The eCommerce fulfillment methods that you choose can make or break your business. Customers want their online orders to be fulfilled as quickly as possible, with frequent and clear status updates along the way. Failure to do so in a timely manner or inform customers about issues or delays could cause you to lose customers to competitors who can better meet their needs and provide higher service. Deliver a differentiating delivery experience, however, and you’ve just earned yourself a loyal customer and maybe a word-of-mouth recommendation or two!
eCommerce fulfillment is a crucial part of the buyer’s journey and developing a strong fulfillment strategy to keep your customers coming back for more is fast becoming business critical. Before we tackle that, let’s take a quick look at modern eCommerce fulfillment.
What is eCommerce Fulfillment?
eCommerce fulfillment is the series of steps an order goes through from the moment a customer places an order online until that order is delivered to its final destination. These steps include receiving, processing, selecting, packaging, and shipping (transporting) orders. Depending on the size of a business (among other factors), a business may choose to handle eCommerce fulfillment in-house or use a fulfillment center or provider.
But there’s a lot more to consider when developing an effective strategy for your business. Below we’ll delve more into why fulfillment is so important, along with navigating the entire order fulfillment process, combating challenges, and tips for improving your strategy.
Table of Contents
- Factors That Go into Your eCommerce Shipping Decision Process
- How to Navigate eCommerce Fulfillment Providers
- Choosing Your eCommerce Fulfillment Provider
- Strategies to Improve Order Fulfillment
- The Future of the eCommerce Delivery Experience
Why eCommerce Shipping and Fulfillment Matters
According to a market analysis report by Grand View Research, the eCommerce fulfillment services market was worth $97.33 billion in 2022 and is expected to grow at a compound annual growth rate (CAGR) of 13.9% from 2023 to 2030. This projected increase in value is largely contributed to the number of speedy, convenient, and reliable eCommerce shipping and fulfillment options that delight and convert consumers into regular and return online shoppers.
Order fulfillment is one of the biggest areas of improvement for eCommerce specialists looking to create a first-class customer experience. How and when a customer’s order arrives will make a big impression on whether they want to shop with a particular brand again.
Once an order is placed, it’s on you to get it to the customer as seamlessly as possible, down to the last mile. Last mile delivery refers to the last leg of the shipment journey, when an order ships from a distribution hub to its final destination.
Here’s the problem. Last mile delivery is the most expensive and most time-consuming leg of the journey, due to having multiple stops and being slowed down by long distances between stops in rural areas or heavy traffic in urban settings. eCommerce continues to grow, with annual shipment volumes expected to double from 2020 to 2026. Simultaneously, last mile delivery is becoming is becoming more and more complex.
Businesses often need to use a mixture of LTL (less than truckload) carriers, truckload carriers, parcel carriers, and white glove delivery carriers to service customers. Many businesses are also evaluating crowdsourced delivery – an emerging method of fulfillment that relies on networks of local, non-professional couriers to deliver packages to customers doorsteps.
Seamless fulfillment involves not only choosing the right providers for the job but also keeping customers in the loop about their order’s real-time status or any hiccups. Because, let’s face it, hiccups are unavoidable: project44 data shows that while carriers report exceptions on 9.4% of shipments, our comprehensive last mile data set and predictive capabilities uncovers exceptions on a staggering 33% of last mile shipments. These delays don’t just impact customer satisfaction, they impact your bottom line. On average, a WISMO (“Where is my order?”) call accounts for 50% of inbound calls to customer care centers and costs a company $5 to resolve.
All the while, customers’ expectations for delivery times have shrunk significantly over the two decades, in part due to the “Amazon effect.” Amazon has completely changed online shipping and delivery expectations. Unparalleled convenience, unprecedented choice, and fast delivery all come together to create a superior customer experience that is impossible for other brands to create. The Amazon experience has drastically increased customer expectations for fast delivery, proactive communications, and convenience.
But all is not lost. With the rise of eCommerce delivery and last mile complexity, new best practices and technology has developed to solve these issues to help businesses increase last mile delivery efficiency, visibility, and improve the post-purchase customer experience.
Factors That Go into Your eCommerce Shipping Decision Process
Before we fast forward to solving post-purchase customer experience in last mile, let’s take a holistic approach to fulfillment and being with key considerations for your shipping decision process.
There are several factors to consider when determining your shipping process, including:
- Product size and weight. Keeping an up-to-date list of your products’ measurements and weights will help you provide your customers with accurate pricing. It’ll also help you get a better idea of your total costs.
- Shipping rates and methods offered. Businesses can either choose to absorb shipping costs or pass them onto consumers. Free shipping is one of the most popular options for businesses; a 2022 survey of 100 top retail brands found that 96% offered a free shipping option. Although customers like to see free or flat-rate shipping before making a purchase, they also like to be offered a variety of shipping options like same-day or two-day shipping. Beyond this, an online store also needs to consider the types of shipping methods it wants to use to get online orders to customers in a timely manner.
