Ecommerce Fulfillment: All You Need to Know

Mastering ecommerce fulfillment is crucial for any ecommerce company set on growth. As an ecommerce business owner, you need a fulfillment service that ensures your orders are delivered quickly and efficiently to generate trust and brand loyalty, together with shipping that doesn’t cost the earth so you can retain the margins you need to run a profitable business.

In this guide, we explain all you need to know about ecommerce fulfillment. We will walk you through definitions, comparisons, and strategies that you can implement in your online business.

What is ecommerce fulfillment?

Ecommerce fulfillment is the entire process of a customer ordering an item and then receiving it. Once a customer places an order, it becomes the responsibility of the retailer to ensure it reaches them.

The process itself has many layers, including receiving and storing inventory, picking and packing, shipping, returns, and communication with the customer (to name a few). Businesses will either handle ecommerce fulfillment in-house, outsource to 3PL companies such as 3PL Center, or choose a different model.

Why is it important?

Ecommerce fulfillment is  important for any online business as customer satisfaction is your number one priority. Unhappy customers will lead to a fall in sales, which in turn affects all other areas of the business.

As an ecommerce business, your number one goal is to ensure your customer gets your product as seamlessly as possible. This means minimal delays, damages, and issues with the service.

On top of this, providing an exceptional ecommerce fulfillment service will give you a competitive edge over your competitors. This will then generate loyalty within your customer base, who will then speak positively about your business and thus bring in new customers, creating a healthy cycle.

How does ecommerce fulfillment differ from direct-to-consumer fulfillment?

While both ecommerce fulfillment and direct-to-consumer (D2C) fulfillment share similarities, they are different strategies that businesses of varying sizes will employ.

D2C fulfillment excludes the need of a middle man via retailer or wholesale, instead selling the product directly to the consumer. Moreover, D2C fulfillment can take place both online and offline. However, due to not using any intermediaries in the fulfillment process, businesses that use D2C fulfillment may struggle to grow. Scaling your business without the help of a third party is difficult, especially when trying to cope with growing demand from customers.

On the other hand, businesses that use ecommerce fulfillment to sell their products online will use third parties to help transport and deliver their product, meaning they hand over responsibility of distributing their product to a separate company.

D2C fulfillment may be more appealing when a business is small, but as it starts to grow, it will likely need the help of distributors or stockists to scale. This is where ecommerce fulfillment comes in.

How does ecommerce fulfillment work?

The exact way that ecommerce fulfillment works differs from company to company. However, generally, most fulfillment companies will follow this process:

1 – You (the business owner) order your products from your manufacturer.

2 – The products arrive at the fulfillment partner’s warehouse.

3 – The fulfillment team checks the products into the inventory and stores them.

4 – Once a customer orders a product from one of your sales channels, integrations will feed this information across to your fulfillment partner

5 – It is picked and packed ready for shipment.

6 – The product is shipped to the customer.

This is a broad overview of the entire ecommerce fulfillment process. While it may appear simple, there are many intricacies and opportunities for optimization, making it easy to do but hard to master.

Ecommerce fulfillment strategies

There are several different strategies to choose from when managing your ecommerce fulfillment. The one best for you will depend on your business size, model, and stage of growth. The products you sell and your industry will also have an impact on this decision.

Self-fulfillment

Businesses in their early stages start off with self-fulfillment. This means you control all your picking and packing, either from the comfort of your own home or a rented space.

This option gives you complete control over what you send out, meaning you get the final check over anything you send out.

As your business starts to grow, the logistics will start to get more complicated. A growing business needs more products, staff, and space to accommodate them. At this point, it may be worth looking at outsourcing your ecommerce fulfillment.

Outsourcing to a 3PL

Using a 3PL provider to manage your ecommerce fulfillment alleviates any logistical worries. Companies like 3PL Center will manage your entire logistics pipeline, encompassing warehousing, shipping, and much more.

3PL ecommerce fulfillment get reduced rates on shipping through their partnerships with ecommerce platforms. This will save you money in the long run.

