E-commerce Wiki

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What is fulfillment?

Fulfillment Definition and Meaning

You’ve probably heard the term “shipping and handling” before, right? Well, that’s what fulfillment is, but there’s a little more to it.

Fulfillment is essentially the process of putting customer orders together, so everything is neatly packaged and ready to be sent out. Everything between the time an order is placed, to the time it’s delivered, is when fulfillment takes place. This usually entails production, quality checking, packaging and shipping. Online businesses will fulfill orders themselves, outsource fulfillment to a third-party company or use a drop shipping company.

When online businesses fulfill orders themselves it’s called self-fulfillment or merchant fulfillment. However, there are other fulfillment options that may be better for your business. Other fulfillment possibilities include outsourcing fulfillment to a third-party company or to use a drop shipping company that will take care of inventory ordering as well as the fulfillment process.

The Fulfillment Process

In the world of eCommerce, fulfillment usually starts with an incoming order, but it involves a whole lot more than just packaging and shipping. Depending on the merchant, fulfillment can vary, but the process usually entails the following:

  • Inventory warehousing
  • Production
  • Packaging
  • Labeling for shipment
  • Sending your customers order notifications

Fulfillment Methods:

What is fulfillment by the merchant?

Merchant fulfillment is when orders are produced, packaged and shipped by the seller. This is usually the most cost-effective option when a business is first starting out; however, it’s known to be a tedious and time-consuming process. As a business grows, keeping up with self-fulfillment can get tricky, so eventually a fulfillment team would be hired, or fulfillment would move to a third-party company.

What is fulfillment using a third-party company?

Instead of the merchant self-fulfilling each order, fulfillment companies will store products for sellers and ship out orders whenever sales are made. By using a third-party company, merchants have more time to focus on business and less time taking care of the physical work.

What is fulfillment using a drop shipping company?

Drop shipping companies are great for sellers who have great ideas but a lack of space, time and resources. It’s a fulfillment method where products are purchased from a third-party supplier and shipped directly to the consumer. In fact, the seller won’t even have the product in their possession in most cases. Certain drop shippers, like Spreadshop, won’t even charge the merchant for their services. All sales are commission based.

With new technological opportunities popping up left and right, it’s becoming more and more easy to start your own business.

Should You Use a Fulfillment Service?

Whether your business is already off the ground or you’re still tossing around business ideas, fulfillment is always a relevant topic to keep in mind. It’s important to take all aspects of your business into consideration before making a decision. If you’re self-fulfilling orders for your small eCommerce business, would you be able to keep up with orders if they doubled, even tripled? Even if you could handle the masses of orders, would you have enough space to store inventory? With thousands of eCommerce stores being launched every day, the fulfillment industry continues to grow. Fulfillment is a vital part of both the eCommerce and the customer journey, so it’s important to make sure whichever fulfillment process you use is best for your company. After all, customer satisfaction is what you’re really looking for in the long run!

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