What Are E-commerce Fulfillment Services And How To Choose One?

How to choose ecommerce Fulfillment services

The holistic E-commerce process involves more than just making a sale— it includes everything, from product development to marketing, operations, fulfillment, and more.

But do you know what’s the most challenging of them all— Order Fulfillment.

The reason is that as an E-commerce store, you need to be careful about inventory management and fulfilling the orders in time without compromising the quality.

Failing to do that can hamper your business profitability significantly.

In fact, if an order fails to reach its destination within two days of the estimated delivery date, 69% of shoppers are likely to avoid shopping from that retailer. This is why meeting and exceeding customer expectations is crucial.

And in this article, we’ll cover everything about E-commerce fulfillment services. Starting with the definition. 

What is E-Commerce Fulfillment?

E-commerce fulfillment is the end-to-end process of fulfilling an online order. It involves managing inventory, picking products from the warehouse, packaging them securely, and shipping them out on time to the customer’s specified destination.  

Here are the steps of E-commerce order fulfillment: 

Steps of ecommerce order fulfillment

Types Of E-commerce Order Fulfillment Models

Here are the types of E-commerce order fulfillment methods that you can choose from-

In-house order fulfillment

Inhouse order fulfillment

Assuming the responsibility of E-commerce fulfillment in-house can be a wise decision in some cases. By managing the process in-house, brands can earn a higher profit margin on each sale and maintain complete authority over the process. However, it requires substantial initial investment and recurring expenses. 

Even though managing the fulfillment process by yourself will provide you with better control over the process and quality, it can be complex and tiresome as the business grows and orders increase. Here are some reasons to avoid maintaining order fulfillment by yourself,

  1. High upfront costs: In-house e-commerce fulfillment requires a significant initial investment in equipment, software, and personnel, which can be a barrier for smaller businesses. 
  2. Increased workload: Managing the entire fulfillment process in-house can be time-consuming and labor-intensive, potentially detracting from other important aspects of the business. 
  3. Logistics complexity: Managing the logistics of e-commerce fulfillment requires expertise and knowledge that not all businesses may possess. 
  4. Risk of errors: With in-house e-commerce fulfillment, there is an increased risk of errors such as shipping delays, incorrect orders, and inventory management mistakes, which can result in negative customer experiences and damage the business’s reputation.

Third-party fulfillment

Third party fulfillment services

Under the third-party fulfillment model, E-commerce brands delegate the responsibility of inventory storage and transportation to a third-party provider. While the business retains control over the product quality, the expenses associated with shipping and handling are passed on to the external vendor.

When you opt for a third-party fulfillment model, you get the following benefits:

Reduced upfront costs: Outsourcing E-commerce fulfillment can save businesses a significant amount of money by eliminating the need to invest in equipment, software, and personnel required for managing the fulfillment process in-house. 

Access to expertise: Third-party providers specialize in E-commerce fulfillment, which means that they have the necessary knowledge, expertise, and resources to handle the entire process efficiently and effectively. 

Scalability: As the business grows and order volume increases, third-party providers can easily scale up their operations to accommodate the growing demand without requiring additional investment from the business. 

Streamlined logistics: Third-party providers typically have established networks of warehouses and distribution centers, which can help reduce shipping costs and streamline the logistics of e-commerce fulfillment. 

Time-saving: By outsourcing e-commerce fulfillment, businesses can focus on other critical aspects of the business, such as product development, marketing, and customer service, which can help drive growth and profitability. 

Lower risk of errors: Third-party providers are experienced in managing the e-commerce fulfillment process, which can help reduce the risk of errors such as shipping delays, incorrect orders, and inventory management mistakes, resulting in a better customer experience.

However, just like any other model, there are a few disadvantages to this too. Here are some of the difficulties you might face while working with a 3PL service provider: 

Communication challenges: Coordination between the business and the third-party provider can be challenging, particularly if the business requires real-time updates on order status, inventory levels, and delivery tracking. 

Dependency: Outsourcing E-commerce fulfillment can create a dependency on the third-party provider, making it difficult for the business to switch providers or bring the fulfillment process back in-house if necessary.

Additional costs: While outsourcing E-commerce fulfillment can save on upfront costs, businesses must pay for the services provided by the third-party provider, which can add up to a significant expense over time.

Dropshipping

Dropshipping is a retail fulfillment method in which a store doesn’t keep the products they sell in stock. Instead, the store acquires the product from a third party and arranges for it to be shipped directly to the customer. Consequently, the seller is not responsible for handling the product directly.

This method is often adopted by startups and small businesses seeking to sell products without incurring substantial upfront costs. It is easy to start and has low overhead costs, although profit margins are generally lower due to the additional costs of working with a third-party supplier.

How does dropshipping works

 

Why do you need an e-commerce fulfillment service provider?

If you are contemplating partnering with a third-party E-commerce fulfillment service provider, here are a few reasons for you: 

You don’t have the fulfillment expertise in-house

Managing inbound and outbound logistics can be challenging, and running an E-commerce business requires managing multiple interconnected processes. From managing orders and inventory to preparing for peak seasons, fulfillment companies have the expertise to handle it all. 

