What Is Order Fulfillment? Processes & Strategies

Cody Cromwell
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The Order Fulfillment Process

Reliability is a key characteristic of order fulfillment companies because it�s not possible to make any money with unreliable clients. To ensure a constant flow of orders, it can be helpful to build out a team of freelancers or contractors to help with the work. They can also be helpful with start-up costs, because order fulfillment companies only work with clients who need their help.

Working with contractors can be challenging, though. You won�t be able to ensure that a contractor works great for you just because you both have a good relationship. One great freelance or independent contractor for instance will have a low turnover rate and make you money just as well as a company of much larger proportions. But working with a company you have no knowledge of may lead to poor results. Most companies have stringent processes and contracts in place to combat this.

With more and more companies looking to outsource their supply chain, it�s important that you find a company that offers solid results. While you may have a good relationship with a freelancer you know personally, you won�t have the same history with another freelancer you hire on Craigslist. So, it�s best to hire freelance contractors hired directly by the company, or work with a company that can refer you to a trusted supplier.

What is Order Fulfillment Processes?

Order fulfillment is a system of managing the distribution and shipping of products to the customers. It is an important step for companies starting with retail business to start.

Order fulfillment can be further divided into 3 different processes.


The logistics processes of an company include shipping, receiving, storage, and customer interaction.


The stores include their needs for raw materials and start-ups, and production.


The sales process involves the customer taking the products from the stores and completing the sale.

The Right Order Fulfillment Solution for Your Business

Order fulfillment is a process that often goes under the radar when it comes to supply chain management. Unlike manufacturing and shipping logistics, which are both crucial components of an organization’s mission and success, order fulfillment isn’t something you see on the cover page of a Fortune 500 company’s annual report. And that’s a shame, because order fulfillment is vital to every business, large or small.

Order fulfillment involves the efficient, cost-effective, and consistent transfer of goods from the manufacturer to a customer. More specifically, it deals with the processes of receiving, stocking, and shipping product from the manufacturer to the customer’s door.

Typically, order fulfillment is handled by the customer’s sales team, and so, it’s vital for a customer’s team to work closely with other departments in the company to optimize order fulfillment. But before you can look at how your order fulfillment can improve, you need to understand what order fulfillment entails in the first place.

What is order fulfillment?

Order fulfillment concerns the transfer of product from the wholesaler to the retailer to the consumer, or from manufacturer to manufacturer.

Here’s a more detailed breakdown of what order fulfillment entails:

In-house Order Fulfillment

A Brief Introduction

When you operate a business, you already know that you will have to order products on a regular basis. In many cases, you will also have to fulfill all of these orders manually, one at a time. Regardless of how much work you have to take on for orders, the process can be pretty time consuming and yield a lot of room for error and mistakes.

Order fulfillment, on the other hand, involves automating a portion of the overall order fulfillment process. In-house order fulfillment, as it’s often referred to, basically involves moving a portion of your order fulfillment process from in-house to an outside vendors. This process usually reduces both the time and the room for error that you get by entirely outsourcing order fulfillment.

That said, there are a few things to consider before you decide if in-house order fulfillment is right for you. How much manual work is involved in your business? How much time can you make up for by taking on orders from outside vendors? These are just a couple of the questions to ask yourself before you get started with a company that offers in-house order fulfillment.

Outsource Order Fulfillment

What You Can Expect & What You Should Expect.

A fulfillment center is an ideal location for an online company to locate its operations. The answer to the question … why order fulfillment? is that processing and shipping orders is a necessary task.

First, you need to know if you really want to start an order fulfillment operation. It can be risky to hand over a part of your business to an outside company that needs to be profitable … but you’ll need to weigh the risks for the profitability of doing action now.

Additionally, consider the benefits of outsourcing your order fulfillment operations. You can keep your resources focused on growing your business, while the orders are being shipped to their destinations by a professional order fulfillment company.

