Order Fulfillment Services Overview: Gives you a comprehensive understanding of what order fulfillment is

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With the continuous development of e-commerce and the expansion of the network application field, modern enterprises should also adapt to this change from various aspects, while making full use of the good platform provided by e-commerce to complete efficient business operations. Order fulfillment is a prerequisite for enterprises to complete their online marketing operations efficiently.

Definition of order fulfillment

Order fulfillment refers to the process of accepting customer orders, processing optimization, item picking, order consolidation and packaging. It includes the physical manipulation of items and the corresponding information processing.

It determines the efficiency and accuracy of order execution and is responsible for feedback on inventory availability, which ultimately determines customer satisfaction and is the core competitiveness of a distribution company.

Order fulfillment process

  • From the customer's point of view, the order fulfillment process is the processing of the customer's order.
  • From the manufacturer's point of view, the order fulfillment process is the whole process from accepting an order to completing it.

Types of order fulfillment systems

1. Self-fulfillment

Self-fulfillment is internal order fulfillment, which is usually suitable for a small local area, with low product cost, convenient storage, and no need to pay high warehousing and distribution fees. This means that you have complete control over the quality of your product and fulfillment, and you can efficiently handle every step of the way the product reaches the customer, ensuring that the product is in the best possible condition when it reaches the customer.

However, self-fulfillment is difficult to realize the self-strength of the brand, which is time-consuming and labor-intensive in the development process, which is not conducive to long-term development.

2. Dropshipping

With dropshipping strategy, every part of the fulfillment process is handled by the dropshipping supplier or manufacturer. In this way, Dropshipping simplifies a large part of the logistics value chain; there is no longer a need to worry about shipping goods from the manufacturer to another logistics center or temporary warehouse location.

But this kind of fulfillment service, you have no control over the quality, warehousing and distribution of the product, and you cannot get the customer's experience of the product in the first place, so it is not conducive to long-term development.

3. Third-party 3pl and order fulfillment service providers

To save time and money while maintaining control over the packaging, quality, and delivery of products, many fast-growing Shopify stores partner with third parties. This is a completely outsourced order fulfillment service to 3rd party 3pl and order fulfillment service providers.

Order fulfillment service providers have powerful resources and technologies to provide enterprises with efficient and professional order fulfillment solutions.

Order fulfillment strategy

Businesses have several choices when deciding on an order fulfillment strategy. Depending on the skills and resources available in your company, you may prefer either internal fulfillment or outsourced fulfillment.

If you have the means in-house, you gain more control over operations and costs by handling fulfillment internally. If your company’s in-house talent and resources are somewhere in the middle, you may want to opt for a hybrid model to give you some of the benefits of both worlds.

If fulfillment and logistic skills and resources are scarce, you may be better off outsourcing order fulfillment completely. This allows your team to focus its efforts on producing and selling the product, and it often leads to more predictability. With internal fulfillment, you employ the staff, own the warehouse, and have to make sure every order goes out perfectly. When you outsource order fulfillment, many of those challenges are no longer your problem.

The difference between traditional sales and order fulfillment

Since e-commerce has changed the traditional way of doing business from on-site viewing and ordering to online booking in online marketing, order fulfillment has become more and more important and difficult. The importance of order fulfillment is reflected in the fact that it is the last link between the enterprise and the customer to complete the transaction, and the good or bad order fulfillment is directly related to the reputation of the enterprise and affects the satisfaction and loyalty of consumers; while the difficulty is caused by the change of business methods and the change of people's concept of transaction in the e-commerce environment. Then, under the network marketing environment, order fulfillment has changed in the following aspects compared with the traditional sales method.

Changes in production methods

Traditional retail management is to produce goods first and then sell them to customers, i.e., the goods are available first and then sold. E-commerce, on the other hand, uses a production-to-order approach, and many personalized custom production. This presents companies with new challenges in terms of product supply. It not only requires the enterprise and all its supply chain to accurately predict customer requirements, control inventory, and an agile supply chain can quickly respond to customer changes, electronic supply chain and collaborative business has become the key to improve the performance of the supply chain, that is, "pull" production method to "push" production method. The "pull" production method to "push" production method change.

Change from pick-up to delivery

Traditional retail is the customer to the retail store to buy and take away, is the customer's own home to pick up; and e-commerce sales when the distance to complete the business, the enterprise must be delivered to the door. This makes the enterprise in the production and delivery of door-to-door challenges, both to ensure the immediacy of delivery, but also to reduce the cost of delivery, because B2C e-commerce is often faced with small orders, low-value transactions, the high cost of delivery is unable to transport.

on-site service to remote service transformation

Traditional retail is the customer to the retail store to buy products, service personnel on-site service. E-commerce distribution logistics is generally undertaken by a third-party logistics company, and e-commerce transactions are achieved remotely, which makes the enterprise in the production of products technical support and the traditional retail differences. In the remote service instead of on-site service process enterprises will assume more training and guidance tasks.

