GLOBAL SELLING BLOG
What is e-commerce fulfillment? Know meaning, types, and process
E-commerce fulfillment refers to the process of receiving, processing, and delivering online orders to customers. Learn more about it in the blog.
Imagine a fashion brand in India receives an order from a customer in the U.S through an e-commerce platform. The customer expects their package to arrive quickly and in perfect condition. But behind the scenes, there’s a complex process at work — managing inventory, packaging the order, navigating international shipping, and handling potential returns. This entire journey, from purchase to delivery, is what e-commerce fulfillment is all about. In this blog post, we will explore key aspects of e-commerce fulfillment, including its processes, different fulfillment services, and how to overcome common challenges for smooth operations.
What is e-commerce fulfillment?
E-commerce fulfillment refers to the process of receiving, processing, and delivering online orders to customers. It involves warehousing, picking products, packing, shipping, and managing returns. Efficient fulfillment ensures customer satisfaction, repeat business, and increased profitability. Sellers can choose e-commerce fulfillment services based on their unique products and needs.
Importance of e-commerce fulfillment
E-commerce product fulfillment is important for several reasons. Some of these are as follows:
Timely delivery builds trust and enhances the overall shopping experience. On-time, hassle-free delivery can boost repeat purchases and create customer loyalty for your brand.
Efficient fulfillment for e-commerce can minimize errors in inventory management, reduce operational costs, ensure accurate order processing, and boost profitability.
Scalable e-commerce fulfillment services can support business growth by adapting to increasing order volumes, handling holiday season surges, and meeting growing customer demands.1
E-commerce fulfillment process
The following is an overview of how a typical order fulfillment process in e-commerce:
Inventory storage
Products are kept in warehouses or e-commerce fulfillment centers. These function as central hubs for product sorting, packaging, shipping, and delivery.
Order processing
When a customer places an order, the item is retrieved from storage for packing and delivery.
Packaging
The item is carefully packaged to protect it during shipping. Accurate labelling and documentation is provided to prevent hassle-free shipping.
Shipping
The packaged order is sent to the customer using a shipping company (carrier). The customer often gets a tracking number to get estimates on the shipment delivery.
Learn the term: Fulfillment center
A fulfillment center is a facility that manages order fulfillment, including receiving and storing inventory, managing stock, picking and packaging products, and shipping orders. Amazon’s network includes more than 100 fulfillment centers worldwide.
Tips to improve e-commerce fulfillment process
Here are some tips for improving efficiency in the e-commerce fulfillment process:
Automate inventory management
Implement software tools to track stock levels in real time, preventing issues like overstocking or stockouts.
Automate inventory management
Implement software tools to track stock levels in real time, preventing issues like overstocking or stockouts.
Optimize packaging
Choose cost-effective, durable, and eco-friendly materials that protect items while reducing shipping costs.
Partner with reliable carriers
Collaborate with carriers known for speed and reliability to avoid delays and lost shipments.3
Types of e-commerce fulfillment models
Some common e-commerce fulfillment models are as follows:
In-house fulfillment
The seller handles everything — storing products, packing orders, and shipping them. This requires storage space, packaging materials, shipping software, and staff to manage the process.
Third-party fulfillment
A third-party logistics (3PL) company takes care of storage, packing, and shipping. This option helps businesses outsource complex logistics processes, offer better shipping rates, and reduce overhead costs.
Dropshipping
With dropshipping, the supplier ships orders directly to the customer. This has low startup costs, and requires no inventory management, but it can lead to longer shipping times, potential quality control issues, and lower profit margins.
Did you know?
You can outsource order fulfillment through Fulfillment by Amazon (FBA)
You sell it, we ship it. With Fulfillment by Amazon (FBA), you can store your products in Amazon global fulfillment centers while we pick, pack, ship your customer orders and provide customer service. FBA is designed to help you focus on your business while Amazon stores your inventory and takes care of shipping and last mile logistics (onward and return).
