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Make Your Shipping Profitable.
Whether you’re using an order fulfilment company or processing your own orders, understanding the different terms relating to order fulfilment can help you better get to grips with the process.
Order fulfilment is an integral part of the supply chain of an eCommerce business. A good eCommerce fulfilment process ensures that your products go from company to consumer quickly and efficiently, boosting your reputation, customer retention, and profits.
In this article, we will cover as many of the different terms relating to order fulfilment as we can to help you better understand fulfilment services. So, whether you own an online store or manage a 3PL, take a look now to learn more.
The order fulfilment process is when customers receive their goods from an online store or eCommerce business. The order fulfilment process is part of the larger supply chain, which encompasses inventory management, picking and packing, and returns and refunds.
eCommerce companies may outsource their fulfilment services to third-party logistics companies or their fulfilment centre, where their employees pick and pack up orders to be sent out to customers.
There are a few different types of order fulfilment that an online store may choose; these include:
Order fulfilment aims to meet customer expectations of your business and ensure products get to them in good condition and in a timely manner. Each type of order fulfilment has different processes, but a few things happen in all different kinds. Every order fulfilment service takes three steps: receiving the order, processing the order, and delivering the order.
The receiving stage is when you receive orders from customers as well as the goods that will be sold. This part of the supply chain requires strict inventory management to ensure that you’re products aren’t frequently out of stock and customers don’t have to wait a long time for their order.
The next part of order fulfilment is the processing stage. In both a fulfilment centre and a self-fulfilment service, this involves everything from picking out and packing up orders to managing the distribution to keep shipping costs down.
Finally, the delivery stage, where orders are sent out. eCommerce businesses will also have a fourth stage where refunds and returns are processed.
The A–Z of order fulfilment has been created to help you better understand all the different terms involved in the eCommerce fulfilment process. Take a look below to learn more now.
3PL: A 3PL or a third-party logistics company may be used by an eCommerce business looking to outsource its order fulfilment process. A third-party logistics company offers fulfilment solutions for eCommerce merchants. A 3PL will have its own fulfilment centres where eCommerce order fulfilment services will take place, including everything from inventory management to processing to distribution.
Air cargo: Goods that are transferred through air transport.
API: This refers to an application programming interface that helps eCommerce businesses automate their order fulfilment services.
B2B: Business-to-business or services that overlap.
B2C: Business-to-consumer services.
Backorder: When a customer purchases an item that has recently gone out of stock, it is referred to as a backorder. The item will be sent as soon as it comes back into stock.
Batch fulfilment: When many orders are fulfilled in one go, it is called batch fulfilment. This kind of order fulfilment saves time regarding the eCommerce order fulfilment process.
Brick and click: This term refers to a store with a brick-and-mortar store as well as an online store (click).
Carrier: A carrier refers to a postal carrier who carries out the distribution part of the order fulfilment process. If possible, you may establish a relationship with your carrier to help reduce your shipping costs.
Crowdfunding fulfilment services: This refers to using a crowdfunding platform where items are processed and delivered, or incentives are given to crowd funders through reward schemes.
Dimensional weight: The dimensional weight is needed to determine shipping costs before sending it. The dimensional weight is calculated using the item’s height, width, and length.
Distributed inventory: This refers to when stock is spread across multiple locations or fulfilment centres. This is usually done to decrease shipping costs and delivery times.
Dropshipping: This kind of shipping model is a ‘middleman’ business model. It is when a consumer buys a product from a merchant who then orders it from the original manufacturer to be sent to the customer.
DTC: Direct-to-customer. This refers to a business that sends its own manufactured products directly to customers.
eCommerce: Any business transaction or business service that occurs over the internet. It is a shortened version of ‘electronic commerce’.
eCommerce platforms: The online sales channels used by eCommerce businesses to sell their products.
eCommerce shopping cart: This could be a part of the eCommerce platform or a separate channel where products are held. Customers can see their products as well as an estimate of shipping costs.
EDI: This stands for electronic data interchange and refers to communication between online systems.