Additionally, businesses that partner with a 3PL free up time to focus on other areas of their business. This is where the true value in outsourcing lies.

3PL vs self-fulfillment

The most common question amongst growing businesses is whether to outsource their fulfillment needs to a 3PL or manage it themselves. In truth, the answer for this will differ on a case-by-case basis. However, there are a number of things to keep in mind.

Small businesses that are just starting out are better off sticking to self fulfillment until they outgrow themselves. This keeps their expenditure down while maximizing profits to use for growth.

Once a business grows beyond its own capabilities, this is when outsourcing to a 3PL ecommerce fulfillment provider becomes necessary. Here, an ecommerce business can gain support from third parties by using their skills and experience to manage their logistics and inventory. By doing so, it gives them the time to focus on other areas of their business to expand.

Dropshipping

Dropshipping is a fulfillment option that many small businesses opt for when starting out. Essentially, dropshipping means that businesses do not own stock, and instead buy it from a manufacturer when a customer places an order.

This is a good option for businesses that have a small initial investment. However, it is beneficial to later transition to another option when looking to grow.

Amazon FBA

Using fulfillment by Amazon (FBA) gives you access to Amazon’s logistics network. This method ships orders from the Amazon Marketplace and other ecommerce platforms.

The biggest perk of using this method is gaining access to Amazon Prime shipping. However, it does come with some downsides too. Notably, FBA has a limit on warehouse space and product size, alongside other disadvantages.

Amazon FBA works well in combination with other strategies.

Hybrid

Many businesses opt to use a combination of the choices above. However, what works for one business may not necessarily work for another, as this depends heavily on your products, business size, and capital.

The most popular hybrid model is outsourcing to a 3PL in conjunction with Amazon FBA. This gives you access to the Amazon Marketplace, but also gives you storage space and flexibility to hold your products elsewhere.

It’s important to identify what stage your business is at before making a decision. Outsourcing too early could hamper growth, while outsourcing too late may create workload you simply cannot handle.

Ecommerce fulfillment services

Ecommerce fulfillment is an umbrella term that encompasses several different services. Here is a detailed breakdown of these services and what they entail.

Receiving

Fulfillment warehouses have dedicated areas where new products arrive ready for storage.

When you order products from a manufacturer to your provider’s warehouse, you should send them an advance shipping notice detailing what the order should contain. Once it arrives, the workers can then cross reference the order with the shipping notice to ensure there are no discrepancies.

It is important that your chosen fulfillment company stays on top of this service as poor execution can seriously hinder a client’s ability to sell their product. Ideally, a fulfillment warehouse should place your stock into inventory within two days of receiving it. Failing to do so means that your order will sit on a pallet in the loading dock, which means you are unable to sell it.

Moreover, your provider should also share inventory data with you. This gives you insight into how much stock you have and how much is waiting to be put into stock, thus showing an accurate depiction of your inventory and what to expect if an influx of orders comes in.

Storage

Storage is the backbone of any ecommerce fulfillment strategy as failing to store your product means it is unavailable for customers to buy. To ensure maximum efficiency, fulfillment warehouses have well-established systems in place to keep inventory in storage.

When the warehouse receives an order, it comes with a picklist detailing each SKU’s aisle and shelf location. Pickers can easily identify the correct area to pick items from as all shelves are labeled with their respective SKU codes.

While each warehouse operates differently, they will likely organize their storage in a way that benefits them. For example, products with the highest volume of sale will sit nearest to the packing area, thus minimizing the distance the picker needs to travel.

Inventory management

Ensuring that your inventory meets the levels of demand your business generates requires constant monitoring and adjustment. It is hard to meet the balance of having enough inventory while not investing capital into your product.

Therefore, having a 3PL manage your inventory through ecommerce fulfillment ensures it is both safe and secure. Any issues relating to theft or damage are typically covered by the provider, thus protecting your inventory and investment.

Picking and packing

When a customer orders a product, the warehouse management system generates a packing slip for pickers to work from. Pickers will then work their way around the warehouse and place all items from an order together.

