Order Fulfilment Process Steps: Explained in Detail


Order Fulfilment Process Steps: Explained in Detail

The order fulfilment process is one of the most important aspects of the eCommerce business model. Once the customer places an order online, the seller needs to deliver the products to the customer. This is done through order fulfilment management.

Hence, the order fulfilment process steps in eCommerce have a direct impact on sales. It is directly linked to some of the top purchase drivers for online shopping. These include shipping costs, delivery time, and product returns.

Order fulfilment management also affects the supply chain, distribution, and logistics strategy of an Ecommerce business. Consequently, it has a direct impact on operational expenses and profit margins as well. On average, order fulfilment activities cost 70% of the order value.

This further emphasises the need for eCommerce order fulfilment steps to be defined diligently. It can help you reduce operational costs and speed up the delivery process. As a result, you can offer faster and more cost-effective shipping options to your customers.

In this article, we will understand the key order fulfilment process steps. We will also discuss the impact of these steps on the overall supply chain. Furthermore, the article also covers the significance of eCommerce order fulfilment process flow on customer satisfaction.

But, before we get into order fulfilment process flow, let’s understand what it means for Ecommerce.

What is Ecommerce Order Fulfilment Process?

The order fulfilment process in eCommerce is the journey of a purchased product from the seller to the buyer. It is also a crucial part of order management that every Ecommerce store needs to focus on. The customers place their orders online. Then it is the responsibility of the seller to deliver the products to the customer’s location. As the eCommerce retailer fulfils this responsibility of delivering the ordered products. Hence, the process is called order fulfilment.

Here are the key steps in the order fulfilment process flow:

1. The customer places an order

2. The seller receives the order

3. The seller checks the availability of the ordered products in its inventory

4. If the products are available, the seller confirms the order

5. The customer receives the order confirmation details

6. The seller picks the products from the inventory

7. The ordered products are packed for shipping

8. A logistics carrier ships the order to the customer’s location

9. The customer receives the product

10. The order is considered fulfilled unless the customer returns the product.

Ten key order fulfilment process steps

The above order fulfilment process flow can change based on the order management or fulfilment strategy. For instance, if the customer chooses the click-and-collect fulfilment option. Then you will ship the order to the fulfilment centre closest to the customer. Then the customer will collect their order from this location.

The responsibility for different steps in the order fulfilment process also changes. If you are using the dropshipping method. Then the seller only transfers the order details to the supplier. The rest of the steps in the order fulfilment process are carried out by the supplier. On the other hand, if you are using third-party logistics (3PL). Then the logistics carrier is responsible for completing the order.  

The role of the seller keeps changing in the order fulfilment process at each step based on the strategy. However, the flow of order fulfilment remains the same. It is only the responsibility of completing these steps that change hands.

Let’s see how the order fulfilment process works for eCommerce businesses.

10 Key Order Fulfilment Process Steps

The order fulfilment process in eCommerce is triggered right after the customer places an order. However, the groundwork for fulfilment operations is laid through other supply chain management processes. These include supply management, distribution, warehousing, inventory management, and logistics. 

Let’s understand the order fulfilment process flow from the very beginning. Along with the process, we will also see how it depends on the supply chain strategy.

Step 1: Receiving Inventory

The first step of the order fulfilment process comes before the customer has placed an order. Before you can fulfil the order, you need the products in your inventory. This is the stock you will use to fulfil the order. It is also the stock that marks the availability or unavailability of the product on the eCommerce website.

Hence, the order fulfilment process begins with stocking the fulfilment centre with the inventory. This can be a warehouse that fulfils orders from across the country. It can also be a micro-fulfilment centre that only caters to customers in one city. If you are using a 3PL service, you will supply the inventory to the logistics partner.

For order fulfilment management, you can also consider the inventory that can be shipped directly to the customer. Hence, the stock in a central warehouse or inventory held by the supplier does not count. The inventory becomes part of the order fulfilment process flow only after it reaches the fulfilment centre.

Step 2: Inventory Processing

Once you receive the inventory, you will need to inspect it. You need to check whether you have received all the SKUs in the required quantity. This stage also includes damage inspection. It is a crucial, yet often overlooked step in the order fulfilment process.

On average 2% of products arrive damaged at the distribution centre. So you need to discard such products from the eCommerce order fulfilment process. Otherwise, you risk shipping a defective product to the customer. This can result in a poor customer experience and product return. 20% of products are returned because the customer received damaged items.

After inspection, you must lodge the stock into the inventory management system.  You will use this stock count for different SKUs on your eCommerce website. The available inventory shown on the website may change from region to region. As you might have different stock levels in fulfilment centres of each region. 

The location of the fulfilment centre also affects the shipping distance. Consequently, it directly impacts the cost and time of shipping. Alongside the availability of stock, you will also convey the shipping information based on this step of the order fulfilment process in eCommerce.

