An online retailer’s success relies on the effectiveness of its delivery process, and as the 2019 report into shipping and delivery from BigCommerce claims that 35 per cent of UK consumers were unlikely to shop with the same retailer following a negative experience, it’s vital you get every element - including order fulfillment - right if you want to succeed.
By reviewing every part of this process and implementing key changes, you may be able to improve the effectiveness of your order process and enhance the experience of your customers.
What is the order fulfilment process?
The order fulfilment process refers to the steps that are taken when an online order is made. It starts with the customer making a purchase, moves through several stages, and ends with the customer receiving the product. However, it also includes the returns process should a customer decide to return their order.
Having an efficient and effective order fulfilment process in place helps to prevent errors and their associated costs, ensure that deliveries are made on time and keep customers satisfied.
The eFulfillment Service claims that, when done correctly, the cost to fulfil an order is around 70 per cent of the overall order value. Without an effective order fulfilment process, the cost of products and shipping may be significantly higher, and as Forbes claim that 63 per cent of shoppers will abandon a purchase if they believe the shipping fees for their order are excessive, offering customers value is crucial.
However, having an effective order fulfilment process is as important to a business as it is to retaining and satisfying customers. Logistics experts SupplyChain 24/7 ran three test studies in different industries whereby an organised order fulfilment process was introduced. The results indicated improvements to all three ecommerce businesses, with the time spent processing orders reduced by an average of 74.5 per cent.
What are the six steps in the order fulfilment process?
Broadly speaking, the order fulfilment process consists of receiving, processing and shipping a customer order. But for an order to be managed and organised correctly, each of these areas need to be broken down into six core areas. As an e-tailer, it is important to understand and optimise every step.
Below, we look at each stage in the order fulfilment process and offer tips for improvement:
1. Receiving
Although often handled differently from retailer to retailer, the first step in the order fulfilment process is the movement of goods from the manufacturer to supplier. At this point, the goods should be inspected to check they’re accurate with what the customer ordered and undamaged.
A proven way of enhancing the receiving stage is by using a stock keeping unit (SKU) to track the movement of the package. By doing this, your stock can be managed, organised and recorded, allowing for more transparency around stock control.
2. Inventory storage
After the inventory has been received, it needs to be stored to simplify the picking process later down the line. An inventory storage system that facilitates quick and accurate movement of goods is crucial as it will help the rest of the process to run smoothly.
For smaller businesses, changes as simple as organising items in separate areas of the warehouse could speed up the process of finding an item and getting it moved along to the next stage of the fulfilment process. A consideration for businesses with a larger inventory is ensuring that warehouses are appropriately located. For example, if a warehouse is close to the location your packages ship from, it will make the shipping process quicker.
3. Order picking
When an order is placed, it will be marked as processed. It’s at this point that the item being bought is located, the availability is checked and the product in the chosen quantity is ordered. The picking stage is where the item is located within the warehouse and retrieved for the customer.
In modern e-tail, many businesses may decide to continue to use traditional ways of picking. This is done by recording stock data on paper and marking out the location of the required product when needed. However, inventory management software is an effective alternative that allows data to be collected digitally and gives the user the ability to control and automate picking and other related tasks.
4. Order packing
As soon as an item is picked, it moves straight to an area where it is packed and labelled with the customer’s details ready for delivery. It’s important at this stage that the correct packaging is used for the product as failure to do so could result in damage to the product or delays in transit.
Packaging costs can be cut in a number of ways. For example, cardboard is a cost effective material for packaging, and as it’s recyclable, it has less of an impact on the environment. It’s also possible to improve productivity and reduce costs by minimising packaging times and identifying peak times where a vast selection of products can be packed at the same time.
5. Shipping
Depending on a number of factors, shipping can be carried out in a selection of ways and using a handful of different methods of transport. However, once you’ve provided delivery options to your customers, they can choose the preferred method of delivery based on how quickly they want the package and how much they’re willing to pay. In many cases, ecommerce businesses choose to use carriers that deliver multiple packages via road.
As a carrier will be delivering your products to customers, it’s paramount that they provide a suitable service. A poor customer experience will reflect negatively on your business and could potentially deter those customers from returning. As such, it would be advisable to form strong relationships with your carriers, monitor their performance and ensure that customers aren’t being subjected to an unacceptable service (for example, unnecessarily late deliveries, damaged goods or unpleasant communications).
6. Returns processing
The returns process also forms a part of order fulfilment. Conversion rate specialists Invesp claims that as much as 30 per cent of products purchased online are returned, paling in comparison to the 8.89 per cent of returns that are made in bricks and mortar stores.
A survey carried out by UPS found that 68 per cent of shoppers check the returns policy before making an online order. With this in mind, offering a returns policy is something that customers now expect, and it may be the difference between a customer choosing your business or a competitor. Invesp also highlighted this concept, claiming that 58 per cent of customers admitted to wanting a hassle-free returns policy, so overcomplicating your returns policy could potentially lead to an issue with customer retention.
All ecommerce businesses should provide a returns policy that is available for customers to read and that is easy to understand and clear. It should explain the length of time customers have to return a product, how a potential refund may be provided (e.g money, store credit or a replacement product), which products qualify for refunds and who will pay for shipping if the product is returned.
