Shopify Guide: What is Order Fulfillment?
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It doesn't matter if you're a brand-new eCommerce retailer or a 100-year-old brick and mortar store, order fulfillment is one of the most important parts of your business. But what exactly is order fulfillment? Is it different from shipping? How should you get started with it? And once you do, how can you improve your eCommerce order fulfillment processes to make sure that you're maximizing efficiency while lowering costs and ensuring that every customer gets the exact product they ordered in perfect condition? We'll answer all these questions and many more as we explain what order fulfillment is, why it matters for your business, and how to master it.
What is Order Fulfillment?
Order fulfillment is the process of fulfilling an order that has been placed by a customer. In other words, it's how you actually get the product(s) your customer ordered in their hands. This can be done either in-house or outsourced to a third-party service.
Outbound shipping is when you ship products directly from your warehouse to the customer's address (or location). Order fulfillment may also involve picking, packing, and labeling orders before shipping them out. Order fulfillment doesn't end at this point though because order management systems also include receiving, sorting, and storing incoming shipments as well as managing inventory levels on hand and generating reports on this information.
Why Order Fulfillment Matters
Without a doubt, order fulfillment is the most important part of your business. If you can't ship orders out to customers on time and in the right condition, they're unlikely to come back and buy again. And if your products don't arrive in the condition they should be in—or worse yet, if they aren't delivered at all—you could lose potential buyers forever.
Order fulfillment is so important that it's worth taking some time to consider how it affects all aspects of your business:
- Customers: Customers care about getting their stuff on time and as expected because it impacts their experiences as consumers. The last thing anyone wants is for a new shirt or pair of shoes not to fit quite right after waiting weeks for delivery (and this has happened before).
Plus, not only do happy customers mean repeat business but they also tend to refer to other people who might want what you have!
- You: This one might seem obvious but it matters just as much whether or not someone else buys something from us as us buying something from another store owner. No one wants their business going under because something went wrong during shipping.
Setting Up Your Own Shopify Order Fulfillment Process
When setting up an order fulfillment process, you're going to want to consider a number of factors. How many orders do you expect to get? Where are most of your customers located? How much time and resources are available to prepare packages and send them out?
When you fulfill an order manually, you have to handle each step of the process yourself. This is called a manual order fulfillment process and is the default setting. If you use automatic order fulfillment, Shopify automatically handles most of the order fulfillment steps for you. This can help free up your staff to focus on other aspects of running your business.
- Manually: You can fulfill orders automatically using a shipping carrier that supports Shopify Shipping, like the United States Postal Service (USPS), UPS, FedEx, Purolator, or DHL Express. This option is best if you have a lot of inventory—you don't want to be stuck entering in all the information for each order manually over and over again.
- Automatically: You can fulfill orders automatically using a third-party fulfillment company. This option also works best if you have a lot of inventory that needs to be fulfilled.
After you set up your store's fulfillment methods, you can assign them to your products. For example, if you offer your products for different shipping speeds (for example, a two-day shipping option or overnight shipping), then you need to create separate fulfillment methods for each speed and assign them to your products.
The last step in setting up a Shopify order fulfillment process is actually fulfilling orders—the steps involved depend on whether you're using manual or automatic order fulfillment.
How to Coordinate Your Shopify Order Fulfillment Process
There is no one-size-fits-all approach to managing order fulfillment, but there are a few key steps that you can take to ensure that your process runs smoothly.
Label your packages.
Labeling packages is a great way to keep your customers up to date on the status of their orders. It also helps you track which items are going out and when they are received by your customers. If you have multiple warehouses, it is even more important to label packages so that each warehouse can track where its orders are in the fulfillment process. Labeling can be done using a simple sticker or using an app
Provide good customer service.
Customers expect fast delivery of their orders, but they also want to know that you will treat them well if there is an issue with their order. Take the time to notify them of any delays in shipping and update them on when they should expect their order to arrive (even if it's only an estimate). This will help keep your customers happy while also protecting yourself from negative reviews or social media complaints about late shipments or missing items from orders.
Communicate clearly and openly with your customers, suppliers, and staff.
Whether you're an eCommerce business owner or a drop shipper, it's important to create clear expectations and keep in contact with your customers, suppliers, and staff. Without it, you risk delivery late or not at all. Your suppliers might even ship the wrong items or charge you extra. Customers would be puzzled and disappointed if they get the wrong product or late shipping. This might lead to unfavorable reviews and lost business.
Ship products promptly so that customers know when to expect their orders.
Customers should know when to expect their orders once they place them. When you sell a product online and have it shipped, you can set a delivery period between one and eight business days. If the item ships after more than eight business days, Shopify creates a custom delivery date depending on the order date. Your customer's order may arrive in two weeks or three months.
If you want your consumers to know how long they'll have to wait for their order, establish the delivery time yourself and attempt to keep it accurate. You can adjust the delivery date if something unexpected arises and it takes longer to fulfill the order, but try to get it out soon so customers don't have to wait.
Manage inventory levels so you don’t run out of stock or over-stock items.
