The global e-commerce market continues to go from strength to strength, having recently seen its expansion accelerated during the coronavirus pandemic. To this end, total revenue in this market is projected to reach $3.98 trillion by the end of 2023, before evolving at an average CAGR of 11.35% between now and 2027. As a result, global e-commerce will be worth an impressive $6.12 trillion in four years’ time, as the demand for online shopping experiences rises exponentially. Successful order Fulfilment is central to any e-commerce strategy, especially one that looks to keep pace with increased demand. But what does this refer to and what’s involved in this? Here’s our guide to e-commerce fulfilment for small and medium-sized businesses.

Getting Started – What is E-commerce Fulfilment?

Let’s start with the basics; e-commerce fulfilment refers to the logistical process of distributing your products to those who have purchased them from you.

In this respect, it’s the final step in the logistics supply chain, while it’s arguably the most important from the perspective of driving customer loyalty and minimizing the financial impact of returns on your business.

This isn’t to say that returns aren’t a key part of fulfilment, of course, as you’ll need to factor reverse logistics into your wider e-commerce strategy and make the most of any investment that you’ve previously made in inventory.

OK – But What’s Involved in the Order Fulfilment Process?

When it comes to appraising the practical order fulfilment process, it’s important to note that there are several steps required to ensure that purchased goods reach your customers as quickly and efficiently as possible.

While it can be argued that order fulfilment strategies may vary slightly from one business to another, there are some universal principles and components to keep in mind. These include:

• Receiving Goods (or Materials) From Supplier: If you’re an importer of the products that you sell to customers, you’ll initially need to check the goods on receipt to ensure that you have the requisite quantity and quality. This will highlight any discrepancies and enable you to tackle these immediately, minimizing any disruption to your operation. The same principle applies to raw materials, which may be relevant if you manufacture goods for sale.

• Inventory Management: You’ll also need to develop a system for ordering and replenishing stock, whether you commit holding a fixed amount of inventory in storage or order import products as they’re purchased and ship them directly to the customer (referred to as drop-shipping). The key here is to balance your demand and storage costs, as holding too much stock increases the risk of product and financial loss (while holding too little can cause you to miss out on orders).

• Store Your Goods and Materials Adequately: Whether you receive inventory that’s ready for sale or raw materials, you’ll also need to be able to store these in an organized, safe and compliant space. This will allow for efficient picking and packing, while making it easier to carry out counts and quality control checks. If goods are perishable or vulnerable to certain conditions (such as dampness), you’ll need to factor this into your choice of storage space.

• Order Processing and Prior to Shipment: The sale of a product will trigger a chain reaction in the e-commerce fulfilment chain, with this including the picking, packing and shipment of the order in full. Of course, the precise system will vary from one business to another, but many e-commerce brands will use a comprehensive order management system (OMS) to manage this and other parts of the process seamlessly.

• Organize Shipments: Once again, how you organize shipments will vary from one business to another, depending on the size of the venture in question, the nature of the products being shipped and the frequency with which items are sold. For example, you may have goods collected in bulk by an organized daily shipment pick up, or enter into a partnership with an on-call courier. The key is to find the best solution for you.

• Don’t Forget About the Returns Process: While the average rate of returns varies across different industries, it’s estimated that 25% of all Ecommerce orders are ultimately returned to retailers. While you’ll want to have a viable strategy that minimizes this rate, you’ll also have to create a manageable and efficient returns process that caps your financial losses and ensures customer satisfaction.

The Costs of E-commerce Fulfilment and Outsourcing

Ticking these boxes can be challenging for e-commerce entrepreneurs, especially those of you who don’t count logistics or warehousing among your core competencies.

What’s more, it’s crucial that you factor in the costs associated with ecommerce fulfilment, which may also be referred to as the cost of shipping your products directly to customers. This can be an incredibly complex process, and one that may vary depending on a number of different factors. These include:

• The Precise Number of Orders That You’re Shipping 
• How Many Items are Included in Each One 
• The Physical Size, Weight and Dimensions of your Inventory 

• The Distances That Shipments Have to Cover

So, even if you work from a basic premise that it costs approximately $0.12 per item, it can be hard to calculate the total cost of fulfilment and how this impacts your bottom line. This is why the concept of outsourcing e-commerce fulfilment is so popular across a wide range of markets.

But how exactly does this differ from in-house logistics? Well, e-commerce fulfilment providers like Salesupply will store your inventory in relevant fulfilment centers around the world, before organizing shipments via a selection of reputable global and local carriers at beneficial hard to match rates.

Typically, they’ll also offer fast integration with the most widely used e-commerce platforms like Shopify and WooCommerce, while focusing on reducing the timeframes associated with both local and international deliveries and minimizing costs.

Most importantly, they enable you to tap into genuine expertise and an existing, global network of couriers and fulfilment centers. At the same time, they’ll present their costs and make these as transparent as possible, including any fees that may be charged in instances where inventory is stored for an extended period of time.

The Last Word

As we can see, the e-commerce fulfilment process features a number of steps and potentially complex costs, while it also has a significant impact on your eventual profit margin on every product sold.

After all, your business will continue to bleed money if the cost of shipping goods is higher than their retail value, and this is without factoring in the inevitable cost of returns.

So, although choosing whether to outsource e-commerce fulfilment is a personal one, it’s highly recommended if you ship large volumes of products regularly or continue to scale at a significant rate.

In the case of aforementioned providers like Salesuppy, you can even outsource the management of your returns and minimize your operational costs further. This is a huge boon, and one that can drive your profit margins a little higher over time.

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