After, packers will add the items to a box of relevant size, alongside adding infill to protect the items. They will then seal the box and apply the label, thus readying it for shipment.

A good practice for fulfillment warehouses is to pick and pack orders the same day a customer orders them. If this isn’t possible, then they aim for the following day instead. It is important for warehouses to maintain reliability and speed to ensure customer satisfaction levels are not impacted by poor fulfillment operations.

Kitting and assembly

While this is a less common area of ecommerce fulfillment, kitting and assembly is still important for some businesses. This service is for products that require a certain method of shipping and arrangement of items that deviates from the norm.

A simple example would be a phone. Typically, a phone will also include a charger and earbuds alongside it. These will not arrive at the warehouse together and require the workers to pack them into a single kit.

Due to this deviation, kitting can be a very inefficient and time-consuming service to complete, especially through self-fulfillment.

Shipping

The final stage of the main ecommerce fulfillment process is shipping the product. It is here that workers make the final checks to ensure packages are delivered to the right place.

Staff will cross reference shipping labels with the carriers they are intended to ship with. Once satisfied, they will sign off and hand them over to the relevant delivery company.

Once they leave, they will be enroute to your customers. Providers with a wide network of warehouses will have less issues with delays, so it’s important to partner with a provider that has easy, nationwide delivery access.

Returns

While not a staple of every delivery, it is inevitable that a customer will want to return their product. Whether it is due to damage, delay, or an unwanted product, your provider should be ready to receive and manage returns.

You can choose to receive returns yourself if you wish. This can give you insight into why it was returned and who was at fault. If returns occur often due to damage, your provider may not be providing adequate care for your product.

In spite of this, most orders go back to the warehouse that shipped them. This allows them to sub the item out straight away as they have your inventory to hand. Some 3PL providers have a separate warehouse for returns in order to keep things in order.

Your returns system will differ depending on the products you sell, the size of your business, and how your fulfillment provider operates.

Costs of ecommerce fulfillment

The costs of ecommerce fulfillment can be complicated to calculate based on a number of factors. These include the product, method, channels, and services that a business uses.

The costs of self-fulfillment

A common misconception amongst many small businesses is that shipping is the only cost that they should be concerned about. However, there are many subtle costs associated with self-fulfillment that businesses typically overlook:

Pick and packing supplies – Packing your products requires things such as tape, infill, labels, paper, printers, and ink.

Transportation – Paying for gas to deliver things yourself or paying a third-party to do it for you.

Returns – Refund unhappy customers or spending time dealing with them.

Making customers wait – Spending your time managing logistics yourself will inevitably delay sales and other areas of the business.

The last point is crucial when considering the costs of self-fulfillment. Time is money, so always consider if you would be better off spending it doing something else for your business.

The costs of 3PL

While 3PL providers charge for their services differently, here are some of the most frequent fees you will likely accumulate by working with one:

Onboarding – Receiving and stowing your product into inventory

Storage – Holding your product while awaiting order

Pick and packing – Readying your product for order

Packing materials – The materials used to ship your product. Special products that require tailored packing will likely incur costs.

Kitting – Assembling special products in a certain way

Shipping – Sending orders to your customers

Importantly, as 3PL providers work with many ecommerce businesses, they typically get discounted rates. This means big businesses that spend a lot of money on self-fulfillment will likely save money by outsourcing to a 3PL.

Ecommerce fulfillment centers and warehouses

Ecommerce fulfillment centers are imperative to managing the logistics of medium to large online business. When choosing a 3PL, it is important that their location and features match what your business needs.

What is an ecommerce fulfillment center?

A fulfillment center is the facility that ships orders for an ecommerce business. They store the product when it arrives via onboarding, then retain it until a customer places an order, leading to shipment.

The most important aspect of a fulfillment center is ensuring efficiency and speed. 3PL turnaround times need to be quick in order to fulfill the needs of the businesses they serve.

Where are 3PL Center’s fulfillment centers?

3PL Center has reach across the entirety of North America. We have fulfillment centers strategically placed across the continent to ensure vast reach and quick shipment.

