then arrange each batch in the same location for picking.

The picking process involves checking on the different orders and picking products per the available batches.

When the product in one batch is needed for several orders, you go to that batch and select the required quantity.

This facilitates easy picking and movement around your warehouse.

It is the best method to use than the piece picking method if you are operating a small business.

· Zone Picking

This is the best method to use if you have a large business for your product.

In this method, you classify your warehouse into zones consisting of different products but are likely to pick together.

When an order comes in, you send pickers into the different zones to collect particulars of that order.

Once one picker has products in their zone, they forward it to the next zone pickers until the order picking is complete.

It is a complex process that can work effectively if you have management software to help you operate your business.

· Wave Picking

This method combines both zone and batch picking.

It involves pickers in a particular zone picking products as per the batches present in their zone.

Wave picking helps handle different orders at once since the different batches consist of products that fill different orders.

What are the Benefits of Using an eCommerce Fulfillment?

The key benefits you get when using an eCommerce fulfillment are:

• Low Shipping Cost

Various eCommerce fulfillment providers have a wide pool of shipping couriers to use depending on their cost.

This has the effect of reducing your shipping cost since they select one whose price is favorable.

The fact that they are shipping products for numerous people implies that they get a discount on their shipping cost.

This also favors you when you use their services.

· Lower Operating Cost

You get to eliminate various operating costs by using an eCommerce fulfillment.

For instance, your fulfillment center charges you a flat rate for storing your goods.

This is cheaper compared to renting your warehouse.

You also get to remove picking, packaging, and shipping costs from your side.

Most eCommerce fulfillment providers usually offer a flat rate charge for these services, which is minimal compared to handling them.

· Increases your Reach

The advantage of an eCommerce fulfillment is it allows you to have a huge client base.

You can use your provider’s services from anywhere in the world, provided they are in that location.

Therefore, it is important to consider the outreach level of your eCommerce fulfillment provider before selecting their services.

· Enhances your Customer Services

You can enhance your customer services by selecting the right eCommerce fulfillment providers.

Such a provider should have a lower turnaround time, package your product properly, and ensure correct address delivery.

You are likely to increase your customer by ensuring your eCommerce service provider has excellent customer care services.

· Relieves you of Certain Duties

You don’t have to package your product and ship it by yourself. Those are duties your provider handles on your behalf.

Therefore, you are in a position to focus solely on increasing your sales, which translates to an increase in profits.

What are the Disadvantages of eCommerce Fulfillment?

You are likely to experience the following limitations when using an eCommerce fulfillment.

· Delivery Mistakes

There is a possibility of your eCommerce fulfillment delivering your products to the wrong address.

An incorrect delivery delays the product from reaching the intended customers.

Such a delay may lead your customer to change their mind in certain cases resulting in a loss on your side.

· Lack of Personalization

Remember, you are not handling the picking and packaging process directly.

Instead, your provider is the one responsible for these activities.

This is because your products lack the personalization effect that you may want on your packaging.

For example, it may not be possible to brand your package uniquely before delivering it to your final customer.

Certain providers offer contracts that bind you to the activities that they handle; hence you cannot change such policies.

· Costly

ECommerce fulfillment can be costly to you.

This is true in situations where you don’t have immediate customers for your products, resulting in overstaying in the warehouse.

This increases the warehousing charges hence becomes a liability if you fail to find customers.

You can minimize this by conducting a proper analysis of the market and understanding its dynamics.

Are there Any Risks Associated with E-commerce fulfillment?

Yes. There are risks that you are likely to get when using eCommerce fulfillment. Such risks include:

· Shrinkage

Shrinkage is a risk that results from damage, loss, or theft of your products.

The effects of shrinkage are that you end up having fewer sales, which decreases your profit margin.

Most eCommerce fulfillment centers have a shrinkage allowance for their customers to cushion them on its effect.

However, it would be best if you minimized this risk to maximize your profitability.

You can achieve this by checking with a center that has the lowest shrinkage allowance possible.

Such a center handles your products safely, and you have a guarantee of maximizing your profit.

· Poor Customer Service

How you communicate with your customers says a lot if they are going to purchase your product.

In commerce fulfillment, part of this customer care service is not within your control but your eCommerce fulfillment provider.