Basic elements of an order fulfillment system

Network and logistics are the basic elements supporting the development of e-commerce. The order fulfillment system of e-commerce can be divided into order generation, order processing, order picking, order distribution and other major links, and its core is still logistics. Therefore, the timeliness of distribution becomes the key content of e-commerce order fulfillment.

The basic operation flow of order fulfillment center

Receiving goods

After the goods arrive at the order fulfillment center, inspection, verification, inventory, storage and other operations should be completed. Except for a few varieties, the general goods whose purchase volume is not, but more items arrive every day. Therefore, in the receiving link, special attention should be paid to the problem of fast receiving of many varieties.

Warehousing

Once the goods are received at the fulfillment center, they are recorded or sent for short-term or long-term storage. Order fulfillment services can be synchronized with fulfillment warehousing services, which can support longer-term storage and inventory management of goods.

Picking and packing

Picking and packing is a key step in order fulfillment and determines what kind of package the customer receives: whether the product is intact and whether the product is the correct one for the customer's purchase. A good pick and pack warehouse can save you costs (time costs, product costs and shipping costs).

Distribution

Distribution is the process of completing the goods from the fulfillment center to the consumer as required by the order, and is generally required to be done by region and route. The current method used is mainly third-party distribution. In the long run, the use of three-party distribution will be the mainstream. The distribution process has various forms of participation such as sea freight, air freight and logistics, which makes the whole process of order fulfillment more efficient.

Return of goods

Returning goods is an unavoidable operation in the process of order fulfillment. For the processing of returns, the first thing to consider is the business level of processing. At the logistics level, there is also the issue of returning goods to the shelves. Returns processing includes quality control checks and sorting of returned products accordingly. The returned products are then re-stocked, returned to the supplier or manufacturer for a refund or credit from the distributor, or sent to a recycling center.

Characteristics and difficulties of order fulfillment

E-commerce includes almost all industries, but at present, mainly concentrated in 3C electronics, daily necessities, books, clothing and other fields, especially 3C electronics, books, clothing is the most mature development. The main feature of e-commerce orders is the large number of orders, but the order quantity of each order is small and the delivery quantity is small. For most comprehensive e-commerce enterprises, the main difficulty of order processing is the large number, wide distribution, many varieties, short delivery time, randomness, etc.

Number of orders

The daily order quantity of a mature large integrated e-commerce enterprise is mostly 50,000~200,000 (may break through to more than 300,000 in the future). The daily orders are more than 50,000, and some are already close to 200,000.

As for the shape of orders, the situation of each industry is more different. A large number of orders, to order fulfillment brings great difficulties. Several large e-commerce platforms, the daily processing orders of thousands of employees. Low efficiency, high error rate, low satisfaction rate and high cost are the main problems of domestic B2C order fulfillment.

SKU number

The number of SKU of B2C logistics system is also a difficult issue. General B2B distribution center, such as a typical pharmaceutical distribution center, SKU in about 10 000, B2C distribution center SKU number is very different from this. Books generally require more than 500,000 SKUs, even daily necessities require more than 100,000 SKUs, and some even require more than 200,000 SKUs. This poses a huge challenge to the design and operation of distribution centers.

Response time

Order fulfillment business generally requires a short response time to meet the demands of market competition. This urgency of response time creates great difficulties for order fulfillment.

Customer response time is determined by market competition. Some companies currently make the faster the better as the basis for their business to win the competition, and excessively compress the time for order fulfillment, which is debatable. A more scientific view is that customer response time should be in line with cost advantages and competitive advantages, not the faster the better.

Randomness

The randomness of orders includes several aspects, of which randomness by geographical distribution and randomness by time distribution are the two key aspects. The former is mainly reflected in the different consumption habits of each region, while the latter is mainly related to holiday promotions and different order habits of customers. This unevenness of order distribution generated by randomness poses a great challenge to system design and order fulfillment. To solve this problem, it may be more economical to choose extended delivery times.

Elements that support electronic order fulfillment technology

  • Continuity. (Information transfer provides intelligence)
  • Visualization (visibility system)
  • Dynamic optimization (real time)

Benefits of choosing Angixin

Angetion, as a professional order fulfillment service provider, can continuously enhance the development of your business.

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