eCommerce Order Fulfillment: Optimizing the Business Growth and Customer Experience With Automation


eCommerce Order Fulfillment: Optimizing the Business Growth and Customer Experience With Automation

The global eCommerce market is expected to reach USD 5.4 trillion in 2026. The eCommerce order fulfillment process is a significant differentiator in the creation of positive customer experiences (CX). A recent survey states that 80% of online customers do not repeat orders if they experience a delay in delivery. 

Gartner correlates customer experiences with customer loyalty, so delayed delivery affects customers’ experiences and dents customers’ relationships with brands and online businesses. And in today’s time, customers are increasingly expecting personalized experiences alongside quicker and cheaper deliveries. This makes the role of order fulfillment in the eCommerce space all the more important. 

Brands are increasingly adopting agile and optimized fulfillment operations, with the ultimate aim being a better delivery experience. In this blog, we will understand the significance of eCommerce order fulfillment in the success of an eCommerce business, the various steps involved in the execution of smooth order delivery at the customer’s doorstep, and the challenges that affect the order fulfillment process. We also explore how eCommerce fulfillment solutions can provide a competitive advantage to online businesses and how smart automation can help businesses reduce their fulfillment costs and logistics costs and deliver delight to their customers.

What Is eCommerce Order Fulfillment? 

eCommerce order fulfillment refers to the series of steps that an online business deals with after receiving an order. This includes product picking, packing, shipping, and delivery of products at the customers’ doorstep. 

As a customer places an order on the website or app, the product goes through several steps before it can be shipped out for delivery. These steps are storage, inventory management, order management, packing, labeling, shipping, delivery, returns, post-order tracking, etc.

The number and nature of these steps can vary across eCommerce offerings and business models; however, one thing that remains common across all of them is the disparate nature of different operations. This is why it is difficult to control all the steps in eCommerce order fulfillment in a unified manner without the aid of smart automation that integrates multiple operational silos. 

The Significance of Order Fulfillment

For any eCommerce business, order fulfillment is of foremost importance. Managing orders efficiently not only ensures customer satisfaction but also brings profitability to the business.

Moreover, eCommerce order fulfillment also guarantees on-time delivery and reduces the chances of returns. Effective order fulfillment streamlines the entire journey of a product from source to destination. It also brings complete transparency to all stakeholders, and nevertheless, to mention its contribution to building customer experiences.

Simply put, the right eCommerce fulfillment solution and strategies help convert inefficiencies-ridden logistics intoa highly optimized mechanism of transportation and order fulfillment.

Step-by-Step Guide to eCommerce Order Fulfillment 

eCommerce order fulfillment starts right after a customer place an order on the eCommerce store. A system approach needs to be followed to ensure timely, cost-efficient, and effortless delivery of goods from the source to the destination. Here are the six steps in the order fulfillment process:

Receiving Inventory

It refers to the process of accepting and collecting products directly from vendors or manufacturers at local fulfillment centers. This process comprises ensuring product count, documentation, inspection, entry of items to warehouse management software (WMS), and creation of stock-keeping units (SKUs) for every concerned product.


This is the second step of fulfillment operations. At this stage, gathered products are stored on shelves in such a manner that makes the identification, pickup, and packing seamless. Therefore, inventory and warehouse managers make sure to optimize the available shelf space to its full capacity.


As a customer places the order, it is assigned to the picking team after being tracked across the existing inventory. In conventional warehouses, orders are assigned manually, so the chances of human-induced errors exist. However, with the help of an inventory management solution, these orders are conveyed through notifications to concerned automated pickers. The pickers get clear instructions regarding the item, storage location, quantity, SKU number, etc. 

Packing and Labeling

Safe packaging is a strong sign that the business cares for its customers. Logistic managers aim to make safe and timely delivery. In cases of self-owned inventory, the eCommerce order fulfillment center packs products with secured packaging materials like boxes, bubble mailers, poly bags, bubble wrap, and air fill. 

This packaging secures the product in transit. Some eCommerce companies provide personalized or gift wrap facilities. So, these eCommerce order fulfillment centers label and gift wrap products as per the customer’s instructions.