If your provider has poor customer care services, then it runs a risk of affecting your customers.

It is therefore critical that you check how a particular provider handles their customers before engaging their services.

· Complicated Software

An eCommerce fulfillment works through the use of the software.

This reduces the need for your physical presence within the center.

However, if you don’t understand how the E-commerce fulfilment software operates, it becomes a challenge for you to enjoy the services.

You might have to hire another party to operate the software, which reduces your know-how on your stock.

The best option is to have software to fully understand or have a trusted person to handle it on your behalf.

What are the Costs Associated with E-commerce Fulfillment?

We can breakdown the cost associated with an eCommerce fulfillment as follows:

· Initial Setup Fees

This is a one-time fee that you pay to your fulfillment.

The amount you pay depends on your business’s complexity and how you want to customize your business.

Other factors that determine the initial set up cost include your type of stock, getting it from your supplier, and delivering to your customer.

· Receiving and Intake Cost

There is a need to have a process of receiving your product and stock-taking it.

Such processes attract a fee that varies depending on your eCommerce fulfillment provider.

This fee consists of all the services that your provider takes to manage your inventory.

This is from the time your inventory arrives at their warehouse to the time it gets to your final consumer.

Factors that affect this cost include the type of stock you have and your fulfillment center.

· Storage Fees

There is a need to store your stock once it reaches your eCommerce fulfillment center.

This storage attracts a fee from your fulfillment provider.

This fee depends on your product’s space and the type of provider that you engage for your services.

· Order Fulfillment Fee

This is a fee that your provider charges in the process of picking and packing your customer’s order.

The fee covers the activity of picking and packing your client’s order and the packaging material.

The order fulfillment fee can either be a flat rate or a base rate plus an extra cost.

A flat rate fee is constant regardless of the packing product.

A base rate fee is a constant fee plus an additional cost, which is a percentage depending on your product’s packing.

· Shipping Cost

The shipping cost is the cost of transporting your client’s order from the fulfillment center to your client’s destination.

Most eCommerce fulfillment centers provide logistics support for the goods to reach the clients’ destination.

You, therefore, have to pay for this cost before or after the shipment process.

It also varies depending on the fulfillment provider handling your cargo.

· Return Fees

The return fee is the cost of returning your client’s order from their premises to the warehouse of your fulfillment provider.

This depends on the type of order fulfillment center you are using, the return policy, and the kind of defect on your product.

· Account Management Charge

This is a flat rate charge that your provider offers for handling your accounts.

This charge covers all the customer-related services that your provider handles on your behalf.

It may be a flat rate charge or have a varying percentage depending on your provider’s preference.

How Long Does it take to Receive Goods in E-commerce Fulfillment?

How long it takes to receive your goods in an eCommerce fulfillment depends on your eCommerce fulfillment provider.

However, an effective provider should ship your product as soon as possible.

To achieve this, your provider should be in a strategic location close to its customers.

In most cases, an eCommerce fulfillment should deliver your products within three days.

Which Goods can I order Under E-commerce Fulfillment?

You can order virtually any product in an eCommerce fulfillment.

However, you need to ensure the product is legal within your jurisdiction.

You can order common products from an eCommerce fulfillment include cosmetics, apparel, electronics, and supplements.

Other products are pet accessories, toys, and accessories.

What entails E-commerce Fulfillment?

Ecommerce fulfillment entails several activities.

These activities include shipping your goods from your supplier to your eCommerce fulfillment provider’s warehouse.

It also involves storing the goods and pick and pack the goods for shipment to the final consumer.

These activities end when your customer either gets satisfied or returns the goods.

How does the Shipping of Goods Take Place in E-commerce Fulfillment?

There are different means that you can use to ship your products in an eCommerce fulfillment. Such means include road transport, rail transport,air freight and ocean freight.

Ocean and air shipment are ideal shipping methods of getting your products from your manufacturer.

Road transport is the common method of shipping your product from your order fulfillment provider to your customer.

Which Equipment Facilitates eCommerce Fulfillment in a Warehouse?

We can categories the equipment that you should have in your eCommerce fulfillment warehouse into the following categories:

· Storage Equipment

Storage equipment is what holds your product while it is in your warehouse.

