As a company looking to venture into different global markets like the USA, you are definitely open to considering new challenges and collaborations. You will be looking to market your products online, partner with different fulfillment companies, and gain new customers.
Fundamentally the most important step is order fulfillment but what exactly is that?
What is order fulfillment?
Order fulfillment can simply be defined as the steps between receiving an order from a customer and delivering the product to them. Alternatively, this process could also be known as inventory fulfillment or supply chain fulfillment.
The three main steps of order fulfillment are receiving the orders, processing them, and shipping the items out. It is the act of logistics and responding to customers’ requests.
Why is order fulfillment important?
Order fulfillment needs to happen for a transaction to be complete. Regardless of the type of business you run, whether it’s goods or services, you have to deliver products satisfactorily.
How well orders are fulfilled affects the customer experience.
Customers want to get their packages on time and safely. A negative experience when receiving items will turn customers away even if the product itself is good. It is, therefore, essential to ensure that the entire experience of buying and receiving a product is positive.
Types of order fulfillment
There are many different types of order fulfillment and it’s important to choose the right one for your business. A company would choose different options based on the resources and skills it possesses.
An in-house model means that everything is done within the company. The company has staff to handle all the steps to fulfill the orders. This would be an ideal solution for companies that are large and established and want to be involved in an end-to-end process.
Often, small businesses start out this way and choose other options as they grow since this method can be time-consuming.
Companies can opt to hire a third party to handle the order fulfillment process. You can choose to outsource some or all of the processes to supply chain experts. Supply chain management can help you store inventory and ship them out when they receive orders.
Companies may choose to use a fulfillment service when there’s growth in the number of orders or when attempting to serve customers in a different region.
You would be able to save investments on warehouse space or the technology needed to sustain increased volumes of shipment. Business resources can be channeled to business development instead.
Drop shippers supply the products to the customers. The retailer markets the products and then passes on any orders to the drop shippers to process. All order fulfillment is done by the drop shipper and retailers get a share of the profit.
This minimizes the cost for retailers because they only need to focus on marketing the products to potential customers but don’t need to store inventory. However, they’re not involved in the process of order fulfillment and cannot guarantee the quality of service the customer receives.
A hybrid model combines two or three different models stated above. Some companies may hire third parties occasionally during sales or the holiday season. There are also companies that have in-house products and also drop-ship products they might not want to store in house.
Hybrid models offer flexibility in switching to different models to accommodate different seasons. It could get confusing using many models and can be time-consuming to balance the different parts to make sure it works well together.
Order fulfillment process for US markets
The first step is receiving inventories for sale. As a company, you could be receiving inventory from manufacturers, suppliers, or even other companies. Once items are received, there are a few steps to go through before they are ready for sale.
- Count your items to make sure you’ve received the correct amount as ordered.
- Quality control is essential. Make sure all items have been checked for damages.
- Add SKUs or barcodes to items that don’t have them.
- Key in SKU’s to your inventory management software to track the number of items available for sale.
You may choose to fulfill orders in-house or through other third-party companies but the first steps are still similar. Once all the items have been labelled and checked, they can proceed to storage.
Warehousing of inventory
Inventory needs to be stored in a warehouse until they’ve been purchased by customers. Some companies invest in their own warehouse while some outsource this process. Warehouse storage needs to be clean and safe for items to be kept until they’re needed for delivery.
Organization at the warehouse should be clearly sorted to ease packing for an order. How well a warehouse is sorted can determine the accuracy and the speed of getting an order ready. A great tip is to sort best sellers at an easily accessible spot.
Once the order has been made, order processing begins. An order management system can automatically initiate the processing of a new order. If you’re working with a third-party company, you can sit back as they handle the labor of getting the order ready. Otherwise, the employee at the warehouse will receive a slip to start packing.
Picking and packing
A packing slip will contain the information of all the items that are needed to be packed. The information will be specific to contain item codes, size, color to make sure the team gets the right item. Once items are collected off the shelves they are sent to packing.
This process can be automated by a robot if a warehouse is equipped with them.
The packing team has the key job of assembling items in the most efficient way to reduce shipping fees. The fees include the weight of an object as well as the dimensions of the packaging. Items should be packed with return instructions and a return slip for the customer.
The items are now ready to be shipped out to the customer. It is important to choose the best method of shipping for the weight of the items. You will want to look for the fastest, safest partner that is also cost-effective.
There are a few options for the US market such as FedEx, USP, or the US Postal Service.
Each one has different rates that should be considered when choosing the right shipping partner. Shipping charges tend to be a premium for the US and it’s a long journey so you want to choose a reliable partner.
Once an order is shipped, the tracking information is sent out to the customers. Customers will be notified where their packages are and can check the status at any time. Usually, they will also receive an estimated time of arrival of when they can expect to receive their parcel.
It is also common that the shipping route in the US could involve more than one carrier. Depending on the location of the customers, a mix of different carriers could be the most cost-effective. The US postal service is most likely to deliver to more areas than other commercial delivery services.
There are different options to partner with a carrier or to choose the most cost-effective carrier based on the order. Customers might also choose a different delivery carrier to suit their needs and it depends on how much they’re willing to pay for shipping. Once the customer has received the goods, the delivery is complete.
The ability to return products or exchange faulty ones is an essential factor that customers consider when choosing an online retailer. Returns processing should be as seamless as possible and be paired with excellent customer service. Terms of returns and refunds should be made clear at the time of purchase.
When items are returned they need to be checked to see if they are still of good quality. Quality control checks are done and items are repackaged or restocked for sale. If items are malfunctioned or soiled they can’t be sold and will be returned to the manufacturer for a refund or credit.
Order fulfillment strategies
You want to make the best decision for your business. There are many options out there and not all of them will work for you.
Businesses cannot rely on a one size fits all method. Your needs will change as your business grows.
Following are some strategies that are helpful for order fulfillment:
- Understand your business size and order volume
- Customer location
- Maintain accurate inventory
- Integrate with suppliers
- Warehousing options like Smart warehousing and Micro warehousing
- Make the supply chain transparent
- Consider alternative shipping methods
- Last-mile tracking
- Use CRM technology
- Keep communications open
Read our article on “Order fulfillment strategies For Your eCommerce Business” for more details on order fulfillment strategies.
There are many different things to consider when choosing the right order fulfillment process for your business. Having the right technology and the right expertise can make the difference in ensuring that your venture into the US market is successful.
Working with a fulfillment company that has the expertise in this field is likely to boost your sales and result in a positive experience for your business.