- Type of packaging. The right packaging matters. This ensures that items aren’t damaged during transit and that you don’t overpay for packaging. Worth noting: Carriers like USPS or UPS frequently offer free packaging.
- Level of service required. Another important factor to consider is the level of service you promise your customers. For example, a luxury retail business may choose to offer multiple same-day delivery options or even a “white glove” level of service. Not only are customer expectations high for this type of high-end online business, but customers are also willing to pay more for exceptional service.
- Tracking. An important component of building a good customer experience is offering consumers transparency in order tracking. Tracking will also help you to identify and resolve any issues as quickly as possible.
- Returns. Many businesses offer free shipping for deliveries but pass on shipping costs or restocking fees to consumers for any returns.
More than half of consumers are willing to pay more for expedited shipping services such as overnight or same-day delivery. Offering consumers a variety of shipping options helps to increase the likelihood that they’ll purchase an item instead of letting it sit in their shopping cart. Some of the most popular shipping services are:
|Guaranteed same day
|By next business day
|Within 2 business days
|Any shipping method faster than ground
|Within 3-5 business days
How to Navigate eCommerce Fulfillment Providers
Let’s explore how to choose eCommerce fulfillment providers.
Types of eCommerce fulfillment providers
Businesses that don’t handle fulfillment in-house need to consider outsourcing fulfillment. This is a worthwhile option once your shipping volumes hit critical mass.
The two main types of fulfillment providers are:
- Third-party logistics. Third-party logistics (3PL) can be ideal for businesses that want to scale up. Many eCommerce businesses choose a third-party provider to handle most or all aspects of supply chain management and logistics.
- Fourth-party logistics. Businesses that need assistance with 3PLs can choose to hire fourth-party logistics (4PL) to manage a business’s supply chain end to end, including all 3PL services.
There are a lot of third-party providers that businesses can choose from to handle inventory management, distribution, warehousing, or fulfillment. Some major fulfillment providers include:
- Fulfillment by Amazon
- Ingram Micro Services
- FedEx Fulfillment
- Rakuten Super Logistics
- IDS (Integrated Distribution Services)
Calculating the cost of order fulfillment
All of the components of eCommerce order fulfillment — receiving, processing, selecting, packaging, and shipping — must be considered when calculating the total cost of fulfillment. For a small business, one element of order fulfillment cost would be the time it takes for an employee to process, select, and package the order. After that, shipping costs need to be calculated. Shipping costs are based on:
- Package weight and size
- How far a package is traveling to reach its destination
- Tracking methods used
- Shipping insurance
- Time of season (costs and surcharges may arise around peak season)
Carriers offer shipping calculators on their websites so you can get an accurate idea of shipping costs in the U.S. or abroad. Take a look at major shipping carriers like USPS, FedEx, DHL, or UPS to see which option works best for you.
Other factors to consider when calculating total costs:
- Product costs
- Transaction fees
- Profit margin
- Customs/duties (for international shipping)
- Customer satisfaction
Choosing Your eCommerce Fulfillment Provider
When choosing an eCommerce fulfillment provider, the three main factors to consider are cost, speed, and customer experience. Customers expect their orders to arrive as quickly as possible, but you also don’t want to greatly reduce your profit margin by absorbing over-the-top shipping costs. In fact, speed is not the number one factor in a satisfying delivery experience.
In a survey from UPS, 80% of customers surveyed reported they would prefer features like last mile personalization features, like the ability to track packages in real time, over two-day shipping or free shipping. That’s why it’s crucial to find a happy medium between cost, speed, and customer expectations.
How to Measure Order Fulfillment
Three key components to measure are:
- Customer satisfaction. A customer’s satisfaction depends on how a customer experiences your business from the time they are introduced to your business until their order is delivered. Customer satisfaction can be measured by providing personalized, branded alerts on feedback, delivery exceptions, engagement, etc.
- Perfect order rate. This calculates how many orders are shipped without issues. Issues could be any type of delivery exception, such as damaged goods or late shipments.
- On-time delivery. This refers to the time window an order has for delivery. An “on time” delivery is typically any order that arrives early or by the guaranteed delivery date. So, if an order is guaranteed to arrive by December 23 and it arrives December 23 at 10 p.m., it is on time. If it arrives on December 24, it is late. Measuring on-time delivery involves compiling order data and calculating the percentage of on-time deliveries.
Order Fulfillment Challenges
Some challenges associated with fulfillment can’t be avoided, but with the right tools and strategic planning, it’s possible to minimize their impact. Key challenges to prepare for include:
Peak season. This refers to either the peak holiday season or a peak season for retailers. Either one can lead to longer fulfillment or shipping times.
Returns. No eCommerce business wants to deal with returns, but returns are unfortunately a major part of online shopping. Your return policy should make sense for both your business needs and your customers. Although returns can be costly, your business could lose more in the long run — in the form of lost customers — by charging high fees or refusing to process reasonable returns.
