Ecommerce Fulfillment Best Practices To Make Your Business More Efficient

Great products and a user-friendly website set the stage for sales in ecommerce, but they don’t guarantee success. In order to ongoingly sustain itself through the orders it receives, an online store must be able to both literally and figuratively fulfill buyers’ expectations with efficient and effective processing. That means employing the right ecommerce fulfillment strategies. 

Every aspect of logistics – from inventory management to shipping and returns – has the power to make a difference in the overall customer experience. Use the ecommerce fulfillment best practices in this article to optimize your order fulfillment model and seize every sales opportunity that comes your online business’ way. 

Implement Accurate Inventory Management

If you're looking to truly benefit from ecommerce logistics best practices, start with inventory management. Inventory effectively represents the roots of ecommerce fulfillment efficiency. When products are accounted for, every step involved in turning them into completed orders becomes easier. Here are three ecommerce fulfillment tips focused on improving the accuracy and efficiency of inventory-related responsibilities:

Real-Time Inventory Tracking

Ecommerce inventory management becomes harder as operations grow in size. As the complexity increases, so does the potential for mistakes – and managing inventory efficiently requires robust systems that can handle the growing demands of a larger operation. 

Real-time inventory tracking doesn't come with the same vulnerability to error as manual systems. It's connected by a network of sensors and software that updates inventory counts automatically. There's no need for manual counts or spreadsheets, so human error is significantly reduced. Meanwhile, integration provides real-time data that allows businesses to respond swiftly to changes in demand or supply chain issues better than they would be able to otherwise.

Real-time inventory tracking is made possible by ongoingly-developing technologies like the Internet of Things (IoT), which connects devices and systems for seamless data exchange. Cloud-based platforms provide scalable solutions that can grow with the business, offering flexibility and accessibility from anywhere. Machine learning algorithms also play a role by analyzing patterns to predict future inventory needs and optimize stock levels.

Ecommerce businesses looking to enhance their fulfillment process with real-time tracking simply need to invest in the right technology and infrastructure. That's easier said than done, of course. Evaluating, selecting, and implementing these systems calls for careful planning and training. The solution you choose should meet your business' needs today and be able to accommodate its growth in the future.

Automated Reordering Systems

Automated reordering systems step in to replace the need for human intervention when stock levels are low. They significantly reduce the time and effort required to manage inventory using predefined rules and thresholds.

For example, say a popular item suddenly spikes in demand. A real-time tracking system would immediately update stock levels, while automated reordering systems would automatically initiate a reorder process.

The proactivity of automated reordering pays off in multiple ways. Firstly, it minimizes the risk of stockouts, thereby preventing lost sales opportunities and ensuring constant availability for customers. Optimizing inventory turnover by aligning stock levels with actual demand also reduces holding costs and frees up capital for other business needs.

Accurate Demand Forecasting

Demand forecasting helps ecommerce businesses plan for potential fluctuations in demand. Done manually, it takes considerable time and effort, and also often leads to inaccuracies. Technology can streamline the process while improving the precision of its insights. Today's advanced analytics tools can quickly identify patterns that may not be immediately apparent to a human supply chain manager.

Armed with foresight into emerging trends and consumer behavior, businesses are empowered to make smart, cost-effective decisions that ultimately support their overall ecommerce supply chain optimization efforts.

Streamline Your Order Processing

Order processing encompasses the steps that kick into gear when a customer clicks 'buy'. It's where your work as an ecommerce business really starts. With products paid for, the onus falls on you to pick, pack, and ship them on time. Doing so without delay or error is possible with a prioritization of the following best practices.

Order Workflow 

Efficient order processing starts with a mapping out of each step of the order fulfillment process. Standardizing everything from order receiving to outbound shipping ensures consistency and minimizes errors for greater efficiency across entire operational workflows.

This best practice is even more powerful with an order management system (OMS). Usually deployed as a cloud-based solution, it centralizes data for greater access to and actionability on order-related issues. Logistics managers appreciate the enhanced visibility because it allows them to address potential hindrances to productivity before they become serious. Order management systems further streamline warehouse operations by improving interdepartmental collaboration.

Picking and Packing

Picking and packing are foundationally sustaining practices, but it's hard to improve their efficiency without compromising accuracy. The key to balancing these two elements lies in the strategic use of technology and process optimization. 

Start by analyzing your current workflow to identify bottlenecks or areas for improvement. Implementing a warehouse management system (WMS) can provide real-time insights into inventory levels, order statuses, and picking routes, enabling more efficient operations.