SLA adherence is a significant goal of fleet managers, so to make the delivery in the committed time, the product is further loaded onto designated fleets to ship it to the customer’s location.‍ 

At this stage, eCommerce logistics solutions consider several parameters like vehicle capacity, supply chain network, geolocation of the nearest delivery hub, etc. Also, based on the shipping orders, one has to choose between third-party shipping, merchant shipping, or drop shipping.


At this stage, the logistic hub collects customer parcels at their facility. Here, the product delivery is further assigned to the riders. The rider delivers the product to the customer’s doorstep and shares the electronic POD (proof-of-delivery) with the concerned stakeholders. BOPIS (buy-online-pickup-in-store) has emerged as an increasingly popular delivery mechanism, where customers can order online but pick it up from a physical store.


Reverse logistics or returns and exchanges are also part of order fulfillment. eCommerce providers are now accepting order fulfillment to be the journey from order generation to doorstep delivery, including a successful return/exchange process

Whenever a customer asks for an exchange or return request, the order processing should begin immediately. The eCommerce order fulfillment completes with the delivery of returns at the warehouse locations for further decision on RTO or resale. 

5 Common Challenges Associated with eCommerce Order Fulfillment 

Fulfillment operations are not easy. Each step has its unique complexities. Below, we discuss some of the major eCommerce order fulfillment challenges faced by businesses.

Managing Increasing Order Volume

On one side, high order volume presents a greater chance of profitability for each business; however, it can also affect order fulfillment and result in shipping delays. Product delivery per the designated delivery window is ideal for creating positive customer experiences. But it is not easy every time, specifically when the demand for any product increases.

Organizations must take this challenge as an opportunity for their market growth. Such businesses should look for flexible and decentralized fulfillment networks that can shorten delivery time and address customer demands in a short duration. In a survey, 34% of consumers stated that fast shipping would improve their online shopping experience. And eCommerce fulfillment solutions are successfully addressing this evolving consumer demand.

Reducing the Rate of Return

Around 30% of products ordered online are returned. Reverse logistics is expensive, affects storage space and vehicle capacity, and eats into business margins. This often negatively affects customer outlook regarding a brand after a poor return experience.

Businesses can control this in a couple of ways. The first is to make the return process intuitive and smooth. With the right automation, customers can easily facilitate their return requests in a seamless manner. The second is to have as few returns as possible. This is made possible with accurate order allocation and better oversight over order dispatch.

Minimizing Delivery Delays 

Delayed deliveries affect brands harshly. Failing to meet delivery windows dents customers’ confidence in a brand, and as a result, customers avoid placing orders in the future. Thankfully, eCommerce logistics solutions enable fulfillment managers unlock improved SLA adherence via:

  • AI/ML insights to streamline their entire fulfillment process.
  • Smart solutions automatically allocate orders and eradicate the possibility of manual errors.
  • Orders are shipped to the right courier hubs that are in the proximity of customers’ geolocations.

Real-Time Tracking 

Each step of fulfillment requires effective planning to optimize its operations. However, effective planning goes on toss in the absence of real-time visibility and tracking. 

Real-time tracking is important for all stakeholders as it enables up-to-date information regarding the smooth execution of the order. 

Fleet managers get clarity on the timely delivery of the product, and the customer gets the opportunity to plan their schedule as per ETAs and delivery notifications.

However, manual solutions do not support real-time tracking. As a result, vendors to customers all remain in the dark about the timely delivery of the product.

4 Different Ways to Manage eCommerce Order Fulfillment

Retailers can plan their eCommerce order fulfillment in four major ways. But not all models can augment your future growth plans since each have its pros and cons, along with suitability to particular use cases. Let us understand these eCommerce order fulfillment models in detail:


Self-Fulfillment is the primary eCommerce order fulfillment model, where businesses manage all steps of fulfillment themselves. This includes storage, inventory management, order management, packaging, shipping, and returns. It means that brands use their own storage facility where they perform all order processing themselves.

