Chapter 5: Choosing an Order Fulfillment Method for eCommerce

Order fulfillment is the process of getting your products to your customers. It involves three key steps: receiving inventory, processing customers’ orders and shipping orders to customers. You can fulfill orders in many different ways, including shipping items directly from your warehouse or working with a third-party fulfillment service. Regardless, your fulfillment method should enable you to meet your customers’ demands for fast delivery and accuracy. Over a third of customers cancel online orders due to slow delivery times, so it’s critical to select an efficient process.

In this last chapter, we’ll explore the different types of order fulfillment options and factors to consider when selecting the best method for your business.

What to Consider

Before deciding to keep inventory in-house or use a fulfillment service, it’s essential to consider the following factors:

  • How much space you need for your inventory
  • Your company’s short-term and long-term goals
  • If you have enough employees to perform order fulfillment
  • The warehouse location and whether it’s close enough to customers to offer fast shipping
  • Whether the warehouse is secure and has backup power
  • The cost of the fulfillment method and how it’ll impact your bottom line

If you’re considering partnering with an order fulfillment provider, make sure it offers the services you need and integrates with your eCommerce platform.

The Different Order Fulfillment Strategies

The ultimate goal of order fulfillment is to get accurate orders to customers as quickly as possible. Since no two companies are the same, you need to think about how your unique business will accomplish accurate, speedy order fulfillment. Consider the following fulfillment methods and imagine how each one fits your company and your customers:

1. In-House

In-house order fulfillment means you and your employees complete every step of fulfilling customers’ orders in your own warehouse. eCommerce companies with low sales volumes or businesses just starting out may choose this option to save money and then outsource order fulfillment as they grow. For example, people who use Etsy to sell goods often complete order fulfillment at home.

Larger companies may also select in-house order fulfillment to have complete control over the whole process. With in-house order fulfillment, you may need warehouse space to hold your inventory; warehouse equipment; employees to handle receiving, picking, packing and shipping tasks; and an efficient inventory management system.

2. Third-Party Logistics

A third-party logistics provider (3PL) is a company that handles order fulfillment for you. With this option, you’ll send goods to the 3PL’s warehouse rather than keep them in your own space. The 3PL’s employees will then stock your items and pick, pack and ship them when they receive customers’ orders from your eCommerce store. In general, 3PLs use an efficient picking and packing system, so orders get delivered without delay.

You might work with a 3PL if you’re spending too much time fulfilling customers’ orders or are running out of room for your inventory. Although partnering with a 3PL costs money, it gives you the freedom to focus on marketing efforts and growing your business.

3. Fulfillment by Amazon

If you register as an Amazon seller, you can send your products to an Amazon fulfillment center. With fulfillment by Amazon (FBA), Amazon’s employees will store, pick, pack and ship your items. FBA also provides customer service for your products, and your inventory will be eligible for Amazon Prime’s free two-day shipping.

You might choose FBA if you want to reach more customers by offering your products on Amazon. With FBA, you can rest assured your products are getting delivered quickly.

4. Dropshipping

With dropshipping, you won’t keep any inventory on hand or have to ship products to a fulfillment center. When a customer buys an item from your online store, you’ll purchase it from a supplier, such as a manufacturer or a distributor. In other words, you’ll only pay for items you sell. The supplier will then pick, pack and ship the order to the customer.

Dropshipping involves low overhead costs and is easy to set up, making it a popular choice for beginners.

5. Combination

You may decide to combine order fulfillment methods if it meets your needs better. For example, you might offer in-house order fulfillment for customized items and use a 3PL for large products you can’t store in your warehouse. You might also outsource order fulfillment during the holiday season so you can manage an influx of orders more easily. Overall, if you need greater flexibility, you might think about ways to combine the above options.

No matter what order fulfillment method you choose, you need a way to track orders and shipments. Finale Inventory offers order management capabilities, so you can keep a close eye on your customers’ orders and ensure they’re filled on time.

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