Ultimately, outsourcing your order fulfillment operations helps your business to move in a direction of growth. To get more information about outsourcing your order fulfillment, consider asking these questions:

  • Can I find a Fulfillment Service Company to justify the cost of purchasing an order fulfillment operation?
  • Do I fully understand what is involved in the order fulfillment process?
  • Do I really understand whether the order fulfillment operation will benefit my business or not?
  • Should I outsource my order fulfillment business?

Fulfill Orders With Drop Shipping

One of the easiest ways to start your own ecommerce store is to use drop shipping. Drop shipping is a distribution model in which you outsource the order fulfillment to a third-party company, which in turn packs and ships your merchandise to the customer. Drop shipping is a straightforward process in which the fulfillment company takes care of all of the order processing and shipment and you receive all of the profits.

Drop shipping is a great choice if you have a product that sells well on Amazon or Ebay, and you aren’t looking to handle the fulfillment yourself. If you do have time to handle the shipping, a POD (print on demand or power printing) business model is a better fit. A POD business model involves printing and distributing physical merchandise. E.g. t-shirts, mugs, and notepads. This involves either setting up your own limited production, or hiring a manufacturer to produce your merchandise.

Regardless of whether you choose drop shipping or direct marketing, it’s crucial that you set up an effective fulfillment system to meet customer demand. As a drop shipping merchant, you can’t afford to sit around waiting for your inventory to arrive. Besides, your customers will be happy to find you’re selling new products.

Hybrid Order Fulfillment Solution

Order fulfilment optimization is the process of helping businesses maximize their profit by tackling the challenges associated with order fulfillment by leveraging the power of a hybrid fulfillment.

Order fulfilment is defined by the purchasing methods used to receive products at the fulfillment center to then ship the products to the customers. Order fulfilment can be delivered in two ways:

  • · Partial capacity order fulfillment
  • · Full capacity order fulfillment

When a retailer receives a large number of orders to fulfill, an efficient order management system is necessary to order fulfilment strategies so as to ensure efficient order fulfilment.

Order management is the process of picking and fulfilling orders, and for a retailer, it usually involves pre-sorting the incoming orders (whether they are inbound from a web or offline channel) based on the customer/quotes and inventory databases. The necessary information about each order is collected in an order management system so that the orders can then be fulfilled in compliance with the customer requirements.

On the other hand, order management is also used to determine the feasibility of products to ship by taking into account each order details such as customer/quote. This can be imported into the downstream activities of production, inventory, and distribution.

The order management process includes the following activities:

  • · Order picking
  • · Order consolidation
  • · Order picking index
  • · Inbound order matching
  • · Cart matching

The Elements of an Order Fulfillment Operation

The retailer order fulfillment process is, at its core, a customer service operation. An effective order fulfillment operation involves the following:

  • Analysis of customer needs and the development of a buying process plan
  • Setting up a CRM system
  • Setting up web sites, catalogs, and order processing requirements
  • Establishing the order fulfillment process
  • Implementing order fulfillment
  • Corrective action plans and giving service the service it deserves
  • Taking a performance management approach to order fulfillment to improve productivity
  • Process, time, and safety management

A good return and exchange policy is part of an order fulfillment process.

An effective order fulfillment operations are flexible and have the capacity to change and adapt to changing customer needs.

By following a customer service-oriented approach, the fulfillment process plans can be prepared and implemented quickly. The biggest challenge is to account for changing needs in the fulfillment process, which must be continuously.

A good fulfillment process will give you a higher percentage of orders completed on the day that are 99 percent or higher of the time, and those are shipped on the same day from the warehouse.

A Place to Receive & Stock Products

Order fulfillment is a place where you store products that have been shipped from the supplier. You can store them in a warehouse, a customer’s home or cars.

At some point, you’ll need to take an inventory and ensure that all the products you stock are accounted for. If you decide to use the warehouse, you can use a bar code scanner, which enables you to identify the product from inventory.

Shipping isn’t the only function of an order fulfillment center, though. You’ll probably want your customers to pick up their orders, which is why most warehouses offer customer drop-off services. You can also use the warehouse for storing returned product.