No business owner wants to lose customers. Proactively improve customer experience, retain customers, and convert new buyers by staying ahead of these common delivery exceptions.
Incorrect address. A package may be delayed or undeliverable if a delivery address is incorrect, incomplete, or unclear. In most cases, these issues are the customer’s fault, but occasionally a retailer may document a customer’s address incorrectly. Either error will lead to shipping issues.
Weather delays. Hurricanes, snowstorms, and other types of severe weather can lead to shipment delays regardless of the method of transit.
Lost in transit. Packages are occasionally lost in warehouses or during transit. Often, this is due to a failure to properly track a package throughout the supply chain. If a package is unable to be located in a reasonable amount of time, the retailer must inform the customer. They may choose to refund the customer or else ship out a replacement product.
Missed drop-off. Depending on the price or nature of an order, a package may require a signature upon delivery. If no one is home to accept the order during the delivery window, the delivery cannot be completed. Good carriers will inform customers of this issue and the next step they should take, such as picking up the package at a carrier location or rescheduling the delivery. If no notice of the missed drop-off is provided, this issue is more likely to reflect badly on retailers than carriers because the retailer chose that specific carrier.
Damaged package. An order will be delayed if a shipping label, package, or product is damaged. In many cases, the order may need to be canceled and reshipped.
How to address fulfillment challenges
For combating the issues listed above, it all comes down to sharing real-time updates with customers. Customers are generally understanding when it comes to delivery delays or issues — as long as they’re informed. Failure to communicate issues to customers will result in them going elsewhere: 85% of online shoppers say that a poor delivery experience would prevent them from ordering from that retailer again.
Symptoms of bad order fulfillment include:
- High number of WISMO inquiries, aka “Where is my order?”
- Orders arriving late or damaged
- Increase in customer complaints and negative reviews (NPS or other CSAT measure)
- Lost customers
- Low on-time delivery percentage
Strategies to Improve Order Fulfillment
It’s not enough to know about fulfillment challenges or the symptoms of bad order fulfillment — businesses also must try to find order fulfillment solutions.
How to Improve the eCommerce Delivery Experience
The best way to improve order fulfillment, particularly during the last mile, is by investing in an eCommerce delivery experience that provides end-to-end visibility throughout the retail order journey. eCommerce delivery platforms can go by many names, like “delivery experience manager,” but their ultimate goal is to:
- Solve order issues by creating frictionless experiences with real-time order updates and dynamic collaboration
- Communicate at scale by driving loyalty and maximize revenue with a dynamic, customizable post-purchase solution
- Take proactive action and get ahead of issues before they even start with intelligent, reliable, and predictive order data – across any carrier
- Predict delivery issues with machine learning-driven data to power total order transparency
- Achieve network visibility and strengthen agility in the final mile with unified order visibility
- Boost customer satisfaction with extensive brand configurability and control, leveraging last mile technology that offers automated messaging, self-service configurability, and bulk altering
eCommerce platforms like project44 help retailers provide customers with real-time, total order transparency that shows them where their order is, if there are any issues, and what happens next. Total order transparency can reduce WISMO calls by more than 25%.
We do this by offering a comprehensive last mile suite built for customer-obsessed brands:
- Last Mile Insights: Analytics & Insights across the entire journey to identify issues and optimization opportunities, enabling action
- eCommerce Predictive Delivery Rates: Predictive estimated delivery dates in your cart
- Consumer Visibility: Consumer tracking, alerts & updates, customer feedback
- Last Mile Resolution: Visibility & resolution
- Delivery Appointment Scheduling: Self-service scheduling embedded directly from the tracking page
- Last Mile Connect: API access to the p44 Data Platform to enable connectivity to systems such as ERP, CRM, Audit, BI and more
For example, consider project44’s case study on UrbanStems, a rapidly growing modern floral and gifting company that was struggling to gain visibility into their perishable deliveries and address a high volume of WISMO inquiries. To get on top of these issues and deliver a superior last-mile experience, UrbanStems partnered with project44 to optimize their delivery process. The results?
- 63% reduction in WISMO inquiries
- 85% customer care cost savings
- 75% decrease in time to resolution
The Future of Order Fulfillment is Great Customer Experience
The only way to stay ahead of the competition is by offering a great customer experience. That’s what satisfies customers, converts them, and retains them. The key is to use a delivery experience management platform that will guarantee perfect orders during the last mile. That’s a bold claim, but it’s possible with advanced visibility.
Adopting the right eCommerce technology will help you to collect and analyze the right data, optimize shipping and fulfillment, and provide your customers with the best possible delivery experience. In summary, you’ll remain ahead of the curve in a hyper-competitive landscape.
Your customers deserve the best
Learn more about how project44 can improve the delivery experience for your customers. Request a demo today.