14 key steps to perfect ecommerce fulfillment

eCommerce fulfillment is the process by which the products ordered by a customer are selected, packed, shipped and delivered to that customer. At its simplest, for physical goods, a warehouse receives the order details, stock is picked from its storage location in the warehouse, packed suitably, a carrier label printed, the package collected by the carrier which then uses its logistics network to deliver the package to the destination specified in the order.

eCommerce fulfillment activities

The significant steps in the process of ecommerce fulfillment are:

1. Order capture

A customer places their order (sometimes referred to as being "captured") on the sales channel - the website, App, in-store kiosk, store POS or by a contact center agent. The order specifies the product(s) to be shipped, the delivery details (including address and carrier service) and payment method.

2. Order validation

Additional fraud detection processes may be run on an order after it has been captured, to validate it is real and should be fulfilled.

3. Order routing

Once an order has been captured and validated, it is routed to the location where the products are located. The logic might be as simple as sending all ecommerce orders to a single warehouse, but it could also route orders to supplier warehouses for some products, or to a retail store where the stock is held. When an order is to be picked up from a store rather than delivered, it makes sense to route the order to that store if the store has stock of the items in the order.

4. Order splitting

Some orders need to be split in order to fulfil them, for example one line in the order might require a product to be shipped from a supplier warehouse whereas the rest of the lines can be fulfilled from the seller's own warehouse or store. Typically splitting an order is more costly than fulfilling it from one location and therefore single location fulfillment is prioritized.

5. Order acceptance

The location that receives the order (or part order in the case of split orders) will accept that order after determining that it can fulfil it within the service levels set. For example, checks will be made against the inventory held at that location and the capacity of staff or automated warehouse machinery to pick and dispatch the products before a cutoff time (the time at which the carrier will need to collect the parcel to enable delivery by the time specified in the order). If an order is not accepted it will be rejected and an exception process might re-route the order to an alternative location, cancel it, or trigger customer services to determine the next step manually, or to contact the customer to decide what to do.

6. Picking

An accepted order will be picked by the staff working there, often by creating a picking list, assigning this to a warehouse or store worker, or triggering automation machinery to fetch the item from storage. There may be multiple steps in picking, for example a warehouse worker might be allocated to pick all items in a particular zone in the warehouse from multiple orders, which they retrieve to a sorting location and break them down in to the individual orders and combine with items picked by other workers from other zones to form complete orders for dispatch.

7. Substitution

When a specific item in the order is not available there may be a substitution process to replace it with an equivalent item. This almost never happens outside of grocery. In grocery ecommerce where orders are fulfilled from a grocery store or dark store, not all products might be available on the shelf. In this case an alternative product could be picked with the customer given the option to accept or reject this at point of collection or delivery. The process of determining how to substitute a missing item can be complex, for example is it more appropriate to provide a larger size from a different brand, or a similar product of the same brand?

8. Packing

Orders must be appropriately packed, whether this is to facilitate collection or delivery. Packing must protect the product to avoid damage and therefore refunds and returns, include information about the order and minimize cost of materials and its weight and size, to reduce shipping cost.

9. Carrier selection

For orders that will be delivered, the carrier must be selected, which could have been specified in the order capture process, or could be determined at the point when the order is picked. Carrier considerations include cutoff time for order collection from that location for that class of service, the cost of the service, the service level (e.g. overnight or two day), customer satisfaction with each carrier, and the requirements for insurance or other services.

10. Carrier label printing and collection

Once a carrier is selected a label is printed and affixed to the package ready for collection by the carrier. For warehouses dispatching orders daily the carrier will be scheduled to arrive in a predictable pattern. If an order is being dispatched from a different location, such as a store where this might be an occasional activity, the carrier must be notified to collect the parcel.

11. Logistics (own fleet)

For some retail sectors the retailer may operate their own fleet for delivery, for example using temperature-controlled vehicles in grocery, or when goods are bulky, such as furniture, household appliances or construction materials.

12. Doorstep process

The final step in ecommerce fulfillment is the delivery of the package to the customer at the delivery address. A signature may be required at this point, but not always. Some services allow for packages to be left unattended if the customer is not available at time of delivery. Some delivery services will take a photograph at the destination to help prove delivery.

13. Lockers

Lockers are sometimes offered as a delivery point for ecommerce orders. Amazon runs a large network of these. The package is delivered to the locker and the customer is sent details of how to access and retrieve the package. This minimizes risk of non-delivery  and re-delivery attempts, which can be a significant cost for the courier.

14. Collection process

For orders that will be collected by the customer, ease of collection is important. Electronic means of identifying the customer and allowing a quick, painless collection are growing in popularity. Collection points can often be the physical stores of the retailer capturing the ecommerce order (sometimes called BOPIS or Click & Collect), although there are also networks of collection points they can use.

This article was updated on February 10, 2021

M Ryan

M Ryan is an ecommerce consultant with twenty years experience working with retailers, consumer brand manufacturers and other consumer-facing businesses helping them to develop their ecommerce strategy, implement ecommerce technology and improve their ecommerce operations. He works extensively throughout US and Europe, with clients including global brands, large retailers and household names in consumer goods.