Ecommerce fulfillment is the process of storing inventory, packing items, shipping orders, and managing returns. This in-depth guide covers everything you need to know about ecommerce fulfillment, including quick tips and long-term strategies for success.
You’ll also learn more about some tools that will make your life easier as you’re fulfilling orders.
Why Ecommerce Fulfillment Is So Important
There’s a lot that needs to happen between the time a customer orders something from your online store to the moment that order is delivered to their door.
Effective fulfillment ensures that items are shipped quickly and accurately without costing you a fortune. In today’s world, customers expect online orders to be delivered within two days of the purchase. You can thank Amazon for this.
If your ecommerce operation can’t deliver products fast and accurately, customers won’t be satisfied, and they’ll stop buying from you in the future. Conversely, quick and accurate deliveries keep your customers happy—ensuring they’ll spend more money in the long run.
Cost is another main reason why you need to prioritize ecommerce fulfillment. There are two ways to look at this. You need to look at cost in terms of dollars spent on fulfillment as well as time associated with fulfilling orders.
If your fulfillment operation isn’t tight, it could be costing you tens of thousands of dollars in added costs. Even if you’re handling fulfillment on your own to save some money, you’ll never be able to scale your brand if you’re spending all day fulfilling orders.
In a perfect world, your fulfillment will be automated, fast, and cost-efficient. You won’t even have to touch your inventory, and your profit margins will be substantial.
Here’s a quick case study that showcases the importance of ecommerce fulfillment optimization. It’s the story of Uncommon Goods—a New York-based retailer that sells unique and creative gifts online.
This company understood the importance of delivering fast and low-cost shipping to customers but struggled with supply chain issues. All of the inventory was being shipped from a single distribution center in Brooklyn, which made it harder to quickly deliver goods nationwide at an affordable price.
But by partnering with a fulfillment company, Uncommon Goods gained access to a west coast fulfillment center as well. This helped lower shipping costs, improve the customer experience, and even helped them accommodate busy seasons where sales increased by thirty-fold.
Quick Tips to Improve Ecommerce Fulfillment Today
Ecommerce fulfillment might feel a bit overwhelming, especially for new ecommerce stores that don’t have a ton of experience with this process. Even if you’ve been in business for a while, your fulfillment strategy may not be working as well as you hoped—particularly as your sales scale and fulfillment requirements become more complex.
Fortunately, there are some things you can do right that will make your life easier.
The quick tips below require minimal effort, and they’ll immediately have a positive impact on your ecommerce fulfillment process.
Tip #1 — Outsource Ecommerce Fulfillment
The easiest way to optimize your fulfillment strategy is by outsourcing the process entirely. Most ecommerce stores don’t have the in-house capacity to truly handle fulfillment on their own.
Many new ecommerce store owners run the business from their homes, small offices, or out of an existing retail store. Handling fulfillment on your own might be fine in the beginning when you only have a dozen or so orders per week. But as sales scale, it quickly becomes difficult to manage.
Rather than renting extra space for inventory storage and hiring more staff to pick and pack products, you can let a third-party service handle all of this for a fraction of the price.
While there are lots of great ecommerce fulfillment solutions on the market, Shopify Fulfillment Network is the best option.
Getting started is easy.
Just reach out and speak with an expert to see if these fulfillment services are right for you and your business. Shopify will run a quick evaluation to ensure compatibility.
Then it’s just a matter of adding the Shopify Fulfillment Network app to your site and selecting which products in your inventory list you want them to fulfill.
From here, you just have to make sure your inventory is being delivered to a Shopify fulfillment center, and they’ll handle the rest. You can focus on selling products and growing your store, knowing that all of your orders are being fulfilled quickly and accurately.
Setting up your operation this way means you never have to touch your inventory, pack a box, or print a shipping label again. Even returns will be handled for you.
Tip #2 — Use Technology for Inventory Management
You need some type of software to help you manage inventory. This will give you real-time access to what products you have on hand, what’s been ordered, and the fulfillment status of every order.
Having the right tools at your disposal ensures that you always have enough inventory on-hand to meet customer demands.
If you’re trying to track this stuff manually or using an eyeball test by simply looking at boxes in your warehouse, it’s impossible to stay organized. Inventory management technology is crucial for ecommerce shops that have busy seasons and unpredictable sales cycles.
Fortunately, Shopify and Shopify Fulfillment Network make this easy. Everything is seamlessly connected with your online store. You can even use the technology to manage orders and fulfill sales across all of your sales channels—ensuring that nothing slips through the cracks and your inventory is 100% accurate at all times.
Tip #3 — Find Fulfillment Partners Close to Your Customers
One tricky part of managing fulfillment from a single location is the shipping.
If your business is based in San Diego, but you need to deliver products to customers in New York and Florida, shipping is going to be expensive—especially if you’re paying for shipping on your own and don’t have access to bulk pricing offered by shipping providers.
That’s another reason why it makes sense to outsource and partner with a fulfillment service.
Shopify Fulfillment Network has distribution centers located nationwide. So your inventory will be pulled from the distribution center that’s closest to the customer—ensuring a low-cost and timely delivery.