A single fulfillment center can handle operations for numerous E-commerce businesses and ship millions of orders regularly. This extensive experience and high volume make them valuable strategic partners. 

Moreover, fulfillment companies can help E-commerce businesses achieve greater efficiencies in various areas, such as negotiating lower shipping rates with carriers and strategically placing their inventory to reduce delivery time and costs.

You aren’t prepared to handle larger volumes during peak seasons

For many E-commerce businesses, demand can fluctuate greatly throughout the year, with peak seasons often resulting in a surge of orders that can be difficult to manage. 

Fulfillment providers have the capacity and expertise to handle these fluctuations, ensuring that businesses can meet customer demand without having to worry about the added complexities of managing inventory and fulfillment operations during busy times. They can scale their operations up or down depending on demand, making it easier for businesses to manage inventory levels and avoid stockouts. 

You can’t compete with Flipkart & Amazon in fast delivery

Amazon has already set a standard for a fast and reliable delivery time, and keeping up with this standard is a huge challenge for small businesses.

Today’s customers are busy and look for instant solutions. They don’t want to wait for days just to receive their orders. This is why most fulfillment partners have strategically placed fulfillment centers around the country, which can help businesses make faster delivery at lower shipping costs.

You are not using the right technology

Another advantage of using an E-commerce fulfillment service provider is that they have access to advanced technologies and systems that may not be available to individual businesses. These technologies can be used to streamline the fulfillment process, reduce errors, and improve overall efficiency. 

For example, fulfillment providers use warehouse management systems (WMS) to keep track of inventory. WMS can help manage inventory levels, process orders automatically, and reduce errors caused by manual data entry. Making managing a warehouse much easier and more efficient.

You’re unable to focus on strategic tasks

Using an E-commerce fulfillment service provider can free up time and resources for businesses to focus on more strategic tasks, such as product enhancement, marketing, and customer service. 

For example, a business focusing more on product development can launch new products to the market more quickly, leading to increased revenue and market share. Similarly, a business investing more in marketing activities can drive greater awareness and demand for its products, leading to increased sales.

What to Look For When Choosing an E-commerce Fulfillment Service?

Now that you understand the benefits of having an E-commerce fulfillment service, you should also be able to pick the right one. There are several fulfillment services available in the market, but choosing the wrong one can negatively affect your business and revenue. To pick the right one, here are a few key points that you need to keep in mind-

Location of the fulfillment center

Customers expect speedy shipping, and the proximity of the fulfillment center to the customer is a crucial factor in achieving this. The closer the warehouse is to the end customer, the shorter the distance the products have to travel, resulting in faster deliveries. 

When selecting a fulfillment partner, it is essential to consider the location of their fulfillment warehouses. Identify areas from where you are getting maximum orders and ensure that your fulfillment partner has warehouses in those locations. 

Additionally, if your business operates globally, it is vital to confirm that the fulfillment company offers global shipping before partnering with them. 

Shipping speed/ Speed of delivery

With the arrival of Amazon Prime’s two-day delivery speeds, fast shipping has become the norm, and customers now expect faster delivery than ever before. And if you don’t stand on this expectation, you may start losing money in no time. 

This is where a fulfillment partner comes handy. 

A good fulfillment company should have streamlined and effective fulfillment processes that ensure quick delivery to customers. 

Features of order fulfillment software

As an E-commerce business owner, you already have a lot on your plate, with various digital tools, applications, and platforms to manage. The last thing you need is to add another software that is slow, disorganized, and difficult to navigate. That’s why it’s crucial to research not only the fulfillment company but also the order fulfillment software they use. 

Different fulfillment companies use different order fulfillment software, each with its own features and capabilities. It’s essential to understand your business needs and goals and select a fulfillment partner whose software aligns with them. Additionally, you want to ensure that the order fulfillment software is easy to implement and use daily, saving you time and reducing the risk of errors.

Customer support

Although fulfillment companies aim for perfection, errors can occur during fulfillment and shipping, such as damaged, lost, or stolen packages. However, the support provided by the fulfillment company during these situations can significantly impact the customer experience. 

Fulfillment companies offer various tools and guidance to help E-commerce businesses and depending on the order volume, a dedicated account manager or a team can support the business. Transparency and visibility into the fulfillment company’s performance should also be expected. 

Branding & packaging options

With the vast number of E-commerce businesses in competition, it’s crucial to stand out and make a lasting impression on customers. Sending generic brown boxes won’t do the trick anymore. This is where branding options from an order fulfillment company can make all the difference in building a strong brand and generating buzz for your business. 

Personalization is key to engaging modern consumers, and a custom-tailored and exciting user experience can create loyal customers who return to your business. Neglecting branding potential when selecting a fulfillment partner can be detrimental to your user experience, especially when 89% of digital businesses invest in personalization and 51% of digital marketers prioritize it as their top goal. So, choosing a fulfillment company with branding options can help create a positive, memorable experience for your customers and drive business growth.

