2022 was a great year for ecommerce sales, mainly thanks to growing ecommerce channels. While many companies were forced to close due to COVID-19, many companies transitioned to the internet to get stores opened quickly as possible. These adapting companies are now reaping the benefits and 2023 is expected to be a big year in ecommerce.
Many of these businesses quickly realized how different it is to deliver items to online shoppers rather than rely on them coming in to shop. These steps, known together as the retail order fulfillment process, require the following for each order that’s placed on an online store:
- Picking items from inventory
- Packing and wrapping boxes
- Adding shipping labels to the shipments
- Having a carrier pick up packages for shipping or mailing them yourself
With all that said, you then have retail fulfillment costs you must get familiar with, as well as other important steps in the process like inventory management, trying to compete with Amazon, tracking a shipment’s status for a customer, and more.
If you own a (DTC) direct-to-consumer brand, your retail order fulfillment process is key to great customer satisfaction. Traditional retail distribution, this is where a customer has to go to a brick-and-mortar retail location to buy an item, the goal of retail fulfillment is to ship orders as efficiently as possible from a store, home, or fulfillment center to your customer’s front door.
For this of you that reply on omnichannel marketing and want to improve your retail fulfillment process, there is steps you can take to make it happen.
- Suppy Chain Optimizations
- Fulfillment Technology
- Fulfillment Partners
Most of you know how important fulfillment is to your business. This is where a third-party logistics (3PL) provider, also known as a professional fulfillment company, can be used to outsource the retail fulfillment process.
While you may feel the retail fulfillment process is too complicated or complex, we’re going to explain it so you fully understand. In this guide, we’ll be focusing of the key pillars of retail order fulfillment for ecommerce brands, as well as a few strategies that can be used to improve the customer experience. This is going to be longer than usual, but take notes, there’s a ton of pure goodness you can get from this content.
What Is Retail Fulfillment?
Retail fulfillment represents the process of fulfilling (assembly, pick, pack, etc.) and shipping an order to a customer.
Unlike having customers come to a physical retail store to select and purchase items themselves, ecommerce merchants are responsible for ensuring the package has the right contents and getting that package in transit once a customer places an order online.
Retail Fulfillment Is Key To A Successful Ecommerce Store
If you want to ensure the success of your ecommerce business, one area where you should focus is optimizing your retail fulfillment process. Ecommerce order fulfillment has a huge impact on customer satisfaction. When customer satisfaction is high, you’re maximizing your profits.
Successful ecommerce businesses make retail fulfillment process optimization a priority because they know it has a major impact on both customer satisfaction and profits. When you have to manage your retail fulfillment process by yourself, you have packaging costs, shipping costs, and other hidden costs. On top of that, if you’re struggling to deliver customer orders on time, you’re going to lose customers. Your customers won’t hesitate to go elsewhere if you’re not delivering on your promises.
You need a successful retail fulfillment process for your business to grow. With an effective order fulfillment process, your business can manage customer orders with greater efficiency. Moreover, you will be able to scale as your order volume picks up, thus increasing your profits.
Let’s look at the 6 levels of the retail fulfillment process.
(1) Inventory Receiving
When you sell your products, you need to order more inventory, that process plays out over and over again. However, with ecommerce stores, the opportunities are maximized as you can sell to customers anywhere. Due to this, reordering is key to optimizing your retail fulfillment. You need a deep level of experience as it pertains to inventory forecasting and working with your manufacturers.
New inventory coming in will need to be sent to fulfillment centers to be stored. Each SKU will need a storage location (which may be a bin, shelf, or pallet). When inventory arrives at the fulfillment center, it must be processed, organized, documented, and eventually stored away.
If you’re doing your own retail fulfillment, you likely already know how important warehouse management strategies are. If your warehouse is not optimized, you’re going to run into trouble.
Once inventory is properly stored, you will be able to use those products to fulfill customer orders. Two key focal points you want to pay attention to is stock levels and reorder points. This is especially true for your holiday fulfillment. The last thing you want to do is run out of inventory, no business needs lost sales and customers.
Remember, where you store and ship items matters. The farther away your shipping destination is, the higher shipping costs will be (in most scenarios).
Note: The location of where you store and ship items from will have a big impact on your shipping costs (i.e., the farther away the shipping destination, the more expensive the delivery will typically be).