The self-fulfillment model has more negatives than positives, as this model lacks scalability. Only new businesses that are still looking for a good fulfillment partner can use this model. Once businesses start expanding, the limited resources and fulfillment capabilities fail to support the growth spurts.

Drop Shipping

In the drop-shipping model, the wholesaler or manufacturer directly ships the product to the customer, which means the vendor never stores inventory with them. So, when customers place their orders on the website, their orders are directly conveyed to suppliers and manufacturers. Then the manufacturers have to process and ship orders to customers from their own facilities. 

Unfortunately, this model is also not ideal in the long run. Since vendors do not get control over inventory, they miss the opportunity for brand creation through their products. 

Further, this model also creates hurdles for scalability as it provides no control over inventory.  

3PL Fulfillment 

Third-party fulfillment is one of the most successful e-commerce order fulfillment models. Here, retailers outsource their fulfillment operations to a third party that provides access to warehouses, inventory management systems, shipping, and reverse logistics.

Once vendors decide to engage a third-party fulfillment partner, their whole eCommerce order fulfillment operations are managed by these third-party logistics providers.

3PL service providers work with several e-commerce businesses; so for smooth fulfillment operations and SLA adherence, these 3PL companies deploy trained resources and automated eCommerce logistics solutions. This enables them to accelerate their order fulfillment process to perception with agility. 

Retailers and eCommerce vendors can approach third-party logistic companies for associations. Every 3PL service provider offers unique fulfillment solutions like B2B, B2C order processing, and temperature-controlled supply chain management. In addition, these 3PL companies can also provide customized solutions.

This model does not impose barriers to business growth. Instead, online businesses can accelerate their profitability by using their smart eCommerce logistics infrastructure. This model offers several benefits, like the ones mentioned below: 

  • Better growth prospect
  • Easily meet sales rush
  • Easy to achieve scalability
  • Helps brand building
  • Access to better infrastructure
  • Better chance to meet customer expectations
  • Adds competitive advantage


A hybrid model is a combination of two or more of the above-discussed fulfillment models. For instance, a retailer may choose to manage the fulfillment of popular products internally and outsource them during sales rush, peak seasons, and holidays or the manufacturer directly ship bulky orders to customers’ doorsteps.

How Much Does eCommerce Order Fulfillment Cost?

The cost of eCommerce order fulfillment depends on the model you choose. In the case of a self-fulfillment model, a business needs to bear the cost of getting a manual inventory, order management system, training resources, and more. In the second case, i.e., drop shipping, the supplier takes care of the complete shipping process. Therefore, it does not incur much cost. However, scaling your business and partnering with multiple suppliers might become cumbersome and involve a high cost. 

When you choose a third-party logistics provider, the cost of order fulfillment might be a bit high. But the positive thing is that the eCommerce company does not need to worry about timely deliveries, customer satisfaction, and other factors that help in building brand reputation. All they need to do is to hire reliable 3PLs and get a courier aggregator platform to manage and monitor their performance under one roof. 

Unlock The Shipsy Advantage For AI-Powered eCommerce Order Fulfillment

Shipsy’s eCommerce fulfillment solutions offer end-to-end coverage for all fulfillment needs of eCommerce operations, like warehousing, inventory management, shipping, and delivery.

Shipsy provides businesses with a unified interface that they can use to run their entire fulfillment operations with accuracy and agility. The AI-powered logistics management platform allows for intuitive order fulfillment. The cutting-edge AI/ML algorithms and advanced data analytics allow greater insights into the entire operational process.

The customers are empowered to make the best use of resources and time by automating every single thread of eCommerce order fulfillment. As a result, inventory planning, smooth operation workflow, resource optimization, real-time tracking, scalability, and creating positive customer experiences become second nature. 

With Shipsy at their side, brands enjoy a competitive advantage with the following:

  • 64% increase in customer satisfaction
  • 26% increase in delivery NPS
  • 28% reduction in customer complaints
  • 18% decrease in shipment returns

To know more about Shipsy’s automated fulfillment solutions, please get in touch with our experts for a customized demo today.


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