All of these are just scratching the surface of the basic functions of a warehouse. In this post, we’ll cover how to stock your warehouse, how to take inventory and how to ship your products to your customers.

Space to Prepare and Pack Orders

The order fulfillment cycle involves at least three distinct steps: receiving, unpacking and processing, and shipping. The first step, receiving, happens mostly in the warehouse or distribution center. Although orders can arrive for you box by box, the whole process will take longer as well as lots of storage space and administrative time. Orders arrive at an order fulfillment center if they’re sent from a PO box, distributor, supplier, or warehouse.

The second step in the process, unpacking, is done by the warehouse staff, and involves a lot of space to prepare and pack orders. This process is where order defects are discovered, and where the rejection rate is highest. For example, if an order has weight-based dimensional requirements but the box is filled to the top, it won’t fit inside the conveyor which is the next step in the fulfillment process.

The third and final step in the fulfillment process is shipping. Shipping involves packaging the items and sending them out to the customers. This is done either by a resourceful packer who sends out all the items with as much value as possible or the warehouse or distribution center staff who pack the order. The packing process also rejects a significant number of orders that are more trivial and that don’t meet the packaging standards.

Shipping Supplies for Packing Orders

Order fulfillment! Legally speaking, this just indicates the process of physically packing the items ordered and sending them out. In reality, order fulfillment is an entire business practice in itself.

The latter of the two are important because they are the processes associated with order fulfillment, which can be anything from the physical packing of the package to insurance and shipping supplies.

So what is this order fulfillment process?

Order fulfillment is a part of distribution and a strategy of product placement used by sellers.

Order fulfillment involves the process of packaging, shipping and fulfilling orders as per the details of the sales order. Order fulfillment in its simplest form can be done directly with the customer as a fulfillment house, or outsource to a fulfillment center.

It can be done in various ways:

Order fulfillment can be initiated by the software when a customer places an order online or by the customer in a web shop.

It can also be done manually, with the help of a service provider or a fulfillment house.

For larger scale orders, it can also be done for promotional items.

Back in 2007, a merchant with an online catalog started a fulfillment house just to capitalize on Amazon's referral programs. Undoubtedly, the sales were fruitful.

The company now has their own fulfillment center.

What is order fulfillment?

Order fulfillment is a part of distribution and a strategy of product placement used by sellers.

Packing Slips or Invoices

Packing slips are the answer to the question of what is order fulfillment and how is it carried out? It is a paper or electronic record of what comes from and where it will be shipped and what is on the package. Hence, it would be more precise if the term order fulfillment would be called packing slip or packing slip details.

Packing slips are created as a record of what the company is shipping to its customers or clients. The results of the packing slip look as follows:

  • Customer name
  • Customer address
  • Product description
  • Price

The necessary shipping document contains the method of payment, the shipping type, and the information for the carrier.

An example of a packing slip can be found here. In the example, you can find out whether the company shipping to New York is going to use FedEx or UPS, which method of payment, and which type of shipping the company will choose.

Two or Three Months Ahead of Time, a Packing Slip is Created.

Creating packing slips is something that should be done two to three months ahead of time. Meanwhile, companies should start creating a list of products that they have but will need to ship in the near future.

A Way to Create & Print Shipping Labels

Order fulfillment(O.F) is fundamental to the success of companies. It is the process of fulfilling orders, accepting and processing shipments for retail, eBay, wholesale and manufacturing companies, manufacturing, and distribution. Order fulfillment involves several key processes and tasks.

In the case of larger companies, order fulfillment can include item receipt, asset management (pricing & promotion), lot-picking, shipping, and, warehouse operation, and inventory management. This is not all. Order fulfillment can include the process of obtaining items, shipping labels, item receipt, merchandise assembly, and return items. Order fulfillment is an integral step in various business functions.