(3) Picking Items
When your customers place an order, that order is processed in your queue and a picking list is generated. From there, your team can start to retrieve the items you’ll need to fulfill the order. The locations in your warehouse can be optimized to ensure your picking is efficient as it can be.
(4) Packing Orders
Once you have all products needed to complete the order, you can now pack them. There’s a lot of fine details as it pertains to packing orders, many areas can be optimized. At the most basic level, you’ll need to choose boxes, wrapping, poly mailers, and other packaging materials that will both protect your products and add up to the lowest practical dimensional weight to help you save on shipping costs.
While it may costs more, your company may want to implement custom boxes to ensure customers have a good brand experience. We see this all the time from our subscription box customers, they have custom boxes made that help their brand stand out from the competition. Unboxing experiences are very important.
(5) Shipping Orders
As soon as the packing is done, it’s now time to begin shipping your orders. Shipping differs in a wide range of different ways, depending on the company you’re talking about. What shipping policy does your business offer? If your online store does same day shipping, you may have a policy that says all orders need to be in by 11a.m.
You always want to make sure you honor your shipping policy. If you can’t honor your current policy, change it and make sure you keep your promise.
(6) Processing Returns
The last stage of the retail fulfillment process is processing returns. Customers will likely return ecommerce orders from time to time, and you need to be ready for that. A well-designed returns management process can reduce costs and headaches associated with returns or exchanges.
How Can We Optimize Our Retail Fulfillment Process?
There’s no limit to the steps retailers, ecommerce merchants, and business owners take to measure and optimize their retail fulfillment process.
When you do a deep dive to understand what it involves and how your business can benefit, you can learn a lot.
Let’s take a quick look at what you need to focus on.
Focusing On The Location Of Fulfillment Centers
Location, location, location! Well, we’re not talking about real estate, but rather, it’s where your fulfillment center is located.
A strategically placed fulfillment center can be exactly what you need to improve customer experience. Choosing a location that is near your customers is going to allow you to deliver order on time and help you reduce shipping costs due to the way that shipping zones work. Here at Thill, we have fulfillment centers and warehouses all across the United States. We done this purposely and strategically as we wanted to ensure we can help our client’s ship product fast, store product, and everything in between.
We can use our fulfillment centers and warehouses as needed, often based on our client’s goals and needs. Look, as an ecommerce merchant or business owner, you already have a ton to worry about on a daily basis. Due to that, outsourcing your fulfillment may not be a bad idea and may help you save time, effort, and money, not to mention the growth it can help your company with.
3PL services from a fulfillment company such as Thill Inc. offer you the ability to split inventory across multiple fulfillment centers all over the US and internationally, allowing to cater to a larger volume of consumers while improving your efficiency.
Sure, you can pay for warehouse space, you can pay for multiple warehouses, but that’s going to cost a lot. Instead, you may want to consider finding a fulfillment partner, especially one like Thill Inc. that has a major infrastructure your company can immediately tap into and scale.
With fulfillment centers and warehouses located all over the United States, partnering with a 3PL fulfillment company can immediately help you cut your shipping costs while also improving shipping times and customer satisfaction.
Integrated Fulfillment Software
Retail fulfillment is a complex process. Large brands typically rely on ERP systems that account for all aspects of fulfillment and multichannel inventory management.
For smaller ecommerce merchants, you need software that takes care of inventory management, order tracking, and easily integrates with your online store. A fulfillment provider like Thill will not only perform retail fulfillment services for you but provide integrated fulfillment software at no extra cost to you.
We have dozens of fulfillment software integrations, such as:
- Shopify Fulfillment – Shopify fulfillment software integration that allows you to track all your Shopify fulfillment.
- Ebay Fulfillment – Ebay fulfillment software integration that allows you to track all your Ebay fulfillment.
- Magento Fulfillment – Magento fulfillment software integration that allows you to track all your Magento fulfillment.
- Amazon Fulfillment – Amazon fulfillment software integration that allows you to track all your Amazon fulfillment.
- WooCommerce – WooCommerce fulfillment software integration that allows you to track all your WooCommerce fulfillment.
- KickStarter – KickStarter fulfillment software integration that allows you to track all your KickStarter fulfillment.