ERP: This stands for enterprise resource planning. This refers to how businesses plan different tactics or strategies to integrate resources, like inventory storage, management, and sales.
FBA: This is the fulfilment service offered by Amazon.
Freight forwarder: Third-party that arranges and oversees the shipment of a product either on behalf of a customer or a merchant.
Freight shipment: This refers to a shipment that weighs over 150lb and has dimensions larger than 30x30x30″.
Fulfilment: When an order has been processed and delivered to a customer.
Fulfilment centres: A centre where fulfilment services, including picking, packing, and distributing, are carried out.
Fulfilment services provider: This is usually a 3PL or a third-party logistics company specialising in order fulfilment.
Hybrid fulfilment services: This is when businesses choose to use a mix of both internal and external fulfilment services.
Inventory: This refers to stock that you have available at the time, which can be easily distributed to customers.
Inventory storage and management: This is the process by which all your inventory is stored and managed. It includes where inventory is stored and placed in fulfilment centres, incoming shipments, and outgoing orders.
IoT: Standing for ‘internet of things,’ this refers to all items advertised and sold on the internet.
JIT: ‘Just in time’ inventory is inventory that is made available only when it is ordered. This is used mainly by merchants who do not have the space to keep inventory.
Kitting and assembly: This is the assembly of products that may be sold separately, for example, if products are sold on an offer, like ‘3 for 2’.
Last-mile delivery: This delivery format intends to keep the cost of shipping orders to an absolute minimum. It means that once an order has been made, the product is found in a warehouse as close as possible to the final destination of the product. This makes the delivery more efficient and more affordable.
Mobile responsive: This is when an eCommerce site changes how it looks to suit a mobile device.
MFC: This stands for micro fulfilment centre and refers to a smaller fulfilment centre usually located in specific regions.
Net weight: This is the weight of an item before packing boxes, and other packaging materials are added.
On-demand warehouse space: Services that provide on-demand warehouse space link businesses that need to store inventory with warehouses with extra space.
Online marketplace: This is an online platform that allows businesses to sell and advertise their products quickly.
Packaging: This may refer to the process of actually packing up your order as well as the packing materials that you use.
Packaging slip: This is the piece of paper that goes into packages with the information about your order on.
Pallet: A wooden structure used to hold and move heavier stock in a fulfilment centre.
Picking: The process by which products are picked ready to be packed.
Picking list: The list given to picking staff of ordered products.
Pick and pack: This is the process of picking and packing up orders.
Receiving: When merchants receive stock that is then organised and stored in a warehouse.
Reorder point: The point at which an item needs to be stocked to avoid running out.
Returns handling: The process of handling any returns from customers.
Self-fulfilment: When a business chooses to process and distribute its orders.
Shipping zones: These are usually defined by their proximity to the warehouses, and the zones are used to estimate a shipping cost.
SKU: Standing for stock keeping unit, this is a unique coding system to help identify each product you have.
Split shipment: This is when a shipment will be sent from multiple locations due to inventory levels.
Storage fees: This is how much a 3PL will charge for the storage of your inventory in their warehouses.
Supply chain: This is the entire process from manufacturing to distribution that products go through.
WAAS: This stands for warehousing as a service and refers to a newer service where warehouses store and distribute products for a short while.
White label shipping: When a 3PL does not advertise its brand on any packaging.
Order fulfilment services are essential in eCommerce. Getting it just right can help meet customer expectations and improve your sales. Our glossary should help you understand what’s going on as you enter the world of eCommerce fulfilment!
If you’re looking for a 3PL to provide logistics solutions, why not get in touch with us today.
What are the six steps of the order fulfilment process?
Order fulfilment differs depending on how your choose to do it, but all processes have a few key steps. These are:
What does order fulfilment mean?
Order fulfilment is when an online store or eCommerce business receives orders, picks and packs them, and then distributes them to their customers. It also involves the returns process when products are refunded.
What is the role of order fulfilment?
Order fulfilment services are used in eCommerce fulfilment to ensure that products your customers buy make it to them in good condition and in good time. The whole process is designed to move quickly to reduce delivery times and the cost of shipping.