What is Order Fulfilment?

Picture this: It’s December 20th — only five days before Christmas — and you just bought a gift online for someone you care about. (In this hypothetical scenario, you’re a major procrastinator.) Will the gift arrive in time for the big holiday? The answer largely depends on the company’s order fulfilment process.

The stakes are high when it comes to order fulfilment: Speedy delivery and transparent tracking can build customer loyalty, but slow delivery or errors with customer orders can lead to dissatisfaction and reputational damage, especially during critical moments like a major holiday.

From the moment a shopper makes a purchase until the product is delivered to their doorstep, the fulfilment process, backed by effective order fulfilment software, plays a vital role in shaping the overall customer experience. Here’s everything you need to know about how order fulfilment works and how to improve it.

• Why is order fulfilment important?
• How order fulfilment, management, and dropshipping differ
• The five steps of order fulfilment
• The different methods of order fulfilment
• Order fulfilment challenges and how to overcome them
• Key strategies for optimising order fulfilment
• Best practices for effective order fulfilment

Order fulfilment is the process of getting a product from your business to your customer – quickly, accurately, and efficiently. It covers everything from receiving stock and processing orders to packing, shipping and handling returns.

From the moment a customer places an order to when it arrives at their doorstep, the fulfilment process plays a key role in shaping their experience. When supported by the right software, it can help businesses deliver faster, more reliably, and at scale.

Great fulfilment boosts sales and loyalty. But delays, wrong items, or damaged goods can hurt your reputation and your bottom line. Considering that 74% of shoppers will abandon a brand after three bad experiences, getting order fulfilment right is crucial.

The order fulfilment process has five fundamental steps:

1. Receiving inventory
2. Processing orders
3. Picking and packing
4. Shipping and delivery
5. Managing returns

In this guide, you’ll learn what order fulfilment involves, how it impacts your customer experience, and the most effective strategies for improving speed, accuracy, and scale in your ecommerce business.

Order fulfilment might sound similar to other ecommerce concepts such as dropshipping and order management. Although they can be connected, there are some key differences. Here is what each of them means.

Order fulfilment refers to all the systems and processes a business deploys to get a product from its warehouse or distribution centre to the customer's doorstep. It includes many steps, from picking the items from inventory to packing them appropriately and delivering them through a reliable carrier.

Order management helps you track orders, update stock levels, and manage customer information across your systems. It works alongside your fulfilment process to accurately share live data to connect every part of the customer's journey.

Dropshipping is a type of fulfilment where products are shipped directly from your supplier to your customer. You don’t hold any stock or pack orders yourself, but you still manage the customer experience.

While there are many intricacies involved in order fulfilment, they can be grouped under five key steps. By breaking the entire process down into manageable steps or phases, you can focus on the most important considerations during each part of the order fulfilment journey.

You’ll receive stock from your suppliers, check for quality, and store it in your fulfilment centre. Products should be easily accessible based on how often they sell, so your team can move fast.

Once an order arrives, your systems confirm payment and check for available stock. With the right ERP (enterprise resource planning) software, your inventory and sales channels can stay in sync.

Pick the correct items from your inventory and pack them securely to avoid damage. A good setup helps your team work faster and make fewer mistakes.

Choose the best shipping method, schedule the pickup, and get the order to your customer's location. Use shipping software to offer real-time tracking and multiple delivery options.

Returns should be easy for customers and your team. Quick returns, clear processing, and strong reverse logistics help protect your brand and improve retention. In fact, about a quarter of customers (24%) say that a poor returns experience is one of the worst things that could happen during the customer journey.

The method you choose for your order fulfilment process will depend on the type, scale and operational capacity of your business. Here are some common types of fulfilment methods.

The best order fulfilment method for your business will depend on a number of factors, including the size of your business, the type of products you sell and your budget.

Here are five common fulfilment models used by ecommerce businesses:

1. In-house fulfilment
2. Third-party logistics (3PL)
3. Dropshipping
4. Crowdsourced fulfilment
5. Hybrid fulfilment

Each option comes with its own pros and cons, and many businesses switch or combine models as they grow. Let’s take a look at how each model can work for your business.

When a business handles the entire order fulfilment process, from receiving and storing inventory to delivering orders, it is known as in-house fulfilment. This method gives businesses the most control over the process, but can also be the most expensive and time-consuming.

