Shopify Fulfillment 101: How to Fulfill Shopify Orders
When shopping online, two of the most critical factors for customers are price and expected shipping times—estimated delivery time influences 68% of customers’ buying decisions.
Order fulfillment is the process of getting your customers the product they paid for. Fulfillment is essential to the entire selling process, and a poorly planned fulfillment plan could cost you a sale.
Previously, an ecommerce business could stay on top by simply providing free shipping. However, customer expectation levels are much higher than they used to be, so that isn’t enough anymore.
An efficient fulfillment system helps ensure that orders arrive when they’re supposed to. The fewer hours you spend picking and packing your orders and handling any delivery issues, the faster you can get an order from your store into a shopper’s hands.
Keep reading to learn how to fulfill Shopify orders more efficiently.
What Is Shopify Order Fulfillment?
First, let’s take a look at a Shopify merchant’s fulfillment process.
Once a customer places an item on your website, it’s time to accept the purchase and ship the products. After reviewing the items in an order, these products are removed from inventory, packaged, and sent out for delivery. Once the shipment has been prepared, it is marked as shipped and enters the next phase of the supply chain.
Sometimes, orders are placed on hold during the fulfillment process. Reasons for this may include:
- You are upselling, and there’s a chance the customers at checkout will buy more.
- You don’t currently have enough inventory to fulfill items in-house but expect to receive some soon.
- You fulfill orders manually or create custom products, so you build extra time into your fulfillment process.
The above applies to Shopify order fulfillment, however, there is also reverse order fulfillment—or reverse logistics—where the products are returned to your inventory.
When a product is returned to your warehouse, the reverse logistics process may look like this:
- A customer decides to return a product to your store.
- The customer takes the item to a pickup location or a brick-and-mortar store or ships it back to your company’s warehouse using a return label.
- After you receive the product return, you decide what action to take with the inventory. Returns go through a quality control procedure, where you put any sellable back on the shelves. You may choose to put aside or recycle any items that aren’t working correctly or are broken.
- If the order qualifies for a refund, then you give a refund to your customer.
Why Is Order Fulfillment Important?
It’s important for any ecommerce brand to master order fulfillment. With a refined order fulfillment strategy in place, you’ll benefit from:
An external fulfillment service provider can help you save time and money by reducing your order picking, packing, and shipment method costs.
The Shopify Fulfillment Network, for example, processes a large number of ecommerce orders. Shippers like UPS, USPS, and DHL provide discounted rates for online retailers who use their services.
Better Customer Service
You must ensure that your customers’ packages are delivered correctly, with the products ordered, and within a reasonable time.
If you fail at any of these things, your customer service will suffer and negatively impact your business.
A streamlined process will help you spend less of your valuable resources on things that don’t add value to your business.
Online shopping has become increasingly popular among consumers, which means more competition. The expectation is that goods are delivered right away because of the precedent set by large retail stores like Amazon and Walmart.
To be taken seriously as a company, you must be able to process orders within one business day, communicate tracking details to customers, and follow up for feedback once they receive their packages.
How to Fulfill Shopify Orders
You can use one of three different order fulfillment strategies: merchant fulfillment, dropshipping, or third-party fulfillment.
Depending on your shipping volume, team strengths, and customers’ geographic locations, your store will be suited for one of these three options.
Merchant fulfillment is best for smaller ecommerce businesses with lower sales volumes.
When you fulfill an online purchase yourself, merchant fulfillment occurs. Also known as in-house fulfillment, nearly 90% of all online orders are fulfilled partly by their retailers.
If you fulfill orders yourself, it’s an excellent way to provide more personalized customer service. Consider including a handwritten letter or a sample of an item that you think your customer might enjoy. Making human connections can create a higher-quality experience for your customer.
Merchant fulfillment may be the way to go if you’re concerned about high fulfillment fees—all you’ll have to consider are shipping costs. It offers total control over your customers’ unboxing experience since your team packs each order carefully.
However, in-house fulfillment is time-consuming. Your shipping rates may be higher because you won’t have the advantageous rates given to third-party fulfillment providers.
Plus, the risk of human error is increased since it’s unlikely a merchant who fulfills in-house has the warehousing technology required to automatically pick and pack orders.
If you’re a new ecommerce retailer on a budget, consider dropshipping.
Dropshipping fulfillment alleviates any worry over managing your own stock or shipping packages. You can select, package, and send products and a tracking URL to your Shopify customer without ever having physical contact with the inventory.
The dropshipping business model is most attractive to new online retailers without a budget, since you don’t have to worry about purchasing large quantities of inventory or paying warehouse fees.
You can also start an online business without any inventory management experience because you only pay for products once a customer orders them. This allows you to nurture other areas which are critical to a budding business, such as marketing.
However, you have no control over the unboxing experience when using a dropshipping fulfillment model. You’ll be competing with other dropshippers over inventory so shipping delays may be common depending on your niche.