You can have different storage equipment depending on the type of product you are handling.

Common storage ranges from the shelves that you place your goods, sacks, and other specialized equipment.

You have to consider your warehouse space before selecting the storage equipment to use.

· Material Handling and Transportation Equipment

Material handling equipment is used to move the cargo from one point to another within the warehouse.

It also includes the transportation machines for your goods from the supplier to the warehouse and within the warehouse.

Common material handling equipment here include lift trucks, cranes, and forklifts.

You can also have conveyor belts and walkie stackers to handle your goods.

Positioning Equipment

The function of this equipment is to hold your product in position when undergoing processing or manipulation.

Examples of such include hoists and clamps, and work tables.

· Packing Equipment

You have to package your product properly before shipping it to your customer.

For you to achieve this, you need appropriate tools and equipment.

Standard packing equipment include boxes, bags, packing tables, sealers, scales, and label printers.

Barcoding Equipment

This is a piece of essential equipment that facilitates the stocktaking of your products within the warehouse.

They help in knowing the volume of stock left in your warehouse.

Standard barcoding equipment that you should have include printers, barcode readers, and the applicable software.

You have to consider several aspects of your warehouse before deciding the right equipment to use.

For instance, you have to consider the warehouse layout and size.

The equipment you select should move within your warehouse with ease without interfering with its arrangement.

The management software for your warehouse should also be secure and easy to operate.

One should not be able to interfere with the software, and it should also enhance the performance of your warehouse.

Are there Inventory Storage Plans that I Can have for My ECommerce Fulfillment Warehouse?

Yes. There are different inventory storage plans that you can employ in your eCommerce fulfillment warehouse.

Proper inventory storage helps in minimizing product theft, breakage, and ensures the quality of your product.

Common methods available for selections include:

· Like with like Inventory Storage Method

This method involves planning your products depending on the color, size, and category.

That is, you can arrange products of the same colors or size in the same place.

This is a simple yet poor way of arranging your inventory.

This is because you can have different products of the same color or sizes together even if the products are other.

For instance, you can arrange machinery and toys together since they are of the same color or size.

This method can lead to loss or damage to your products.

It also slows down the picking and packing process for your goods, leading to delays in delivery.

· Chaotic Inventory Management

This method involves storing your products without particular order.

This arrangement leads to storing different products together.

You can have cosmetic products with consumer products together.

Operating this inventory storage method works best if you include software management, which can help you find each product’s location.

However, it is a method that can lead to slowing down the delivery of your customer’s product.

This is not what you should aim to achieve.

· Volume Inventory Storage

Volume inventory storage involves arranging the products as per their volume.

As such, you can place products that have a higher turnover close to where you are packing them.

If you have slow-moving products, you can place them further from the packing location.

The essence of this method is to reduce the packing time and movement of pickers within your warehouse.

It is the best method to use if you have a large business since it reduces the picking time for your product.

· Class Inventory Storage

Using this method entails having products of a particular class together.

The same class products have a common trait, like similar products or those that sell together.

You can also have a class with the same turnover rate or items you can pack in the same procedure.

The essence of this is to facilitate the picking and packing and packing process of your product.

· Mobile Shelf-based Storage

This is an inventory storage method that involves robots’ use to collect products from different shelves.

It helps in reducing the labor force in your warehouse and also to increase efficiency.

How do I select an Ideal Fulfillment Warehouse provider for My Business?

When selecting the best fulfillment warehouse provider for your business, you have to consider the following factors

· Economic Sense

The warehouse provider for your business should make economic sense when you engage them.

This should be in terms of the total cost they charge and the services they offer.

You also have to consider the shrinkage allowance that a particular warehouse provider gives you.

This should be as minimal as possible.

· Customer Expectation

You have to consider what your customers want and if your warehouse provider can safely handle them.

Your provider should also have the capabilities of packing the products properly and ship them to your customers.

Return Policy

Your return policy should be compatible with that of your warehouse provider.

This includes them having a schedule for shipping your clients; returns and space for packing these returns

How do I Start an ECommerce Fulfillment Warehouse?