Third-party logistics is when a business outsources the order fulfilment process to a third-party company. A method like this can be a good option for businesses that don’t have the resources or expertise to handle fulfilment in-house.

Some businesses don’t hold or carry any inventory. Instead, they partner with suppliers that ship products directly to customers once items are ordered. This is known as dropshipping. The dropshipping method for order fulfilment can be a good option for businesses that want to start selling products without investing in inventory, warehouses and storage facilities.

When a business uses a network of independent contractors to deliver orders, this is known as crowdsourced fulfilment. It’s ideal for businesses needing fast, flexible local delivery.

If a business uses a combination of these different fulfilment methods, it’s known as a hybrid fulfilment model. For example, a business might use in-house fulfilment for high-volume orders and dropshipping for low-volume orders.

Every fulfilment method has its benefits, but they can all run into the same problems that slow down your delivery and affect how your customers experience your brand. Let’s go over how you can solve some of these common issues.

Order fulfilment involves a lot of moving parts. You need to update inventory as you sell, orchestrate efficient delivery, and make sure the entire process is transparent for your customers. And each part of the process has its own unique challenges. Here are five you should be aware of so that you can get ahead.

You need enough inventory to meet demand but not so much that you’re overstocked. It’s also critical to update inventory levels in real-time so your internal teams and your customers have an accurate view of what’s available and what’s not.

How do businesses tackle this challenge? With inventory management. The right inventory management software will automate processes and offer insights that help with demand forecasting, reorder optimisation and inventory tracking.

For example, True Alliance, which manages brands like The North Face and Speedo, used Salesforce to connect their POS, ERP and ecommerce systems, reducing case handling time by 22% and helping drive over 200% growth in online sales across their brands.

Timing is everything — and the clock starts ticking from the moment a customer clicks the Buy button. The speed with which you pick, pack, and ship orders is directly correlated with customer happiness. To help streamline the fulfilment process and get packages to customers quickly, businesses can use order management software and automation.

We’ve all been there. You place an order online and then incessantly check its location as it makes its way through the delivery system. Customers expect real-time tracking from the moment their order ships.

Transparent delivery updates improve customer satisfaction and prevent an onslaught of customer enquiries flowing to your call centres and service teams. You can give buyers a complete view of their orders with software that provides real-time updates.

Returns and exchanges are a common part of the customer journey, and handling them efficiently can help minimise their impact on your business. To do this, establish a clear, easy-to-understand return policy.

Offer convenient return methods like pre-delivered return labels included with every purchase or free in-store returns. Optimise your reverse supply chain with returns management software and automation strategies.

Tip Top, a leading Australian bakery, implemented Salesforce Service Cloud to modernise their customer engagement, reducing case resolution times from up to two weeks to within hours or days. This improvement streamlined their returns and exchange process, enhancing customer satisfaction.

As your business grows, your order fulfilment needs will change. Breaking into new markets and geographies, increasing your inventory to meet growing demand, and expanding your product offerings to include new types of merchandise can all add complexity.

To meet scalability needs, businesses can implement sophisticated order fulfilment solutions, such as 3PL providers or cloud-based order management software. Flexible automation tech helps scale operations up or down as needed.

If you want to optimise your order fulfilment process, the first step is to collect data so you can understand areas of improvement. For example, you can track order accuracy, order cycle time, order fill rate, and inventory turnover to measure your order fulfilment efficiency and quality. You can also collect feedback from customers, employees and suppliers to identify pain points and opportunities.

One crucial strategy is to automate as many processes as possible. This can be achieved by implementing advanced technology solutions, such as warehouse management systems (WMS) and inventory management systems. These systems can streamline tasks such as order picking, packing and delivery, reducing the likelihood of errors and increasing efficiency.

Find partners who can consistently provide high-quality products and meet demand in a timely manner. Establishing strong relationships with suppliers can ensure a steady flow of inventory and minimise the risk of stockouts, which can lead to customer dissatisfaction and lost sales.

Additionally, businesses should implement a robust inventory management system to track inventory levels, manage stock replenishment and optimise warehouse space utilisation. This can help to prevent overstocking, which ties up capital and stockouts, which can result in lost sales and disappointed customers.

Implement an integrated order management system that connects cross-functional departments like sales, inventory, merchandising, warehousing and delivery. An integrated order management system also enables the sharing and synchronisation of data across different functions in real time.