The Shopify order fulfillment process is a critical but sometimes neglected part of the business. If you run out of an item, customers may lose interest in the product. If you overstock products, you could waste money. Set up a method to manage your inventory levels so you can coordinate orders with available items to avoid these complications. You can also use this approach to assess how well a marketing plan generates sales.
6 Ways to Optimize Your Shopify Order Fulfillment Process
- Subscription Boxes
- Ship from Store
- Distributed Inventory
- In-Store Pickup and Return
1. Subscription Boxes
Order fulfillment is one of the most important things to keep in mind when running a business. If you're selling a product or service, one of the first things you need to do is determine how your customers can order from you and what payment methods are available.
In this blog post, we'll go over some of the best subscription box strategies for Shopify sellers who want to build recurring revenue streams by selling through their own online store.
2. Drop Shipping
Drop Shipping is a fulfillment method where the retailer doesn’t keep the inventory in their own warehouse. Instead, they rely on third-party suppliers to send the ordered products directly to their customers.
Drop Shipping allows you to sell products without having to buy and store inventory, which means that your overhead costs are low. It also helps you scale fast because you don’t have to worry about managing large inventories or purchasing new stock every time demand increases.
This fulfillment method can be applied in many ways:
- You can use it as an additional channel for selling items on Amazon or eBay (for example).
- You can use it as an additional channel for selling through Shopify after launching your online store with Shopify Plus (which has its own in-house logistics team).
3. Ship from Store
A third way to fulfill orders is to ship directly from your Shopify store. This is an option that's best suited for retailers who do not want to use a fulfillment center and don't have the resources or desire to use a third-party shipping service like ShippingEasy or Shippo.
To use this method, you'll need software (like ShipStation) that integrates with Shopify, allowing you to automatically pull your inventory data into their system so that it can print shipping labels on demand. You'll also need access to a printer and mailing supplies so that you can print out labels for each order as well as everything required for packing materials and packaging.
Depending on how many orders are being placed through your store, it may make sense financially to invest in equipment like this if it means saving money overall on shipping costs; however, keep in mind that since these systems aren't designed specifically for eCommerce businesses like yours there could be some technical difficulties getting them up-and-running at first which could leave customers waiting longer than expected before receiving their packages--and nobody likes waiting!
4. Distributed Inventory
It's important to have a strategy for distributed inventory. This is when your inventory is spread out over multiple locations, rather than all being in one location. There are many reasons why you might want to set up your fulfillment this way:
- You may have multiple warehouses or stores that make up the bulk of your sales volume. You may want to ship from multiple locations so that each order goes out as soon as it is ready, or because there are different shipping rates for different areas. For example, maybe orders from California get shipped by air whereas orders from New York get shipped via ocean freight.
- You might also want to set up distribution centers near certain customers so that they can pick up their products quickly and easily (rather than having them shipped).
When distributing inventory across multiple locations, you need an efficient system in place so that all orders go out as fast as possible—and so that they don't get mixed up with each other!
5. In-Store Pickup and Return
In-store pickup and return is the holy grail of eCommerce. You can now offer your customers the best of both worlds: the convenience of online shopping and the social experience of shopping in person.
You can set up in-store pickup and return by adding a shipping method called "In-Store Pickup" to your orders. Initially, this method will default to having an additional cost added to it, but as soon as you start making use of Shopify Order Fulfillment's automated label printing functionality (see below), there won't be any additional costs involved! This means that when an order is placed, if they've selected In-Store Pickup as their preferred fulfillment method, then they'll be able to pick up their purchase at any time within 4 hours after ordering it—or even faster! And if they don't want an item anymore? No worries—with our new Return Refund feature available through Shopify Order Fulfillment for just $1 per month per product line (and no setup fees), you'll never lose money on returns again!
Cross-docking is a way for you to move inventory between different warehouses. It's common practice in the retail and logistics industries, and it has several benefits:
- You can optimize your inventory by moving products that aren't selling well to a warehouse closer to where they're needed.
- It reduces the number of shipments you need to make, which saves time and money. This can also help increase the speed of delivery times because fewer orders will be consolidated into one shipment.
If you're running an online store with Shopify, it's important to stress test your order fulfillment process as early as possible.
When you're running an online store with Shopify, it's important to stress test your order fulfillment process as early as possible. For example, you might start by sending out a small number of orders and monitoring the results. Next, you could send out larger numbers of orders and do the same thing—monitoring the results so that they're more in line with what you expect.
If there are any issues with either of these stages, now's the time to fix them before they become even bigger problems later on. It's also worth noting that if there aren't any issues during one stage (i.e., all products were shipped on time), but there are during another (i.e., customer service was slow), then that can be fixed too!
There you have it. We have covered a lot of information to help you grow your business and reduce costs on your Shopify eCommerce store. By using the right order fulfillment strategies and a reliable third-party logistics company, you can focus on growing your business instead of worrying about where your orders are going. Get started today with one of our premium plans or contact us for more information about how we can help with your order fulfillment needs. Need more info? Check out these other helpful articles:
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