You sell it, we ship it. With Fulfillment by Amazon (FBA), you can store your products in Amazon global fulfillment centers while we pick, pack, ship your customer orders and provide customer service. FBA is designed to help you focus on your business while Amazon stores your inventory and takes care of shipping and last mile logistics (onward and return).
E-commerce fulfillment challenges
Some common challenges businesses face in e-commerce fulfillment are as follows:
Inventory management complexity
Both overstocking and understocking can pose challenges, as overstocking can tie up capital while understocking may leads to stockouts and lost sales.
Shipping and delivery disruptions
Delays due to carrier issues, logistical complexities, or unforeseen events (e.g., weather, global events) can negatively impact customer perception and brand loyalty.
Cost management and optimization
Fulfillment costs for warehousing, packaging, shipping, and returns processing may be too high for small and medium-sized businesses operating in new marketplaces.
Returns management and reverse logistics
Inefficient returns processing can lead to increased costs and customer frustration. Businesses require a robust system for processing returns, restocking, and managing reverse logistics.
Benefits of outsourcing e-commerce fulfillment
The following are some key advantages businesses can gain by outsourcing e-commerce product fulfillment to a third-party or logistics partner:
Cost optimization and scalability
Outsourcing eliminates the need for significant investments in warehousing, infrastructure, and staffing. It also provides flexibility to scale operations up or down, optimizing costs during peak seasons and slower periods.
Access to expertise and technology
Outsourcing enables businesses to access specialized expertise in logistics management, advanced technology, and established storage, packaging, and shipping processes.
Focus on core business activities
By offloading fulfillment responsibilities, businesses can focus on core competencies such as product development, marketing, sales, and customer service, driving growth and innovation.
Expanded reach and market access
Outsourcing e-commerce product fulfillment can facilitate access to new markets and customer segments.
Improved customer experience
Efficient fulfillment processes, faster shipping, and seamless returns handling contribute to a positive customer experience, fostering loyalty and repeat business.6
Ready to outsource order fulfillment so you can focus on building a global brand?
Tips for choosing an e-commerce fulfillment partner
Consider the following factors when choosing a logistics partner for your e-commerce business:
Evaluate scalability and flexibility
Ensure the partner can accommodate your business growth and fluctuating demand without compromising service quality. Look for partners that can customize solutions based on your unique needs, such as special packaging or handling fragile items.
Assess technological capabilities
Choose a partner with advanced tracking systems, real-time inventory management, and automated order processing to enhance efficiency and accuracy.
Review network reach
Confirm the fulfillment partner has a widespread network of fulfillment centers and reliable carriers to ensure faster delivery across key regions and markets.
Analyze cost structure
Understand all costs, including storage fees, shipping rates, and additional charges, to ensure transparency and alignment with your budget.
How to calculate fulfillment costs for your e-commerce business?
Some major cost categories in e-commerce product fulfillment are as follows:
Inbound shipping costs
Included costs associated with shipping inventory to the fulfillment center. These vary based on distance, shipping method, and the quantity of goods shipped.
Storage fees
Costs associated with storing your inventory in a fulfillment center. It depends on the volume of your products and the storage duration.
Picking and packing fees
Covers labor and materials cost for retrieving items, verifying orders, selecting packaging, and securely packing products.
Shipping fees
Includes the cost of transporting orders from the fulfillment center to the customer’s delivery address. This is determined by factors such as package weight, dimensions, distance, and shipping speed.
Customer service and returns processing
Covers cost of handling customer inquiries related to orders and processing returns. This includes managing communications, processing refunds, and restocking returned items.
Conclusion
Efficient e-commerce fulfillment can enhance customer satisfaction, operational efficiency, and scalability. While in-house fulfillment offers more control, outsourcing can save time and resources, allowing you to focus on scaling your business. Models like Fulfillment by Amazon (FBA) provide a hassle-free, cost-effective solution by handling order delivery, customer service, and returns. FBA is available to all Indian exporters through Amazon Global Selling, an e-commerce exports program that enables Indian exporters to sell their ‘Made in India’ products to hundreds of millions of global customers.