The use of an order fulfillment process doesn’t guarantee a smooth distribution. The right tool for the job can make all the difference when it comes to letting order fulfillment work the way it’s meant to. By investing in the right automation tool, you’ll be able to save time, costs, and work efforts, reduce errors, increase employee productivity, and even improve logistics over a longer period of time.

Order Fulfillment Basics: What Every Shipper Should Know

It’s essential for any retailer to understand the order fulfillment process, because once a shipment leaves your warehouse, it’s usually out of your hands. This is because the process typically involves several parties that need to work together, each fulfilling a role that is needed to ensure an efficient, timely delivery of your product.

It’s important for your company to facilitate this process by coordinating the activities of all the parties involved: the manufacturer, the suppliers, the carrier, and you as the merchant.

It’s valuable to look at the order fulfillment process as a series of processes that every company must go through. Every step that is performed must be managed, and every party must be fulfilled…in this order.

From the time the customer places an order until the item reaches the customer’s hands, there are several steps along the way. Understanding the order fulfillment process is essential in helping both you and the manufacturer to ensure that your customers get what they’ve paid for.

The order fulfillment process includes the following steps:

Box Weights & Sizes

Large UPS shipments are packed in boxes with 90%+ full fill. If the package has more {Space_for_packages} the box will be shipped with 50% of the box filled. The minimum order size for 90% full is 10 lbs.

We ship the items in these large boxes using UPS Freight. We highly recommend requesting a signed delivery receipt from the delivery person so that your claim or return is fast and easy.

In a Crate

A delivery may arrive in a crate, as shown in the picture below. Crates are used to protect fragile items like glassware, crystal, china, tableware, etc. This allows fresh air to enter and avoid damage.

For the sake of safety, we highly recommend that the crate be opened as soon as possible. Please call us to schedule a time between 5 p.m. and 8 p.m. to allow the crate to be opened. Please allow more than 24 hours for your merchandise to arrive at the warehouse. Place the furniture in the room where you would like it delivered and label the room with the name you would like on the shipping label. Please be sure to observe any pre-shipping instructions on your order. You will be called shortly with a time and date for delivery. Our service technicians are at your service to help out with the placement of the furniture and any instruction you would like to have.

Address Types

Order fulfillment or order fulfillment often simply referred to as fulfillment, is the process of managing orders and filling them. This is usually the final process and is generally applied to the fulfillment methods of warehouses and stores. Typically, order fulfillment involves accepting the order, finding the customer's information, verifying whether they already have the product and, if not, the number of units and amount of payment.

Order fulfillment is most often applied at the last stage of the purchase process, but can be done a couple of different times along the course of the process.

Processes & Strategies

The process of order fulfillment is where you bulk manage your order. It’s the place where your company takes action on orders that you’ve received. An order fulfillment system is also often used to handle or complete financial transactions. Timely order fulfillment enables you to reduce the time it takes to process orders. It also helps cut down on the time it takes to handle the shipping of your orders. Using a fulfillment service reduces your need to have warehouses. It also enables you to move your products more quickly to your clientele, minimizing time passed on to each process. However, many companies still maintain their own fulfillment system for that reason or because they already have warehouses. Whatever the reason, this process is very important for your company.

Delivery Zones

By the late seventies, John wanted to go international with his business, and he wanted to make that happen in a way that made sense for his budget. This meant that he would need to ship his products via shippers to different countries, but he figured out a way to mitigate the cost of shipping by doing the shipments and stocking the items at the different locations.

This new process of doing business involved a lot of paperwork, and it was long, complex, and involved a lot of rules and regulations. John therefore wanted to streamline the process so that he could do many shipments in a short time, and he could cover more cost-effectively.

Once John started to look into the logistics involved with shipping, he found out about the shipping zones concept, and he realized it could help him save on shipping costs. Shipping zones were created to standardize and streamline the methods of shipping that shipments are carried out by. These shipping zones allowed different shipping companies to use the same set of rules to deliver their shippers’ goods to a particular location.

By using the shipping zones concept, John felt that he could still get his products delivered as fast as he wanted at locations all over the world while still meeting all the regulations and restrictions. It solved a lot of the problems he had been previously dealing with, and it helped John be able to ship to many different countries with slightly different service standards.