Our centers are located in:

Edison, New Jersey

Simi Valley, California

Toronto, Canada

Vancouver, British Columbia

Technology integrations

Any ecommerce fulfillment strategy requires some form of integration when looking to scale.

All businesses will require a link between your warehouse management system and chosen ecommerce platforms. This is crucial as it allows the warehouse to track any orders that a customer places and for you to see your inventory data.

When partnering with a third-party provider, we have a whole range of custom integrations for nearly all major ecommerce platforms. Using our own api, or through third-party developers, businesses we work with at 3PL Center can seamlessly integrate with nearly any system.

3PL Center’s partners: 5 online platforms we integrate with

The platforms you choose to sell your product on need to work with your ecommerce fulfillment strategy. If they don’t, this can be detrimental to the success of your business.

3PL Center works closely with nearly all major ecommerce platforms across North America. Here are five of our top partners and how we integrate our system with theirs:

Shopify

3PL Center has worked with Shopify for many years to fulfill orders for a variety of businesses. Our system seamlessly integrates with Shopfiy’s platform, giving you access to stock, data, and alerts when you need to reorder.

WooCommerce

Our software integrates with WooCommerce’s platform to ensure maximum automation and management efficiency. Connecting to our software works via a WordPress plugin, allowing businesses to instantly start selling and seeing their live inventory.

Magneto

With approximately 250,000 users worldwide, Magneto is one of the world’s leading ecommerce platforms. Our integrations provide you with the ability to view, track, and manage your orders and stock.

Amazon

Our partnership with Amazon allows for shipment of products that do not meet the requirements of Prime delivery. We integrate with the platform, allowing for a seamless experience at your end to track and manage inventory.

Wix

For start up businesses, Wix is the perfect website builder to start advertising their product on. As the business grows, outsourcing to a provider like 3PL Center allows you to split inventory across our warehousing networking for picking, packing, and shipping. The integration itself is simple and requires little set up.

Ecommerce fulfillment examples: 6 industries that benefit from outsourcing to a 3PL

At 3PL Center, we work with many industries that require fulfillment and logistics management. These examples will show the benefits that they get from working with us and how we change our strategy to help them grow:

1. Vitamins and pharmaceuticals fulfillment

Due to our experience with the vitamins and pharmaceuticals industry, we know the standards we must adhere to when holding the product. This includes meeting FDA-approved cleanliness and ensuring the product is kept safe and secure from tampering.

2. Auto parts fulfillment

The main challenge of any auto parts business is handling thousands, if not millions, of SKUs that you can sell through multiple channels. This requires a robust network of warehousing and distribution to accommodate it. When working with this industry, we optimize warehouse layouts and locations to ensure maximum efficiency for shipment.

3. Pet products fulfillment

The pet industry is a highly lucrative yet competitive one. With a massive catalog of accessories to choose from, such as collars, toys, and beds, we ensure that businesses we work with have the room to scale and expand. Using our network of fulfillment centers allows for future growth opportunities when taking your business to the next level.

4. Home goods fulfillment

Home goods sales take up roughly 20% of the overall online market, meaning businesses need to have their logistics secure. By using our proprietary fulfillment software, you gain 24/7 access to the status of your stock. This allows for expert management during busier periods, enabling predictions for later sales and growth.

5. Electronics fulfillment

The electronics industry is growing more and more each day. This requires an approach that is constantly evolving and changing to meet growing demands. An important part of electronics ecommerce fulfillment is kitting and assembly. 3PL Center adopts an efficient approach with this, removing inefficiencies and focusing on a quick turnaround.

6. Ebike fulfillment

With US e-bike sales slowly increasing over time, the demand for bike shipping fulfillment services will continue to rise. Finding a partner that can safely ship these heavy products without damaging the delicate lithium battery is imperative to the long-term success of bike shipping companies.

How to choose the right 3PL for ecommerce fulfillment

When choosing to outsource your ecommerce fulfillment, you need to choose a 3PL that can reliably fulfill your business needs. Your main priorities are speed, affordability, and reliability, so your chosen provider needs to meet these requirements.