Step 3: Warehousing

The stage involves organising the inventory in the warehouse. This step is closely linked with the overall duration of the order fulfilment process. You can organise the warehouse structure based on several criteria. These include the product category, size, demand, and so on. 

You can also organise products based on kits. These are the products that are frequently ordered together. The goal of warehouse management is to speed up the order processing for fulfilment. You need to consider the picking and packing step in the order fulfilment process. Then you can reverse engineer your based on the intended order processing step.

You can significantly improve this fulfilment operation using technology. Robots can help you automate the entire warehouse. This involves both organising and picking. You can also use artificial intelligence to help you plan the warehouse space for your specific requirements.

Step 4: Order Processing

The ecommerce order fulfilment process truly begins with this step. When the customer places an order on your eCommerce website. The order is processed based on the inventory management system. 

The platform searches through the inventory in various locations. It tries to find the fulfilment centre that has the ordered products in the inventory. The platform also considers the distance between the fulfilment centre and the customer’s location into account.

This is a basic system for order processing for fulfilment in eCommerce. Once the system finds a fulfilment centre with the products in stock, it confirms the order. This step is intertwined with the warehousing and inventory processing activities.

This confirmed order triggers a communication process. This step in order fulfilment process flow can be both manual and automated. The communication reaches the customer and the fulfilment centre. Each of these parties receives different messages. These messages trigger the shipping phase of the customer order fulfilment process in eCommerce.

Step 5: Customer Communication

Once the order is confirmed you need to communicate shipping details to the customer. The customer needs to know two things: Shipping Cost and Delivery Time. If you are offering free shipping, you only need to communicate the shipping time.

These aspects have a significant impact on purchasing decisions. The majority of eCommerce shoppers abandon carts owing to high shipping costs and long delivery times.

The shipping cost and delivery time depend on the distance between the fulfilment centre and the delivery location. So you need to keep the fulfilment centre as close to your target market as possible. This can significantly speed up fulfilment operations. 

For instance, eCommerce micro fulfilment solutions can help you deliver products within a day. As the inventory sits closer to the customer, you can also reduce the shipping cost with such strategies.

This can help you retain more customers. The shoppers are more likely to buy from you if you offer cheap and fast delivery. Furthermore, it helps eCommerce brands improve customer satisfaction by delivering the products faster. 

Although this step of the order fulfilment process only involves communicating delivery details, it has a much deeper impact on several aspects of the eCommerce business.

Step 6: Picking and Packing

The second communication from order processing goes to the fulfilment centre. So the order fulfilment management again turns to the warehousing unit. They receive the order details from the point of sale. These details include ordered SKUs, quantity, delivery location, and so on.

The fulfilment centre picks the ordered SKUs from the stored inventory. The better you have organised the inventory, the faster you can pick the orders. The ordered products are sent for packaging. This is done to protect the products during transit. Product packaging in the order processing process depends on shipping distance and mode of transport.

After packaging, shipping is the next key step in the order fulfilment process. The transition of the order from the fulfilment centre to shipping depends on your logistics and distribution strategy. 

You can also integrate order fulfilment management with your point-of-sales. This allows you to automatically communicate order details with your logistics partners as well. Consequently, you can streamline order dispatch after it is ready to be shipped. 

Step 7: Shipping

This is perhaps the most important step of the fulfilment operations. It accounts for the majority of the cost of the order fulfilment process. On average, it costs 10-15% of the order value. The shipping process can be initiated during order processing. It can also be initiated from the fulfilment centre. The point of dispatch for eCommerce shipping depends on your logistics strategy.

This strategy decides whether the logistics personnel picks the order from the fulfilment centre. Or you would have to deliver it to a local courier facility for shipping. Once dispatched, the packed product may go through several stages of transport to complete fulfilment.

This depends on the distance between the fulfilment centre and the customer’s location. If you are shipping internationally, the package would go through 4 to 5 stages of transportation. On the other hand, if you are using micro-fulfilment centres, shipping only involves last-mile delivery. As the stages of transportation increase, the time and cost of the order fulfilment process in eCommerce also rise.

Step 8: Inventory Management

Once you dispatch the order from the fulfilment centre, you need to update the inventory. You need to deduct the dispatched SKUs from the stock count. This is a key step in the order fulfilment process. Without this step, you risk misrepresenting the stock during order processing. 

The customer might see a product in stock, whereas the actual inventory would not contain it. This also leads to misrepresentation of the shipping costs and delivery time. In most order fulfilment management systems, inventory management is usually automated.

Once the order is dispatched, the SKUs are automatically deducted from the stock count. This order fulfilment process step is also essential for managing inventory levels. Based on the exhaustion rate of SKUs and their estimated demand, you need to manage the supply. 