Return management

It’s crucial for a fulfillment center to not only ship products, but also provide returns management, as approximately 30% of online orders are returned. While some returns are unavoidable, a reliable fulfillment company should work with you to reduce controllable returns through better forward logistics. 

Additionally, your fulfillment partner should offer software that enables you to identify “serial returners,” customers who frequently make purchases only to return them. By identifying these customers, you can adjust your marketing strategies to prevent unnecessary returns. For instance, you may choose not to send promotional emails to these customers during sales or email them after the purchase with positive reviews from satisfied customers to increase their confidence in their purchases. A fulfillment company that helps you reduce controllable returns and identify serial returners can significantly benefit your business by improving the customer experience and reducing costs.

Evaluating order fulfillment services: 14 questions to ask

As the owner of an E-commerce fulfillment center, it’s important to choose the right e-commerce fulfillment service provider that meets your business’s needs. However, it can be difficult to know where to begin or what questions to ask. Here are some key questions to ask while evaluating fulfillment service provider for your business: 

Picking And Packing Questions

What kind of products do you ship?

If your products are bulky or weighty, choosing a fulfillment service provider specializing in handling such items is crucial. They will offer you the most appropriate guidance on how to pack and ship your products with utmost care. Conversely, a fulfillment center that predominantly handles large items may not be ideal for smaller products, delicate merchandise, or hazardous materials. Selecting a fulfillment center that caters to your product type is prudent, as this can significantly lower your packaging and shipping costs.

What value-added services do you offer?

Having a warehouse that offers kitting services can be a valuable addition to your E-commerce business. Fulfillment services for E-commerce can involve customized labeling or just-in-time assembly to enhance the value of your merchandise.

What are your customer service practices?

It’s important to ensure that the fulfillment service partner has efficient systems in place to promptly address customer inquiries.

Fulfillment Cost Questions

What is the charge for setting up accounts and integrating sales platforms?

It’s crucial to inquire about all fees associated with your account from start to finish. Concealed fees can transform an initially reasonable quote for fulfillment services into an expense that could harm your business.

Who pays for fulfillment mistakes?

Does the fulfillment center provide any guarantees in case of incorrect packing or shipping of an order? Do they waive fulfillment and shipping fees in the event of an error? Such a guarantee is a good indicator of a high-quality e-fulfillment provider.

What is your policy on inventory shrinkage (loss of products from warehouse)?

Beforehand, determine the shrinkage allowance. A first-rate E-commerce fulfillment warehouse will offer an inventory guarantee, shielding you from expenses related to inventory shrinkage and damage.

Shipping Cost Questions

Do you offer shipping discounts?

As most fulfillment service providers are volume shippers, they may be eligible for reduced shipping rates from freight companies. Make sure that you are receiving the benefit of such discounts.

Do you offer international shipping?

While you may currently sell exclusively to domestic customers, why restrict your future prospects? The E-commerce industry has vast potential for global sales. Opt for an e-fulfillment provider that can assist you in elevating your online store to the next level.

What is your system for shipment tracking?

Ensure shipment notifications are sent directly to both you and your customers and contain tracking numbers. This will allow you and your customers to monitor the shipment and address any issues that may arise.

How fast can you ship my orders?

Inquire about the fulfillment provider’s ability to deliver to at least 70% of the country within two days or less. Additionally, ask about the order turnaround time, such as whether they can ship orders received by a specific cutoff time on the same day. 

Questions Related To Maintenance & Technology

Does your warehouse have backup power?

Customers in other regions anticipate their orders to be delivered on schedule, regardless of your fulfillment center’s circumstances. They are unconcerned about any blizzards or power outages. It’s important to inquire about the last time the fulfillment center tested their backup systems. A generator that is not functional will not be beneficial when faced with severe weather conditions.

What inventory management and inventory control services do you offer?

To prevent inventory shrinkage, seek out a fulfillment center that offers real-time inventory management. This method is more precise than periodic spot-check inventories.

Do you have ISP backups in place?

Although the power may be functioning, an internet outage can render a warehouse inoperable. Without the transmission of orders from your E-commerce sales channels, orders cannot be shipped. It’s crucial to ensure that your E-fulfillment service provider employs multiple ISPs, guaranteeing uninterrupted internet service.

What are your security procedures?

This pertains to both internet security and the protection of your merchandise. Determine the controls that the fulfillment service  provider implements for access to sensitive and confidential information. They should also perform employee background checks and utilize security cameras to deter theft.

Experience the best fulfillment service with ANS Commerce

As India’s best E-commerce enabler, ANS Commerce offers end-to-end solutions to manage your online business-from performance marketing and marketplace management to warehousing & logistic services-we provide it all! 

Spread across pan India, we provide fully equipped storage facilities with cutting-edge warehouse management systems (WMS) and order fulfillment capabilities: pick, pack, dispatch, and return management. 

To know more about how ANS Commerce can help you with warehousing and logistics support, book a free consultation today!