Finding the Right Fulfillment Partner for an E-Commerce Business

4 Mins read
  • An efficient fulfillment process is crucial for any up-and-coming e-commerce business that is trying to grow.

Are you considering starting an e-commerce business? This is a great time to do so! The global e-commerce market was worth over $10 trillion in 2020 and has been growing at a rate of over 10% a year.

There are many things that you need to consider when setting up an e-commerce store. One of the most important things is to have a good fulfillment process in place.

E-commerce fulfillment (also known as order fulfillment) is an essential component of any online business’s supply chain. Its role is to provide the correct goods to the clients who have ordered them.

Your products are housed and sorted at a warehouse even before your customer places an order. After that customer clicks the ‘Buy Now’ button, the fulfillment company picks the goods, packages them, and delivers them to your customer.

You can manage your e-commerce fulfillment in-house (though not recommended for firms aiming to scale) or outsource it to a 3PL (third-party logistics) service such as AMS.

How it works

Business News Daily reports that the third largest challenge facing e-commerce businesses is order fulfillment. Companies that can’t handle it properly are not going to thrive.

Having a good e-commerce fulfillment process in place is important to help your e-commerce business grow more quickly. When your customer places their order, the ball of the e-commerce fulfillment process begins to roll. The process follows a series of steps:

Step 1: Receiving

The order information is sent directly to the 3PL provider via interaction with your shopping cart software. This data is delivered to a large warehouse fulfillment center where your goods are held.

Step 2: Selection, packaging, and shipping

The 3PL provider’s fulfillment center workers locate your product using its unique SKU (stock-keeping unit). By doing this, they ensure that your consumer receives the correct stock from the correct inventory.

After picking, the product is packaged. It can be wrapped, boxed, and sealed according to the specifications you’ve given your 3PL service provider

It is then delivered to the customer. As you can see, the process is simple, right?

What is 3PL e-commerce fulfillment?

Third-party logistics (3PL) is a solution that allows you to outsource each component in the supply chain.

A 3PL provider may handle the entire process, from having your products delivered to the warehouse, storing them there, and then sorting, packing, and shipping them out.

3PL suppliers collaborate closely with your existing systems to keep you informed. They integrate with e-commerce platforms allowing for real-time, two-way stock and order data transfer.

You’ll also be given access to an online reporting dashboard, which allows you to use your company’s sales data to make better decisions in the future.

With live analytics from a 3PL provider’s cloud-based software, you’ll know exactly what’s selling, what’s staying on the shelves for too long, and the opportunities you can take advantage of.

What makes a good e-commerce fulfillment partner?

If you have an e-commerce business, you want to work with a partner who will work with you and give you the desired service. An ideal partner should be:

Fully automated

Traditional supply channels can’t keep up with rising demand. Fortunately, automation can solve a large portion of the order fulfillment cycle and increase optimization.

For example, artificial intelligence (AI) can forecast consumer demand and recommend the right amount of goods you should keep on hand at any time.

AI can study market forces to predict what consumers will order on any given day and whether items’ popularity will likely fall and lead to a waste of shelf space.

AI systems can help prevent processing errors, which generate backlogs and are a source of frustration for online shops.

With so many new orders coming in, the last thing you want is for the fulfillment service provider to trigger orders that have already been shipped. An AI system increases the likelihood that the correct item is selected from stock, packaged, and shipped.

The fulfillment partner should combine AI with machinery to automate the warehouse. The partner should have smart forklifts to collect objects without the need for an operator, while digital locator tags affixed to commodities aid in inventory management.

The warehouse employees should also be able to get real-time location updates on any item.

All of these technologies significantly reduce processing time. And with these AI systems in place, you can be confident that you have the correct inventory, know exactly where the goods are inside a distribution center, and can retrieve items more effectively.

Have micro fulfillment centers.

Micro-fulfillment centers are small warehouses that can only hold a few days’ worth of inventory. They are, however, intentionally built close to the consumer.

Their role is to ensure that products can be dispatched immediately and reach the customer’s house within the shortest time possible, usually 24 hours.

Because of their smaller size, micro-fulfillment centers can be built in greater numbers than a single huge central warehouse distant from consumers’ homes.

Micro-fulfillment centers are widely scattered to serve local retailers and e-commerce orders, filling in the final mile and dramatically lowering transportation costs.

When combined with new automated tools, micro-fulfillment centers can eliminate supply chain bottlenecks based on AI forecasts and transform warehousing and order fulfillment.

What is the result for you, an e-commerce business owner? Your products are delivered within a short time and at little cost, which not only sees your customers happy, but you also make more money on every unit sold.

When scouting for a new fulfillment partner, ask them how they ensure smooth operations. You should avoid a company that doesn’t use automation or AI.

The same thing applies to micro fulfillment centers. If a fulfillment company has only one central location where it ships all the products, you will be disadvantaged as your products will reach your customers too late. This means you will anger your customers, and they won’t order from you again. 

Work with a company with many stores nationwide where you can ship your products and deliver them quickly to your customers.

Parting shot

For your e-commerce business to succeed, you must partner with a reputable, fast, and highly convenient fulfillment company.

If you are new to e-commerce, you should know that consumers love speed and convenience. The faster you deliver their order, the more likely they will buy from you again.

With this in mind, ask your 3PL provider for some reassurance. How quickly can they process orders? Is same-day (or next-day) delivery possible?

Inquire with any prospective provider about their return policy as well. How quickly can they process a returned item and return it to the shelf for resale?

Know all these details before you start working with the service provider.

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About author
Ryan Kh is a big data and analytic expert, marketing digital products on Amazon's Envato. He is not just passionate about latest buzz and tech stuff but in fact he's totally into it. Follow Ryan’s daily posts on Catalyst For Business.
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