Starting a functioning eCommerce fulfillment warehouse for your eCommerce order fulfillment involves the following:

· Understand your Warehouse Space

You have to understand the space that you need to establish your warehouse effectively.

Such a space should be sufficient for storing the goods that you will be receiving.

You also have to consider the other activities that will take place within your warehouse.

Such activities include space for receiving your goods, room to accommodate dead stock and returns, and packaging space.

If you have expectations of increasing the goods you are receiving in the future, you should have a space allowance for that too.

· Understand the needed Equipment

Equipment facilitates the effective handling of goods you receive into your warehouse.

There are four key equipment types that you need to consider for your warehouse.

They include storage equipment, material handling and packing equipment, transport, and positioning equipment.

The equipment you purchase should be relevant to your warehouse and facilitate its effective working.

· Automation of Repeating Processes

Some functions within your warehouse require minimal human interaction.

It would help if you automated such activities.

Also, you can check for activities that are repetitive and either automate or eliminate one function.

For instance, you can have a barcoding system to eliminate the need to repeat the counting process.

· Pick Path Optimization

You have to consider the pick path method you are to have for your warehouse.

Common pick path methods available are wave picking, zone picking, and batch picking.

You also have to consider having a linear warehouse where your staff can pick run to the closest shipping point.

While picking your orders, it is important to fulfill one order before moving to the next.

When storing goods in your warehouse, you should consider having goods that customers purchase together in the same storage area.

This ensures there is a seamless picking of your order.

· Warehouse Rules and Regulations

Rules and regulations establish a [proper working environment for your staff and show your organization’s level of organization.

When coming up with these regulations, you have to consider your workers’ safety and the workflow procedure.

You also have to establish the quality control standards that facilitate the operation of your warehouse.

Such measures can include how to report damaged and poor-quality products and how to store them.

· Training

Training impacts useful knowledge to your staff and helps in the smooth operation of your warehouse.

There are different levels of training that you can have for your workers.

For instance, you can train machine and equipment operators on how they are going to handle them.

You can also train customer service workers on how they are to communicate and treat clients.

Effective training minimizes warehouse accidents and maximizes the functionality of your warehouse.

· Having the Right Warehouse Management Software

It is an easy way of understanding what comes in and out of your warehouse.

You can also understand the volume of stock that are on different levels of your warehousing.

When searching for an effective warehouse management software, you have to consider certain elements.

They include key alerts, scalability, ease of integration, pick and pack, and workflow management protocols.

Which Best Order Packing Practices for ECommerce Order Fulfillment?

You can employ different order packing practices on your eCommerce order fulfillment, including:

· Rescanning Different Order Products

Tre is a need to rescan the order products before packing them.

This ensures your clients receive quality products when they order from you.

It also reduces returns if the products are of poor quality or are not what the client ordered.

· Correct Packaging Material

Always ensure you have the right packaging material for packaging your products.

That is, in terms of the material and size of the packaging.

Right packaging material facilitates the packaging process, which translates into reducing the time your clients receive their orders.

When selecting the right packing material, you have to include the infill instructions and relevant material. this enhances the packing process.

Is E-commerce Fulfillment the same as E-commerce Shipping?

No. eCommerce fulfillment is not the same as eCommerce shipping.

Ecommerce fulfillment entails several activities.

They include receiving your goods from your supplier, shipping them to the warehouse, picking and packing your customer order, and shipping them to them.

Ecommerce shipping entails all the activities necessary to transport goods from the warehouse to the customer’s location.

Ecommerce shipping is part of eCommerce fulfillment.

What are the Key Activities that must be Managed to Achieve World-class E-commerce Order Fulfillment?

If you want to achieve a world-class e-commerce order fulfillment, you have to manage the following activities keenly:

· Inventory Control

There is a lot about your inventory that you need to perfect for your eCommerce fulfillment to succeed.

Among the activities you have to bote here include having the right product and the right quantity.

This is to ensure you don’t run out of stock.

You can always arrange with your supplier to replenish your inventory when it is about to finish.

Inventory control also involves ensuring your stock is in good condition, and there is minimal interference with it.

That is, there is no theft or damage to your product.

It is important to have a proper record for your inventory, including knowing what leaves and what comes.

· Logistics

Logistics forms the backbone of a successful eC