*We also have integrations for Big Commerce, Crate Joy, and many others.
Faster Shipping Times
Thanks to ecommerce giant Amazon, 2-day shipping is beginning to become an expectation. There’s no doubt about it, online shoppers want their ecommerce orders shipped as fast as possible. This is exactly why you need strategically-located distribution centers as it reduces both shipping costs and delivery times.
The time between order placement and the shipment arriving at your customer’s doorstep can be significantly reduced without you paying for expedited costs.
What’s The Best Retail Order Fulfillment Model?
If you’re going to focus on optimizing your retail order fulfillment, you need to focus on a model that’s been proven to work.
In total, there’s only 3 core ecommerce fulfillment models to choose from, each one having its own set of pros and cons. Let’s see what each model has to offer to improve the retail fulfillment process and at what cost(s).
(A) Third-Party Fulfillment (3PL) Model
In this model, ecommerce merchants outsource fulfillment to a 3PL partner. The fulfillment company stores inventory and handles the entire retail order filling process so the merchant has time to focus on other tasks.
- Experience And Specialization – 3PL services are designed with a focus on providing businesses with inbound and outbound logistics expertise and support. These 3PL companies are highly skilled at optimizing the retail fulfillment process with years of experience in the field. Thill Inc: over 50+ years of fulfillment experience.
- Scale And Growth – Partnering with a fulfillment provider allows you the opportunity to speed up your retail fulfillment process and help you focus on what really matters, running your company. With a retail fulfillment partner managing picking, packing, and delivery, there’s no hassle if there’s a sudden spike in consumer demand as your partner can scale up without destroying customer experiences.
- Top Technology And Supply Chain Insights – A technology driven fulfillment provider can allow you the tools needed to automate areas of your fulfillment process. Services like Thill Inc. offer a retail order fulfillment process that provides features such as order management, turnkey integrations, data analytics, real-time tracking, and more.
- Fulfillment Network – Having a 3PL fulfillment partner with multiple locations opens the doors of opportunity, allowing you the chance to optimize your retail fulfillment so you’re not limited to one central location. You’ll be able to instantly tap into their fulfillment network to drastically grow your business fast.
- Costs – Hiring a fulfillment provider to manage your retail fulfillment will be an expense you have to take now. However, finding a retail fulfillment partner that is the right fit for your business can maximize your profits. They key is finding the right fulfillment partner.
- Losing Control – Yes, you’re giving up control of inventory and packing orders, which can be a tough call for some of you. You’ll want to find a partner you can trust and that resolves any issues that arise. Look for a partner that has years of experience, doing fulfillment in your select categories.
(B) In-House (Self-Fulfillment) Model
In this retail fulfillment model, the business is responsible for their own fulfillment. Self-fulfillment is great when you’re a small business or merchant with a low order volume. Some retailers have even gone this route with in-store fulfillment if they don’t have an ecommerce warehouse, though a retail store is set up very differently from a fulfillment center.
- Often Less Direct Costs – If you do handle the retail fulfillment yourself, you may not need to hire people to package boxes. While that’s great, there is an opportunity cost of spending your time working on retail fulfillment versus growing your business.
- Complete Control Over Customer Experience – Merchants and businesses following the self-fulfillment model have complete control over their operations, ensuring every order is packed exactly as they want and with as much customization as they want. They also always have direct eyesight on their inventory.
- Brand Image – An in-house fulfillment model leaves room for you to use customized delivery packages to promote your brand’s identity. Cultivating an attractive image for your brand is important to maintain customer loyalty and to grow your customer base. Though some 3PLs can also ship packages with your custom packaging.
- Less Efficient – A self-fulfillment model may cause customer orders to be processed more slowly since it is time-consuming. You are also stuck in one location, causing longer transit times for the majority of orders.
- Limited Growth Potential – Ecommerce businesses that manage retail fulfillment by themselves must spend a significant amount of time and resources doing so. This can make growing your business challenging since you’re reacting to customer orders coming in rather than figuring out how you can bring new customers in.
- Your Business Is Your Life – When you’re managing retail fulfillment yourself, you will spend more and more time on the process. Say goodbye to days off, vacations, and free time.
