Fulfillment for Small, Medium, and Mid-Market Businesses

Creating and executing a streamlined order fulfillment is critical to growing business, fostering customer relationships, and maintaining a competitive advantage.

What is order fulfillment? It’s the end-to-end process of receiving, packing, and shipping an online order to a customer. It encompasses everything that happens to start from when an order is received to when it’s delivered to a shopper.

There are different frameworks for order fulfillment:

1. In-house fulfillment

2. Third-party fulfillment

3. Drop-shipping

4. Hybrid models

1. In-house fulfillment: Relying on in-house fulfillment means that a business is responsible for completing all stages of the fulfillment process internally. The company determines its strategy, coordinates warehouse space, manages its software and other eCommerce tools, and hires laborers to fulfill each order. In-house fulfillment is ideal for a business that wants complete control over its end-to-end customer lifecycle and can afford to support its logistics (including infrastructure, time, personnel, etc.).

2. Third-party fulfillment: For businesses that do not wish to develop their fulfillment process, third-party fulfillment is a commonly used option. Outsourcing order fulfillment to a third-party logistics partner (3PL) means that a professional provider handles your warehouse and shipping operations. From receiving inventory to delivering orders to customers, a third-party logistics provider assumes responsibility on behalf of a business. Most 3PL providers can also handle requests like kitting, inserts, etc. Third-party fulfillment is a good choice for growing brands and retailers that need extra support, companies juggling many sales channels, and businesses that offer frequent sales and need flexible labor and space to accommodate peaks.

3. Drop-shipping and third-party logistics have some commonalities — another party handles order fulfillment. In the case of drop-shipping, the retailer is removed from inventory management. Retailers leverage suppliers who hold inventory and manage the order fulfillment process for products sold. Drop-shipping enables retailers to avoid the risk of buying a product that doesn’t sell – instead, that risk is assumed by the supplier (who often benefit from large audiences that retail and marketplace exposure provide).

4. Hybrid models: A hybrid fulfillment model is precisely what it sounds like — using multiple types of fulfillment to achieve order fulfillment needs. For example, a business might process customized orders in-house, partner with a 3PL to ship high-velocity products that don’t require customization, and drop ship items that are large and expensive to store (or that are infrequently purchased).

The main steps of the fulfillment process:

1. Receiving Inventory: Inventory must be received before an order can be fulfilled. Upon receiving inventory, a 3PL will check its condition, confirm it’s correctly labeled, and enter it into a management system. Businesses may choose to do the same in-house.

2. Storing Inventory: After receiving the inventory, it must be slotted and stored in a warehouse facility. 3PLs often have a strategy to keep inventory based on stock levels and order velocity. To manage incoming and outgoing inventory, indexing may also be necessary.

3. Processing: encompasses picking each item in an order, transporting the items to the packing station, and boxing them in preparation for their journey through the mail.

4. Shipping: Businesses connect with third-party carriers to accomplish the actual shipping part of the fulfillment process. Package size and weight, as well as the warehouse’s location, customer’s location, and preferred shipping speed, are considered when deciding which carrier is most cost-effective. Once an order is processed, it’s ready to be shipped by a carrier.

5. Handling Returns: Managing returns or reverse logistics is crucial to order fulfillment. Indexing returned items into inventory, inspecting them for damage, storing them, performing refunds or exchanges, and readying items to start the cycle again are considered in the fulfillment process.

What fulfillment model is best?

Creating and executing a streamlined order fulfillment is critical to growing business, fostering customer relationships, and maintaining a competitive advantage. Businesses must choose a model that fits their current needs while positioning them for growth.

For growing small businesses, third-party fulfillment can make a lot of sense because it alleviates resource constraints. While in-house fulfillment may work early on, there comes the point where managing inventory levels, individually packaging each item, making daily trips to the post office to send off orders, and keeping track of it all becomes unsustainable. Once everyday operations become too hard to handle, startups look for alternative ways to manage their operations. Outsourcing to a 3PL ensures orders get out the door while spending more time on sales, marketing, and business development.

The value of a 3PL provider increases as a business grows. Midmarket companies have higher order volumes, their product lines may become more complex over time, and sales channels tend to multiply. Most orders will be shipped through a 3PL provider with flexible warehouse space that allows room for growth. Profit-driven companies want to ensure their costs are minimized and their revenues are maximized, and as the scale is achieved, this becomes more and more possible (through volume-based discounts and more). Devoting time to sales, marketing, partnerships, engineering, and executing business strategies is more feasible when order fulfillment is removed from the internal to-do list.

Ultimately, scaling a business means offloading and delegating time-consuming responsibilities so that there’s space to focus on innovation and strategic growth. FR-Logistics has years of experience helping businesses achieve growth targets, and our services support various business profiles.

Outsourcing your order fulfillment has never been easy—FR-Logistics integrates with your sales channels. FR-Logistics is set up to help your eCommerce brand navigate both aspects of the fulfillment process and all others. Our tech and team are bound to make a difference in your business as we make navigating the supply chain, managing your inventory, and keeping your customers happy easier. Contact us directly for a quote.