Shipping Methods

Order fulfillment is the process of handling and routing the orders received by your company. It involves the order processing, inventory management, order routing, packaging, shipping, and invoicing.

It involves six main processes:

Order Processing:

Order Processing comes down to the inputting of the customer’s order information. It includes processing customer details, such as billing information and shipping preferences.


Customization involves the customization of your products for your customers. This is especially useful for ensuring that you are fulfilling your customer’s expectations.


Catalognum is a new step in order processing wherein your customer’s orders are distributed among all the warehouses in your company. Your customers will not be able to input any order information once the orders are sent to the warehouses.

Order/Routing Management:

Order/Routing management involves the handling of the orders you have received. Here, you will be able to decide what to do with the orders. For instance, you will decide whether to ship the orders immediately or you can set them aside for further processing.


Distribution is where you will ship out the orders to your customers. It is where your orders are sent to the shipping carriers for the delivery of your orders.

Inventory Management:

Overall Shipping Volume

How to Ship With UPS, FedEx & USPS

Shipping is a lot more than just packing and sending a package. When it comes to shipping, timing is everything.

Shipping using UPS, FedEx and USPS, you’ll be faced with a huge range of business processes, such as picking, packing, printing labels and shipping documentation.

If your business is shipping out often, you can benefit by automating as much as possible. This begins with an order-fulfillment system, which can be a crucial tool for streamlining your shipping processes. The good news is that there are a number of different options to choose from when it comes to implementing an order fulfillment system.

In order to choose the right option, you need to understand what you want your system to do and how it will help your business flourish. The following are just a few examples of the types of shipping processes that a modern fulfillment system handles …

Tracking and tracing shipping methods, packages and shipments.

Generating Shipping Labels and Packing Lists

Picking, packing and shipping orders.

Printing Incoming Shipping Documents and Labeling

This list is by no means exhaustive, but if you take a look at the option lists, you’ll see that there are a number of different systems available that cover all of these process….

Use Shipping Rate Comparison Software to Cut Costs

Shipping is not always a profitable business for retailers. Many businesses lose money by shipping their goods overseas, especially third world countries.

However, there are several ways you can save on shipping costs to make up for it. Shipping rate comparison software is one of the most useful tools in making savings possible.

Shipping Rate Comparison Software

As the name suggests, shipping rate comparison software tools will help in comparing the best shipping rates from various vendors. When you are choosing fast shipping, it is very important for you to have a detailed knowledge on the various shipping options you choose for the delivery. Using shipping rate comparison software tools can help you in understanding the shipping cost while also reviewing the delivery option.

If you are short of time, such tools can be used to compare the shipping rates for you on many different shipping companies easily. This helps reduce your shopping time and save you the inconvenience of calling many different shipping services.

All you need to do is choose the most suitable shipping companies to your shipment and shipping rate comparison software will instantly calculate the best shipping rates for you.

You can directly download and install shipping rate comparison software on your laptop or desktop. Once you are done with the online selection and software installation process, all you need to do is compare the shipping rates given by the shipping companies. As soon as you select and the post office supplier, the best shipping rates are displayed on the software screen.

Other Shipping Considerations

Order fulfillment is a process that is extensively used by ecommerce companies. Order fulfillment ensures that an order is distributed so that the transportation of product is not slowed down.

Order fulfillment is a department that involves the entire supply chain of the company. It consists of manufacturing, warehousing, shipping, order processing, and customer service. This process is vital for a company to run smoothly.

Every time an order is placed online, the opportunity exists for the order to be lost, damaged or stolen. To avoid these mishaps, order fulfillment is a must for any company.

A major goal of Fulfillment by Amazon (FBA) is to reduce or eliminate the order fulfillment process, and instead allow you to assume all of the work needed to ship and fulfill customer orders.