Amazon Global Selling: Easy e-commerce exports and hassle-free shipping
If you are a business owner and you want to sell your products to the world, Amazon Global Selling enables you to list and sell ‘Made in India’ products on 18 Amazon global marketplaces. As an e-commerce export program, Amazon Global Selling provides support and guidance at every step of your export journey, connecting you to Amazon’s Service Provider Network for tailored compliance, payments, and logistics support.
Registered sellers can choose to ship their products by themselves through Merchant Fulfilled Network (MFN) or they can opt for fulfilment by Amazon (FBA) and outsource order fulfilment to Amazon including packing, storage, delivery, and returns. Amazon Global Selling simplifies the process of international shipping to the world, helping businesses navigate customs and reach a vast audience.
Registered sellers can choose to ship their products by themselves through Merchant Fulfilled Network (MFN) or they can opt for fulfilment by Amazon (FBA) and outsource order fulfilment to Amazon including packing, storage, delivery, and returns. Amazon Global Selling simplifies the process of international shipping to the world, helping businesses navigate customs and reach a vast audience.
Frequently Asked Questions
1. How to start an e-commerce fulfillment center?
Begin by selecting a suitable location, investing in inventory management software, and partnering with reliable carriers to streamline logistics.
2. Should I use an e-commerce fulfillment provider?
Yes, outsourcing fulfillment can save time, reduce costs, and enhance delivery speed. Amazon sellers can use Fulfillment by Amazon (FBA) to send their products in Amazon’s global network of fulfillment centers and let Amazon handle packaging, delivery, customer service, and returns.
3. What is logistics and fulfillment in e-commerce?
Logistics involves transporting goods, while fulfillment encompasses the complete order process from storage to delivery.
4. Why is fulfillment important in e-commerce?
E-commerce fulfillment ensures timely deliveries, boosts customer satisfaction, and builds brand loyalty.
5. What is the difference between order fulfillment and e-commerce fulfillment service?
Order fulfillment applies to the entire process of receiving an order, processing it, and delivering the product to a customer, and can include orders delivered by retail stores, wholesalers, and direct-to-consumer brands. On the other hand, e-commerce fulfillment specifically refers to the process of fulfilling orders placed online through an e-commerce platform, where rapid and efficient delivery is key to meeting the expectations of online shoppers.
Published on February 28, 2025.
Sources:
1. https://www.tvsscs.com/the-rise-of-e-commerce-and-the-importance-of-fulfillment-center-services/
2. https://flow.space/blog/ecommerce-fulfillment-guide/
3. https://www.linnworks.com/blog/order-fulfillment-strategies/
4. https://www.hopstack.io/guides/ecommerce-fulfillment-guide
5. https://www.deliverect.com/en/blog/fulfilment/7-common-ecommerce-fulfillment-problems-and-how-to-fix-them
6. https://www.shopify.com/in/retail/benefits-of-outsourcing-your-order-fulfillment
7. https://yourstory.com/mystory/e-commerce-fulfillment-costs-calculation
Sources:
1. https://www.tvsscs.com/the-rise-of-e-commerce-and-the-importance-of-fulfillment-center-services/
2. https://flow.space/blog/ecommerce-fulfillment-guide/
3. https://www.linnworks.com/blog/order-fulfillment-strategies/
4. https://www.hopstack.io/guides/ecommerce-fulfillment-guide
5. https://www.deliverect.com/en/blog/fulfilment/7-common-ecommerce-fulfillment-problems-and-how-to-fix-them
6. https://www.shopify.com/in/retail/benefits-of-outsourcing-your-order-fulfillment
7. https://yourstory.com/mystory/e-commerce-fulfillment-costs-calculation
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*Map not to scale. The map has been used for design and representational purpose only, it does not depict the geographical boundaries of the country. These do not conform to the external boundaries of India recognized by the Survey of India.
*Map not to scale. The map has been used for design and representational purpose only, it does not depict the geographical boundaries of the country. These do not conform to the external boundaries of India recognized by the Survey of India.
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