Having your inventory at multiple locations is great for returns as well. Products will get sent back to a nearby facility, where Shopify Fulfillment Network will inspect the items, repackage sellable products, and update your inventory accordingly.
Tip #4 — Send Confirmation Updates to Your Customers
Smartphones and modern technology have made everyone very impatient. Consumers want information immediately.
I’m sure you can relate to this on a personal level. Whenever you order something online, you’re going to check its shipping status and track the delivery—sometimes even before a shipping label is created.
Give your customers what they want, and send them updates throughout the fulfillment process.
As soon as the order gets placed, you should send a confirmation email with the order number. You can also send the tracking number when it becomes available and even let them know when the package has been shipped.
Customers want to know when items are out for delivery and when they’ve arrived. This helps them secure the package quickly before it’s damaged by the weather or taken by a porch pirate.
If you’re using Shopify as an ecommerce platform, you have access to Shopify Email as well. So it’s really easy to set up automated campaigns to keep your customers informed.
Tip #5 — Offer Two-Day Free Shipping
Amazon really changed the ecommerce game back in 2005 with its launch of Amazon Prime. The world was exposed to two-day free shipping at scale.
Previously, items would typically take a week or two to ship. If customers wanted things sooner, they had to pay a premium. Two-day shipping ten years ago could cost you anywhere from $20 to $50.
But all of that has changed. Now two-day free shipping is the bar. So if you can’t offer this to your customers, they’ll likely look elsewhere for whatever you’re selling.
With Shopify Fulfillment Network, you can market two-day free shipping on your site. They’ll even give you a “Shop Promise” badge to put on your site, highlighting your commitment to fast deliveries and reliable returns.
Your customers won’t have to pay extra for two-day free shipping, and neither will you.
Tip #6 — Use the Right Packaging
Choosing the right packaging for your products is crucial when it comes to ecommerce fulfillment.
Not every box is created equally. Depending on what you’re selling, you may need to include extra materials to ensure safe delivery. Nobody wants to receive a box that’s been torn and damaged—or worse, an item that’s been damaged during delivery.
If you sell multiple products across different categories, you’ll likely need different packaging for different product types.
For example, a shirt can’t be packaged in the same way as a wine glass. If you’re running a subscription box service, you should have each item placed a certain way in the box, so it’s presentable when customers open it.
Remember, the packaging is more than just a way to deliver an item—it’s also a representation of your brand. You should also have return-friendly packing, so it’s easy for your customers to send items back without any problems.
Long-Term Strategies For Ecommerce Fulfillment
Mastering your ecommerce fulfillment process takes time, and there are certain long-term initiatives that you need to consider. The strategies below require a bit more work on your end, but they’ll save you tens of thousands of dollars down the road.
Strategy #1 — Find Ways to Cut Costs
Saving money is obviously a top priority for every business. But with fulfillment, costs can add up quickly if you don’t keep an eye on things.
Unfortunately, your total cost per item sent likely won’t be optimized on day one. That’s ok.
Over time you need to monitor customer buying habits, track shipping costs, and see where every dime is being spent on fulfillment. Then you can look for unique opportunities to lower your costs.
For example, Shopify Fulfillment Network offers a straightforward pricing model. You just pay a fixed rate per item fulfilled based on the product’s weight.
However, the price per item decreases if there are multiple items in a single order.
So from a marketing and conversion standpoint, it will save you money if you can find ways to have customers order more products per order.
If the same customer buys two different products a week apart, it’s going to be much more expensive for you than if they purchased both at the same time.
Strategy #2 — Optimize Your Logistics
Logistics can be tough to manage as your product list grows and sales increase. Things become even more challenging if you’re expanding to new regions or countries.
Fortunately, Shopify Fulfillment Network offers fulfillment consultancy on your logistics.
You can get ongoing support to optimize your operations today, in six months, or even two years.
What happens if you want to start selling products to customers in Australia? How can you avoid unnecessary tariffs? These are the types of questions you need to ask yourself.
It takes time and a long history of data to crunch if you want to truly make optimal decisions, so don’t put this one off.
Strategy #3 — Plan For Scalability
Too many ecommerce companies fail to plan for the future. They make decisions based on today’s sales, and it ends up hurting them in the long run.
When you’re looking at different fulfillment solutions, partners, and strategies, you need to pick a direction that will help you scale on demand.
Using a combination of historical data plus future predictions can help. But those will always be just an estimate.
You need to update these predictions on a regular basis to ensure you’re prepared for a significant increase in orders.
Fortunately, Shopify Fulfillment Network offers free storage for all inventory that’s fulfilled within six months. So you can plan ahead for sales spikes or holiday promotions and keep a little extra on hand at various distribution centers.
They also offer exceptional reporting and analytics tools, so you always have accurate data at your disposal.
Next Steps
Ecommerce fulfillment has a direct impact on your bottom line and customer satisfaction. By outsourcing these efforts to third-party services, you’ll be able to save time, save money, and keep your customers happy. Shopify Fulfillment Network is an excellent option to consider.
You also need to make sure that your online store is running on a powerful and reliable backend service. Check out our reviews of the best ecommerce platforms for more information and guidance.