Efficient picking methods, such as batch picking and zone picking, can also significantly reduce the time and effort required to fulfill orders. Batch picking involves picking multiple orders at once, while zone picking assigns specific areas of the warehouse to different pickers.

Training staff on best practices for packing and handling different types of products, as well as regularly reviewing and updating packing procedures, will help keep standards high on an ongoing basis.

Labeling and Documentation

Another challenge necessitating dual speed and accuracy, labeling process efficiency can be enhanced by leveraging technology and standardizing procedures. Start by assessing your current labeling workflow to pinpoint inefficiencies or errors. If you find that your current system is prone to mistakes, consider upgrading to a more sophisticated solution. This might involve adopting software that integrates with your existing systems to automate label creation and ensure accuracy.

Barcode scanning systems significantly enhance accuracy by reducing manual data entry. Using them in tandem with a centralized database for label information, you can ensure that every label your warehouse team sticks on a package is the right one. 

Optimize Warehouse Operations

If the warehouse is where most of the time and money invested in ecommerce order fulfillment goes, it’s easy to see how optimizing it could have a major impact on efficiency. This section explores two simple yet powerful warehousing best practices worth implementing in your own facility. 

Space Optimization Techniques

Maximizing warehouse efficiency begins with strategic space optimization. Implementing techniques like ABC analysis helps streamline inventory management by categorizing items based on sales volume. High-demand products (A items) should be positioned in easily accessible areas to reduce pick times, while slower-moving items (C items) are stored further from high-traffic zones. Like warehouse slotting, this approach not only boosts productivity but also minimizes unnecessary movement within the facility.

Utilizing vertical space is another smart way to maximize storage and reduce overall operational costs. Solutions such as pallet racking and mezzanine floors significantly increase storage capacity without the need to expand your warehouse's footprint. 

Warehouse Management Systems (WMS)

To further improve efficiency, consider investing in a Warehouse Management System (WMS). A WMS centralizes warehouse data and automates processes like inventory tracking, order picking, and restocking. When choosing a WMS, prioritize features such as real-time tracking, integration with your ecommerce platform, and reporting capabilities to better manage operations and scale with demand.

Improve Shipping and Delivery

Even when entrusting external carriers with the job, shipping is far from out of your business' hands. Use these ecommerce shipping best practices to maximize a positive experience for yourself and customers. 

Choosing the Right Shipping Partners

Selecting the right shipping partners is crucial for ensuring timely and cost-effective delivery. Factors to consider when choosing shipping carriers include shipping rates, delivery times, and service reliability. Compare the services offered by major carriers, such as UPS, FedEx, and DHL, to make an informed decision.

Beyond selecting the right partner, negotiating favorable shipping rates based on your order volume can lead to significant cost savings. A third-party logistics (3PL) provider will have a considerable amount of extra leverage given their large-scale, pre existing relationships with carriers.

Multiple Shipping Options

Multiple shipping options cater to various customer needs while insuring against delays caused by issues with individual providers. Integrate your ecommerce platform and shipping systems to provide buyers with real-time shipping rates and estimates during checkout. With more information and control, they’ll feel more comfortable committing to purchases. That has the potential to reduce cart abandonment rates and similarly improve conversions. 

Packaging

Packaging plays an equally important role in shipping efficiency and customer satisfaction. Well-designed, durable ecommerce packaging minimizes product damage and cuts down on unnecessary costs. Customized solutions such as branded boxes and personalized inserts can create especially memorable unboxing experiences that strengthen brand loyalty. 

Last-Mile Delivery

The last mile, or the final stage of the delivery process, is critical for customer satisfaction. By improving last-mile efficiency, you not only meet customer expectations but also cut operational expenses. Partnering with reliable local couriers can speed up delivery times, while implementing route optimization software reduces fuel costs and delivery timelines. 

Real-Time Shipping Tracking for Customers

Real-time shipment tracking enhances the customer experience by offering transparency and peace of mind. Buyers are much less likely to have anxiety over potential delays when they can monitor the progress of their orders from dispatch to delivery. Even better, timely communication reduces the volume of inquiries related to order status your business receives, allowing your team to focus on more complex issues.

Streamline Return Management

Complex challenges like return management are an opportunity to exceed where competitors fall short. Many businesses focus on sales and treat reverse logistics as an afterthought. Your proactivity can transform a potential pain point into an advantage. Here are a few website and warehousing best practices designed to make managing returns simpler. 

Efficient Return Process

Implementing a streamlined return process can help reduce the time and effort required to handle returns. Pre-paid return labels, multiple return options, and automated return authorization are just a few of many ways to enhance efficiency. Digital return management systems further support process accuracy and speed by allowing you to track returns in one place. 