FBA handles the entire fulfillment process, from order arrival to delivery of your product. They decide if, when and how to ship your product. They determine where to ship your product. They provide free seller storage. They provide great free advertising that allows your product to reach the right customers.

There are several advantages to FBA for businesses. The major advantages are:

{1}. Reduced capital investment.
{2}. Sales more than triple.
{3}. 70% reduction or loss of inventory.
{4}. Minimal to no storage costs.

Order Fulfillment Frequently Asked Questions (FAQs)

Order fulfillment is the process of moving goods and content from the place where it was manufactured through to the customer or the final end user. The journey has touched the life of every business but order fulfillment is a complex process especially when the volume of customer orders are added or when orders are delayed due to weather or other unexpected reasons.

Due to its complexity, there are numerous order fulfillment processes that are being implemented today. Essentially, each company has to establish its own order fulfillment process to be able to deliver its desired results.

Why think of and implement an order fulfillment process?

Despite the various processes, order fulfillment is divided into two different processes: order notification and order response. For companies that are using the order fulfillment process to generate revenues, their focus will be on building an order notification system.

However, companies that are not concerned with making revenue out of their order fulfillment process will focus on implementing an order response system.

So what is the difference? In this case, the order is merely a notification about how your product should be delivered to the customer.

On the other hand, the customer response process is the way the customer will acknowledge your order.

When implementing an order response process, the order notification system is done through a different channel than the order response. For example, a company that is using their order response system to deliver products to customers will have their order notification system being handled through the web.

What is order fulfillment?

Order fulfillment is the process of completing customer orders by shipping the goods ordered. Once an order is received, the goods are packaged and sent out to the customer who is then charged in a timely fashion (referred to as 'net 20').

Do you know how your goods are picked, packaged, and shipped to your customers? Take a closer look at this blog to learn more about order fulfillment for your business.

How can I improve my order fulfillment?

Each order fulfillment requires different processes. Consequently, they are also operated differently.

The main difference between order fulfillment processes is the amount of control you have over the package and the order contents. You can choose to inspect the shipment and to reject the order at the time of the shipment or you can pass the parcel along to your internal process without opening it.

Alternatively, you can choose to take control of your order and to open it at the time of the shipment. You may even choose to open it as soon as the order is received by your staff.

Also, in order to improve your order fulfillment processes, you may want to implement some of the order fulfillment casework strategies below.

Should I outsource order fulfillment?

If your company has grown beyond the point that you can personally handle all those incoming orders, you should consider the possibility of outsourcing the fulfillment of your orders. This is the process of managing the entire process of taking an order from a customer, receiving it, and delivering it to a customer.

Fulfillment outsourcing is not just for larger companies, as many smaller companies also outsource to handle their order fulfillment. [1]

It’s important to determine how much order fulfillment outsourcing will save your company if your aim is to cut costs and improve efficiency. Keep the following in mind when outsourcing, and you’ll find the business case clear as day:

Can I save on storage costs and distribution costs?

When you outsource your order fulfillment, you’ll often be able to cut your storage costs and your distribution costs. By cutting these costs, you can save a significant amount of money each month.

Canned goods and other products kept in storage will often go bad or expire. If you have more than a few products, placing them in storage will cost your company a big amount of money and make product unsellable. Plus, if you order the wrong type of cans, it’s a waste of storage space. You will need to sell and return them to your supplier.

Bottom Line

Simply put, order fulfillment is the process of getting an order from an external source to a vendor at the fulfillment center. Just imagine this process: an order that is placed into an inventory management system (Proprietary System or Ecommerce System) for fulfillment and the order is transferred to a Primary Fulfillment Center (PFC) through a transportation system.

Ordering directly from manufacturer, distributor and other wholesalers to vendors has long been an established way of delivering goods, but one of the most popular and modern ways to get goods to your customers is through an order fulfillment process.

Order fulfillment is often viewed as a cost center by retailers who are looking to reduce their operating costs.

Order Fulfillment is very important to the smooth and efficient operation of a business. If you select the right process and strategy, your business can be more efficient then your competition.