- Less Storage Space – When fulfilling retail orders in-house, you may store products in your home. Your apartment, garage, and/or basement will be taken over by your inventory (as will your car most likely). Most of the time, it’s a business owners’ living quarters that are directly impacted by retail fulfillment in this model.
(C) Dropshipping Model
The dropshipping model is the most hands-off, as a business does not hold any inventory themselves. Instead, after a customer places an order, the manufacturer that created the product ships the product to the customer.
- Less Resources And Capital – The dropshipping model requires less resources and capital than other retail fulfillment models, this is due to the fact that you don’t have to pay the overhead for warehousing. On top of that, since you will purchase the product after the customer pays for it, there’s no initial investment is needed.
- Versatility And Flexibility – Using a dropshipping model means that you can run your business from any location, go on vacation and not worry about retail fulfillment, and even introduce new products to your online store as you wish. In terms of freedom, it’s a perfect model for that.
- Proof Of Concept – The dropshipping model is great for testing out new concepts. It allows you to get an idea of what customers may be looking for in particular by testing out different products and observing how consumers receive them. It’s often not a long-term solution but good for proving out an early concept, finding a winner, and then moving to a new fulfillment process.
- Quality Control Issues – Out of all the different retail fulfillment concepts, it’s dropshipping that doesn’t give you any control over inventory or customer experiences. While this can be a good thing at times, it can equally be bad. Manufacturers are not retail fulfillment experts, so quality is usually a concern and unfortunately, there’s little to nothing you can do about it
- Competition And Lower Profit Margins – While the dropshipping model requires minimal investment, ecommerce businesses that operate in the model generally experience lower profit margins. You have to purchase products from a third-party and have them delivered by a carrier. It’s also incredibly competitive, often filled with thousands of people selling the same exact products as you.
- Difficult To Keep Up With Customer Demand – If consumers are ordering vast quantities of products from different 3rd party affiliates, then you will have to make separate transactions to each business. To provide your customer with a great experience, you will have to organize the charges into a single receipt.
- Slow Transit Times – If your manufacturer is located far away and you’re dropshipping from overseas, your customers may have to wait up to 30 days or more to get their orders. Many sellers move away from the dropshipping model to work with domestic fulfillment centers so they can cut back the expensive air shipping, delays at customs, and extremely long transit times. In many cases, these business owners choose to go with the other fulfillment processes.
Solutions And Challenges: Retail Fulfillment Process
In this guide, you’ve learned how beneficial a successful retail fulfillment process can be for your business. Still, it’s always easier said than done, we want you to take action because it will be “action” that produces your results or “lack of action.”
We’ll now take a look at some of the challenges your ecommerce business will likely face (or is facing now) and how you can begin overcoming them today.
Growing Order Volume
Yes, it’s a great problem to have, but it can get dicey if you’re not optimized around that growth.
Managing and fulfilling large amounts of orders can be difficult. If you are short on staff, don’t have the room to expand, or you’re doing it all yourself from a small space, you’re risking your great brand. The last thing you want to do is lose customers and start getting bad reviews. It only takes a few bad experiences for it to cost your company dearly, certainly not worth the risk.
If you turn to a retail fulfillment provider like Thill, you can begin to outsource these tasks and free up your time and resources to focus on the continued growth of your business.
No Logistics Experience
Retail fulfillment involves a lot of complex supply chain facets that can leave you feeling overwhelmed. Partner with an experienced fulfillment provider like Thill who can take the stress of retail fulfillment while letting you utilize their knowledge, resources, scalability, bulk discounts, etc. — without you having to invest in retail fulfillment equipment, space, and infrastructure only to outgrow it all and start over again.
Retail Fulfillment Without The Hassle – Thill Inc.
Thill provides the leading retail fulfillment process you need to improve customer experience and let you focus on other areas of your business. You don’t have to worry about the trouble of inventory management, packaging items, and shipping orders to customers when we can do it all for you while providing best-in-class retail fulfillment technology and support.
If you run a fast-growing ecommerce business, our retail fulfillment services can save you valuable time, effort, and money. You can store your ecommerce inventory at any of our fulfillment centers of your choice, and we’ll even give you data to make the best decision to match the Amazon experience.
Getting started is simple and easy, just give us a call at (920) 967-9201 or use this contact form. We’re always here to help, so don’t hesitate to reach out if you have a question or need help.