This connects to the first step of the eCommerce order fulfilment process. You need to schedule inventory receiving based on these criteria. This will keep a consistent cycle of inventory supply and order fulfilment. It will help you prevent overstocking and stock-outs.

Step 9: Order Delivery

This is the last of the eCommerce order fulfilment process steps unless the customer returns the product. Order delivery includes the handover of the package to the customer and collecting proof of delivery. 

After last-mile delivery, the courier reaches the customer’s location. However, if you offer a click-and-collect fulfilment option, the customer would collect the courier from the fulfilment centre. In either case, delivery is considered complete when the customer receives the order and provides proof of delivery.

The proof of delivery can be a physical or digital signature. It is evidence that you have delivered the right order to the right customer. An eCommerce company can use this stage to collect customer satisfaction data or feedback on the shopping experience.

Step 10: Returns Management

Alongside the linear order fulfilment process, eCommerce should also be prepared for reverse logistics. The ease of returns is yet another major purchase influencer in online shopping. 30.4% of online shoppers have said that an easy returns policy drives their buying decisions.

If the customer triggers a product return, the order fulfilment process is carried out in reverse. The logistics carrier picks the product from the customer’s location. They ship it to a fulfilment centre. The fulfilment centre unpacks the products. 

These products are inspected for damages. Then eCommerce initiates the compensation process. This can be in the form of a refund or a replacement. You can initiate communication with the customer based on chosen compensation.

You also need a system to process damaged products or re-introduce undamaged products to the inventory. This brings you back to the first step of the order fulfilment process.

Before we end this post, let's revisit all the order fulfilment process steps with an example. Say, you have an online store that sells children’s toys and games. Assuming that you have associated with a 3PL service provider to help you with the process, the first step would be to send your inventory to a fulfilment centre or warehouse.

The next step involves processing this received inventory and running quality checks to ensure that the products can be shipped when an order is placed for them. The next step of warehousing includes structuring it, and deciding how to place the products. Once all these steps are complete, the order fulfilment process can finally begin.

The next step is that of order processing which includes processing the details of your order, and communicating to the customer about receiving the order and processing it. The next step is that of picking the products in your order and packing them in appropriate packaging material so that they are ready for dispatch.

After all of the previous steps have been carried out, you have to ship out the products in your order, and update the inventory. This is a good time to restock any products that might be low in quantity in the warehouse. Soon, your order will be delivered  to your customer and the cycle will finally complete, unless the customer raises a return or exchange request.

Effective Order Fulfilment for Your Online Store

Ecommerce order fulfilment is an elaborate process. It is deeply intertwined with supply chain management, distribution, and logistics. The order fulfilment process is one key aspect of eCommerce. After all, the majority of people order online to receive the products at home.

However, this process is quite demanding in terms of planning and resources. You need to integrate several different processes to streamline the order fulfilment process flow. Furthermore, you would also need a vast reach to fulfil orders in different target markets.

Hence, you need help from a logistics company with a widespread network to execute the eCommerce order fulfilment process. You can focus your efforts and resources on selling more products, while PACK & SEND takes care of distribution, logistics, and order fulfilment.


What is the fulfilment process?

The fulfilment process is the practice of delivering ordered products to customers. The process involves several steps concerned with distribution, logistics, inventory management, and customer service. The key purpose of the fulfilment process is to ship the product from the stored inventory and deliver it to the customer’s location.

What are the key steps in the order fulfilment process?

The key steps in the order fulfilment process include:

1. Order processing

2. Customer Communication

3. Picking & Packing

4. Shipping

5. Inventory Management

6. Order Delivery

7. Reverse Logistics

While these steps cover the order fulfilment process, you also need to consider the steps that connect this process to the overall eCommerce supply chain. These include:

1. Distribution Management

2. Inventory Receiving

3. Inventory Processing

4. Warehousing

5. Inventory Management

Collectively, these steps complete the eCommerce order fulfilment process. The execution of the process at each step depends on the supply chain management and logistics strategy of eCommerce.

What is the difference between order processing and order fulfilment?

Order processing one of the many order fulfilment process steps. In this step, you check the availability of the ordered products in the inventory. Based on this, you provide check-out details to the customer. This includes shipping charges and delivery time. Once the customer places the order, you initiate fulfilment operations from the inventory location.

On the other hand, order fulfilment is a part of eCommerce supply chain management. It involves everything from order processing to product delivery and reverse logistics.

What are the methods of fulfilment?

The methods of fulfilment refer to the logistics and distribution strategy used by eCommerce to deliver products to the customer. Some of the commonly used methods of order fulfilment are dropshipping, third-party logistics, merchant fulfilment, micro fulfilment, and so on. Each of these methods has its own pros and cons. You need to choose the one that is most compatible with your eCommerce business model.

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