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October 1, 2015

The Cost of Order Fulfillment Failures

When a customer has submitted and paid for an order, it is time to do your part: Fulfill it.

Many retailers, however, view order fulfillment as an afterthought and focus mainly on sales to increase and traffic growth. Doing this can cost you more than you think, from customer loyalty and retention to company’s profit and reputation.

This article illustrates what challenges arise in order fulfillment and how to improve efficiency.

Understanding Ecommerce Fulfilling Process

Generally, order fulfillment is everything a company does between receiving an order and delivering the product to the customers’ door.

If you’re new to eCommerce, you might wonder how it could possibly be a challenge. However, think of all the steps you need to carry out efficiently and quickly, to avoid putting customer satisfaction at risk. These steps include the following activities:

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Image source: ecommercemilo.com

Order fulfillment workflow may vary, depending on the products and vendors. The steps may also differ for B2C and B2B businesses, small and large products, food, perishable goods and digital stuff.

That’s why such a complex chain may have problems.

Order Fulfillment Challenges

Retailers worldwide agree that managing the order fulfillment process is becoming more complicated and multi-faceted. Major issues companies now face are:

  • Maintaining customer satisfaction (49% of retailers);
  • The complexity of order management systems (45% of retailers);
  • Rising costs around order fulfillment (45% of retailers);
  • Inaccurate delivery dates (29% of retailers).

In particular, errors may occur when:

  • Picking wrong products/SKUs (the standard industry picking error rate is one percent);
  • Manually updating the inventory for a single or multiple orders;
  • Managing inventory across multiple selling channels (eg. You have a Magento store and auction off items on eBay);
  • Generating invoices;
  • Tracking shipments.

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Image credit: sclogistics.com

So, what you can do to prevent order fulfillment errors and make the whole process fast and efficient?

Solutions to Order Fulfillment Failures

The fulfillment process starts right when a customer places an order and pays for it. After that, order and inventory management steps begin.

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Image credit: intelligrated.com

Order Management

Every store owner has out-of-the-box management system as a part of his or her eCommerce platform. Proper order management system helps merchants streamline and automate order processing. In particular, it improves sales, boosts customer experience and processes orders with a minimum of delays and back-orders.

Here are four main points your order management system should do:

  1. Provide order information across all channels. Consumers buy in various locations (websites, marketplaces, mobiles or tablets). Make sure your order management system can manage all of them without a glitch.
  2. Track inventory (especially when you use more than one sales channel) to prevent back-orders and refunds in cases when the item is out-of-stock. Nothing damages your brand and reputation more than not being able to fulfill customers’ orders.
  3. Give maximally informative database. When a customer places an order, you have to deal with an avalanche of information. Make sure the system brings you the detailed overview of each order.
  4. Manage orders automatically. Store owners have a choice between an automatic and a manual management systems. The more system interaction employees have, the higher chances for a human mistake. That’s why automatic solution is hands-down the best way to free up valuable resources and efficiently manage orders.

Order management is a complex process. When it is time to choose a proper solution, try the one that provides enough features, has the right price for you and can be easily integrated into your business.

Here are the most popular order management solutions for various eCommerce platforms:

  1. MagentoOrder Management
  2. ShopifyOrder Manager
  3. OpenCart – Order Manager Professional
  4. WooCommerce Inventory and Order Management

Pick and Pack

The picking and packing process needs to be integrated into a smooth flowing system. Not every eCommerce business is big enough to refer to a fulfillment service (a third-party warehouse that prepares and ships your orders). Many store owners handle picking, packing and shipping of orders themselves.

Here are the most typical pick/pack mistakes (if you do it yourself):

  1. Wrong box for packaging. Different products require different packaging needs. Make sure you choose the correct box for your products. You may use 3d party services like Uline, ValueMailers or Fast-Pack that offer a wide choice of packaging materials (boxes, package cushioning, bubble mailers).
  2. Incorrect address and labeling. When it comes to invoice mistakes, you can get a wide range: from a simple typo to sending the invoice to the wrong person. Check and recheck the invoices you send to the customers or use an app that can help you prepare them hassle free.

     Once a new business starts rapidly growing, pick/pack problems become key. Using a fulfillment service can automate the whole process and handle your orders from beginning to end. When an order comes, your fulfillment partner automatically picks, packs and ships all the orders from the closest warehouse to your customers.

What’s more, there’re a number of benefits using a fulfillment warehouse:

  1. Cheaper shipping rates. Such warehouses ship numerous products from various vendors, so the shipping rates are lower.
  2. Shorter shipping time. Because fulfillment services have warehouses around the globe, customers get their packages faster.

Here’re some popular fulfillment services for online merchants:

  1. Shipwire
  2. eFulfilment service
  3. Webgistix

Using a fulfillment service is a chance for many merchants to outsource unknown tasks and focus on what they do best.

Shipping and Delivery

Shipping can either make or break your business. Improvements to your shipping and delivery process can change your order fulfillment for the better. Offering free shipping is becoming increasingly popular. However, shipping is never free.

A wide variety of factors, including size and weight of the package, departing and destination country, tracking, insurance, take place when it comes to shipping profitability and costs.

Below we have compiled a list of shipping apps that will make the shipping routine efficient:

  1. Magento – Fulfillment by Amazon
  2. Shopify – AfterShip
  3. WooCommerce – Advanced Shipping
  4. Opencart – X-Shipping Pro

The Bottom Line

Apply the best resources available to you to make the whole process more structured, cost-effective and accurate. Take control over every aspect of your order fulfillment process, find a reliable fulfillment provider or pack your management system with the best and the most useful apps. You must be confident that your orders are fulfilled accurately and quickly.

How do you handle order fulfillment?

 


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Natalie Pavlovskaya (@tenlerlenin) is a digital marketer and content strategist at MageWorx, a company developing various extensions and admin tools for Magento. She is here to write cool stuff about all things eCommerce and social.

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