If you’re considering outsourcing to a 3PL, or looking to switch from your current provider, here are some things you need to consider:

Do I need to outsource? – For smaller companies, self-fulfillment or dropshipping may be a more ideal business model. However, you always need to consider expansion and future scalability. This is where a 3PL can help.

How much customization do I need?  – Some businesses require a more tailored approach depending on how many channels they sell on or how they expect their product to be shipped. Ensure that the 3PL can provide a unique solution to your business needs.

Are they the right fit? – Do your research before inquiring with a 3PL to ensure they have a good reputation in the industry. Check reviews, testimonials, and case studies to see if they have had a positive impact on any businesses similar to yours.

Can they scale with my business? – This is arguably the most important question to ask yourself when choosing a 3PL for ecommerce fulfillment. If a provider cannot meet your scalability requirements, they will likely hold your business back in the future. Ask about expansion opportunities and ensure they have the capacity to meet them.

Why choose 3PL Center for ecommerce fulfillment?

At 3PL Center, we have years of experience in ecommerce fulfillment and working with businesses of varying sizes and industries. We have the knowledge and expertise to manage your logistical needs, freeing you of any stress or worry.

By partnering with us, you give yourself the time and money to focus on other areas of your business. Looking to build your online presence? Trying to improve your brand? Let us handle your ecommerce fulfillment needs and this will give you the time to do so.

Our team of experts will carefully manage your fulfillment from beginning to end, handling your onboarding, warehousing, and shipping needs. We pride ourselves on our efficiency, speed, and reliability, ensuring that you and your customers are happy with the service you receive.

Looking to start outsourcing? Contact us today.

Ecommerce Fulfillment FAQs

How can I reduce shipping costs in ecommerce fulfillment?

One effective strategy to reduce shipping costs is to partner with a fulfillment provider that has negotiated discounted rates with major carriers due to their high shipping volume. This can significantly lower shipping expenses, making your operations more cost-effective and competitive.

What is the difference between dropshipping and third-party fulfillment (3PL)?

Dropshipping and third-party fulfillment (3PL) differ mainly in inventory management and fulfillment responsibilities. In dropshipping, the retailer doesn’t keep goods in stock but transfers customer orders to a manufacturer or wholesaler, who ships directly to the customer. With 3PL, the business owns the inventory stored at the 3PL’s warehouse, which handles order fulfillment. Dropshipping eliminates inventory management for the retailer, whereas 3PL offers more control over fulfillment, inventory, and customer service.

How are ecommerce businesses incorporating sustainability into their fulfillment processes?

Ecommerce businesses are adopting sustainable practices such as using recyclable packaging, optimizing delivery routes to lower emissions, and employing energy-efficient technologies in warehouses. These strategies help address environmental concerns and meet the growing consumer demand for eco-friendly business operations.

What impact are emerging technologies like AI, robotics, and blockchain having on ecommerce fulfillment?

Advanced technologies are transforming ecommerce fulfillment by enhancing efficiency and transparency. AI and robotics streamline warehouse operations and improve order processing speed and accuracy. Blockchain offers secure, transparent transaction and supply chain tracking. These technologies can significantly improve operational efficiency and customer satisfaction, shaping the future of ecommerce fulfillment.

What is a fulfillment partner?

A fulfillment partner is a 3PL that handles orders and fulfillment for a range of online businesses. Partners integrate with major ecommerce platforms to ensure they expertly fulfill the needs of businesses they work with.

How do ecommerce fulfillment services work?

By keeping your inventory in our warehouses, fulfillment providers can pick, pack, and ship orders to customers as they come through. This manages the entire ecommerce fulfillment process for you, giving you space to focus on other areas of the business. The number of large businesses partnering with 3PLs is increasing, showing the advantages of outsourcing your fulfillment needs to a provider like 3PL Center.

What is the difference between a warehouse and a fulfillment center?

A fulfillment center functions as places for orders to be packaged and shipped. A warehouse typically holds items, raw material, and finished goods awaiting orders.

At 3PL Center, our fulfillment centers function as both storage for your product and a place for picking, packing, and shipping.