Effective Return Policies

A clear and effective return policy can mean the difference between retaining and losing a customer. That’s why every effort should be made to provide buyers with the information they need upfront. You’ll foster trust and transparency by clearly outlining the conditions under which returns are accepted, the time frame for returns, and any associated fees. Return data may also uncover opportunities for improvements to products or processes.

Restocking Returned Products

Efficiently restocking returned products minimizes inventory losses and maintains accurate stock levels – both of which are important to cost-effective fulfillment operations. Implement a standardized process for inspecting, refurbishing, and restocking returned items to streamline the process.

Improvements might include using barcode scanning and RFID technology to update inventory levels in real-time or integrating your returns management system with your inventory management system to support communication. The resulting faster processing times will reduce the impact of returns on your business’ efficiency and bottom line.

Leverage Data and Analytics

With technology being such a fundamental part of the fulfillment best practices we’ve covered so far, you’d be remiss to leave the data it collects untapped. Use these tips to ongoingly learn from and improve performance among processes and teams alike:

Key Performance Indicators (KPIs)

Tracking key performance indicators (KPIs) is essential for measuring the success of your ecommerce fulfillment operations. Essential KPIs for ecommerce fulfillment include order accuracy, order cycle time, and return rate. Monitoring these metrics can help you identify areas for improvement and make data-driven decisions.

Setting up and monitoring KPIs requires the use of advanced analytics tools. These tools can provide real-time insights into your fulfillment operations, allowing you to track performance and identify trends. This can help you make informed decisions and optimize your processes for maximum efficiency.

Analysis and Continuous Improvement

Continuous improvement should be a core part of your fulfillment strategy. Regularly reviewing operational data helps pinpoint inefficiencies and identify opportunities for optimization. High inventory turnover rates, for instance, may reveal the need for better stock management practices. Regular feedback loops and performance reviews can help ensure that improvements are aligned with business goals, positioning you to continuously improve processes and maintain a competitive edge.

Ecommerce Fulfillment Strategies

Each of the three main ecommerce order fulfillment strategies used today can be efficient. Getting to that point, however, requires a careful assessment of business needs. Read the following summaries to determine which options make the most sense for you. 

In-House Fulfillment

In-house fulfillment involves managing all aspects of the fulfillment process internally. This includes inventory management, order processing, picking and packing, and shipping. In-house fulfillment offers greater control over the fulfillment process and can be more cost-effective for businesses with low order volumes.

However, in-house fulfillment also requires significant investment in infrastructure, technology, and staff. This can be challenging for small and medium-sized businesses with limited resources. Additionally, managing fulfillment internally can be time-consuming and may divert attention from other core business activities.

Dropshipping

Dropshipping is a fulfillment strategy where the retailer does not hold inventory. Instead, when an order is placed, the retailer purchases the product from a third-party supplier, who then ships it directly to the customer. Dropshipping offers several advantages, including low upfront costs and reduced inventory risk.

However, dropshipping also has its drawbacks. Since the retailer does not control the fulfillment process, there can be issues with product quality, shipping times, and inventory availability. Additionally, profit margins can be lower due to the reliance on third-party suppliers.

Third-Party Fulfillment (3PLs)

Third-party fulfillment involves outsourcing the fulfillment process to a specialized provider. 3PLs handle all aspects of fulfillment, including inventory storage, order processing, picking and packing, and shipping. This arrangement allows businesses to focus on their core activities while leveraging the expertise and infrastructure of the 3PL provider.

3PL companies offer several advantages, including scalability, cost savings, and access to advanced technology and infrastructure. For most businesses, a desire for maintained control is the biggest perceived disadvantage of outsourcing. Not all service providers cut you out of fulfillment, though. A good partner will be just that – a partner – who extends your team rather than replaces it entirely. 

Ready to Outsource Your Ecommerce Fulfillment?

Although the ecommerce fulfillment best practices we’ve shared today are effective, they don’t guarantee efficiency. Strong outcomes rely on adequate investment and ongoing management. If your business would rather spend more of its time and money on driving sales, partnership with Shipfusion is an ideal solution. 

We’re the best 3PL in North America from the perspectives of both accuracy and timeliness. 99.9% in each respect beats out virtually every other service provider in the industry. All the while, our dedicated Account Managers ensure communication is also top-notch. 

Ready to take your ecommerce fulfillment to the next level? Contact Shipfusion today to learn how we can support your business growth with fulfillment services built to scale.