The Ecommerce Order Fulfillment Process
A Case Study in Logistics Efficiency
The shopping experience has shifted drastically from what it was just ten years ago, and supply chains have had to adjust to meet consumers’ high standards. Today’s shoppers expect their items to arrive on their doorstep quickly and they want the ability to track their items every step of the way. Shippers, including UncommonGoods, an online and catalog retailer, have to find a cost-effective way to meet those demands and optimize their ecommerce fulfillment processes.
What is Order Fulfillment?
When customers place an order online or through a catalog, they give little thought to the process that brings their goods to them. But ecommerce order fulfillment is a complex process, and every step must be completed accurately to ensure customers get their exact order quickly.
The order fulfillment process requires warehouse organization, order management, strong picking, packing and shipping processes, and a high level of visibility and customer communication. As a third-party logistics provider, ITS Logistics leverages multiple technologies to enable faster and more efficient services and provides visibility—which, in turn, improves the ordering process for your customers.
Key Order Fulfillment Considerations
The order fulfillment process begins with receiving an order and ends with delivering it to the customer, but it is the complex steps in the middle that determine the overall success of each transaction.
The Seven Key Components of the Order Fulfillment Process:
Inbound Inventory Management: Inventory management for ecommerce is essential for online businesses. Products online retailers ship are typically sourced from multiple locations, and ecommerce retailers rely on seamless integration between their order management systems and their suppliers.
Visibility and Tracking: A high-level of visibility helps shippers manage inbound inventory as well as outbound orders. Increased connectivity allows shippers to update inventory levels, track shipments in real time and provide regular updates to customers. It can also help shippers get out ahead of any supply chain disruptions.
Warehousing Strategies: Strategically positioning warehouses allows shippers to get products to customers quickly without having to pay for expensive shipping upgrades. More and more companies are utilizing multiple warehouses to ensure they can meet customer’s demands throughout the country.
Picking and Packing: Efficient pick and pack fulfillment processes help ensure the orders your customers receive are accurate, in good condition and on time. It can also facilitate same-day shipping and get orders to their final destination as quickly as possible.
Shipping Methods: Once customers place their orders, they’re excited for their items to arrive and typically want them as fast as possible. Using data and shipping algorithms, shippers can determine the optimal shipping method based on shipping rates, the customer’s location, the warehouse location, transit time between the two, and the promised delivery date.
Customer Communication: Customers have gotten used to regular status updates, and sharing details about deliveries can keep customers engaged.
Returns and Refunds: If customers need to make a return, they want the process to be as fast and easy as it was to place the order in the first place. Shippers need to have a reverse logistics plan in place to ensure returns are processed quickly and correctly.
Fulfillment Activity within the Warehouse
A large part of fulfillment operations takes place within the warehouse. On the inbound inventory side, a strong logistics partner has systems and processes to match the actual number of items ordered with those received and inspect inventory to ensure no items were damaged. Before shelving the items, the 3PL should apply SKU or barcodes to items if they don’t have them and add all SKUs to its warehouse management software to track the location, counts and number of sales of each product.
SKU management is central to speeding deliveries, handling inventories and controlling costs. Efficient inventory storage and slotting patterns maximize the speed and accuracy of the order fulfillment process.
As part of the picking and packing process, individual items are taken from the shelves to an order packing station. The packing station should utilize a series of quality control checks to ensure the right items have been included. Then, items are packed, sealed and moved to the shipping station.
The Shipping Process
After an order has been picked and packed, it is moved to a shipping station to prep it for delivery to the end customer. Within the shipping station, a package weight is calculated and the optimal shipping method is determined. The shipping station also updates the order status so sellers know when orders have been shipped, and so that those sellers and their customers can track the order to the point of delivery.
Common Challenges, Uncommon Solutions
For UncommonGoods—an online retailer that sells products created by artisans and artists through a catalog and ecommerce site—providing a positive customer experience is a top priority and that starts with a perfect ordering process. This not only means the right product, but that it ships immediately and arrives in a perfect condition.
To ensure its customers throughout the country could receive their items quickly and lower shipping rates, the unique retailer needed to find efficient national distribution. “While our customers come to us for our creatively designed, unique products, we know that to remain competitive in retail, we must provide fast, low-cost fulfillment and shipping,” said Thomas Epting, Co-Founder and COO, UncommonGoods.
Through its fulfillment services, ITS has improved UncommonGoods’ supply chain and reduced the amount of time it takes for orders to reach their customers while also increasing the efficiency of orders from vendors. What’s more, ITS provides logistics solutions at a variable cost to improve efficiency during the retailer’s peak and non-peak seasons.
Before its partnership with ITS Logistics, UncommonGoods shipped all of its inventoried products from its distribution center in Brooklyn, New York.
As part of its services, ITS opened a West Coast distribution center for UncommonGoods, decreasing the overall time it takes for the retailer to move its products to their customers on the West Coast and enabling same-day shipping. Customers receive immediate notification when the order ships with full visibility to where the order is, until final delivery.
“We worked directly with UncommonGoods to custom engineer an improved pick and pack process to handle the seasonality of their business,” said Ryan Martin, President of Warehouse and Distribution for ITS Logistics.
In addition to shipping orders directly to many of UncommonGoods’ customers on the West Coast and in neighboring states, ITS serves as a consolidation point for inbound shipments from UncommonGoods vendors on the West Coast who are shipping to its East Coast distribution center, improving their overall efficiency in their national supply chain network and reducing UncommonGoods’ inbound transportation costs.
“Our partnership allows us to have a much shorter time in transit to our customers in the West, which improves customer experience and lowers transportation costs,” Epting said. “We also take some of the pressure of a very sharp holiday peak season off of our Brooklyn operation.”
During the holidays, volumes increase more than thirty-fold, which exponentially increases the space and labor requirements. ITS has created a logistics solution that allows UncommonGoods to flex up and down as needed.
ITS also offers a managed transportation solution, which has reduced transit time for customers’ orders, lowered outbound transportation costs and improved the customer experience. The positive customer response has led directly to increased business and order volumes.
Both parties plan to grow their relationship, with UncommonGoods trusting ITS with a larger selection of SKUs and inventory. As SKUs and inventory changes, ITS will continually improve its ecommerce and pick-and-pack operations to expand alongside UncommonGoods’ needs.
Ultimately, ITS has reduced the overall product time in transit to their customers, and allowed UncommonGoods to more efficiently scale their operation for the peak season providing a variable cost solution.