Also, finding reliable dropship order fulfillment providers can be difficult as they’re often located outside the United States.
Third-party fulfillment is best for established ecommerce businesses with increased sales volume.
A third-party fulfillment—or third-party logistics—provider (3PL) takes the entire order fulfillment off your plate. It’s their responsibility to source products, print shipping labels, and send items to your customers—without your involvement.
Working with a fulfillment service frees up more time for you to work on other aspects of your business. You can also enjoy time away from work without worrying about order delays.
Third-party fulfillment is attractive to business owners who don’t have the budget to hire seasonal logistics staff during busier periods. Your customers will benefit from faster fulfillment speeds—since most 3PL providers use advanced automation technology.
While beneficial, third-party fulfillment is more expensive. The average pick and pack fee for an order with a single item is $3.13. Plus, many third-party logistics shipping providers don’t offer custom packaging, giving you less customer experience control.
Improving Your Ecommerce Order Fulfillment Process
Now that we know how the order fulfillment process works, let’s look at how you can streamline yours and get products to your customers faster, easier, and smarter.
1. Optimize Inventory Management
When it comes to optimized order fulfillment, speed is everything. The quickest way to make your customer happy is to get their order to them quicker. You can do this by localizing inventory—store products closer to your customers, so you can decrease shipping times.
Consider an order fulfillment platform that allows you to set up routing rules to optimize order fulfillment by location, cost, warehouse or supplier preference, weight, and more.
2. Improve Shipping Carrier Relationships
Shipping carriers play an important role in how quickly you can deliver products to your customer. To get cheaper shipping rates from your carrier partners, build strong business relations with them. This could mean:
- Estimate shipping volume accurately: Carriers often charge by shipping volume. If you expect an increase in orders, let your shipping company know ahead of time so they can plan accordingly.
- Communicate proactively: Check in with your shipping partners often and see if there’s anything you can do to make their jobs easier, such as providing orders earlier in the day.
- Provide positive feedback when things are going well: While letting them know when something goes wrong is important to prevent future mistakes, compliments can go a long way in building business relationships.
3. Introduce Better Quality Control Measures
On the other hand, the quickest way to upset a customer is to send them a package containing the wrong product. Not only do they not receive what they ordered, they have to take the time to ship the product back to you—which no one has time for.
With an order-picking strategy in place, you can minimize the risk of this happening to your loyal customers. Find a way to match customer orders with inventory so that you never deliver the wrong item.
However, don’t stop at developing an order-picking strategy. The way you pack orders matters, too. Always guarantee that your team is packing orders neatly and safely, ensuring that nothing breaks in transit.
4. Use Data Analytics to Guide Decisions
To fine-tune your order fulfillment process, start by building KPIs which can tell you what’s going well and what needs improvement.
Taking the time to analyze your order fulfillment process data allows you to better identify your inventory turnover rate, refine your safety stock quantities, and more accurately forecast demand.
5. Automate, Automate, Automate
Any part of the fulfillment cycle could be affected by human errors. When order fulfillment accuracy is low, customer experience is at risk. Mistakes made by employees could result in lost sales.
When retailers use manual fulfillment, there is a higher risk that something will go wrong, and you risk wasting time and manpower.
Automation is key to optimizing a fulfillment strategy. Automatic fulfillment can help you improve all aspects of supply chain management, including logistics costs, inventory levels, and service satisfaction.
The best way to automate ecommerce fulfillment is by leveraging integrations, so order data is automatically sent to your fulfillment providers without you having to enter anything.
It’s essential to be careful when fulfilling orders because you can lose a lot of money if something goes wrong. Between replacing products, extra packaging and shipping labels, and wasting company time, the costs can really add up.
6. Communicate With Customers When Things Go Wrong
No matter how much you refine your Shopify order fulfillment process, some things will be out of control. Regardless, all orders are your responsibility, no matter the fulfillment method. The best retailers are providing transparency alongside their delivery promises.
For example, let’s say you promise two-day shipping for US shoppers, but a delayed shipment from your supplier impacts your order fulfillment process. You won’t meet your customers’ expectations if you deliver in four days rather than two.
To minimize a negative impact on your customers’ satisfaction, inform them of their fulfillment status as soon as you realize a delay is happening, apologize, and give a brief reason why their package might be delayed.
Fulfill More Shopify Orders With Flxpoint
Fulfillment must be a top-of-mind concern for any online retailer. Regardless of whether you outsource fulfillment or keep it in-house, you need to ensure that your processes are strong. If you fail to meet your customers’ expectations, they will start shopping elsewhere.
Many businesses start out by fulfilling items using manual, error-prone methods. As your business grows, you’ll have to find new ways to optimize your supply chain, starting with automation.
Luckily, Flxpoint specializes in just that. Talk with an expert today about streamlining your Shopify order fulfillment process.
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