What is Fulfillment | Meaning & Process Explained

Fulfillment is a term that’s commonly thrown around in the ecommerce industry. It’s sometimes used interchangeably with other terms like drop-shipping or order processing.

So much so, that someone who’s not familiar with ecommerce may not understand what fulfillment is or why it’s important.

That’s why we have created this article to help you understand the meaning of fulfillment and how it works.

What is Fulfillment?

Fulfillment is the process of shipping or delivering a product that a customer has ordered from a retailer. That may sound like just shipping. But fulfillment is more than shipping.

Right from inventory storage, warehouse management, pick and pack, tracking, order updates, to returns management – it’s all included in the fulfillment process.

Fulfillment is the bulk of the work in completing an ecommerce transaction.

Businesses can fulfill orders in a variety of ways such as:

1) Using their own shipping or logistics service (a method known as self-fulfillment)

2) Letting a third party fulfill the order on their behalf (known as outsourcing fulfillment)

3) A combination of both (known as partial fulfillment)

What is fulfillment in retail?

What retail companies typically do is stock their inventory in a warehouse. When a customer orders the product, it’s then packaged and sent out to them by a shipping and logistics service.

If the company has the infrastructure and the overheads to self-fulfill, then they may choose to do so. In this case, their staff will pick the products from a warehouse, pack it according to the customer’s specifications, and ship it off.

If they don’t have the resources to do so, then they can use a third-party or give the responsibility of fulfilling orders to the seller, which is what happens in dropshipping.

What is fulfillment in ecommerce?

Ecommerce fulfillment is a broad phrase to be honest. It can include retail fulfillment as long as the business is a B2C one. But it can also be a dropshipping business model, where the seller doesn’t store inventory themselves.

Instead, they give the order to the manufacturer or supplier (a third party), who then sends it out to the customer. In this case, everything from inventory management to pick and pack, is the seller/supplier’s pergorative.

In dropshipping, many businesses prefer working with a dropshipping agent, who will help them fulfill the orders. This way, they have more time to focus on growing their business.

Whichever model an ecommerce business chooses, fulfillment is critical to its success. It’s what builds trust with customers and creates brand credibility.

Does fulfillment include shipping?

Basically, yes. When we say fulfillment, we’re talking about all the steps that go into completing an order and getting it shipped to the customer.

It’s the process of picking, packing, shipping and tracking orders. It also includes updating customers with information on their order and letting them know when it’s on its way.

What is a Fulfillment Process?

A fulfillment process is the workflow that a company uses for fulfilling orders. It’s the steps that are taken, in order to complete an order.

Here’s a general overview of the steps involved in it.

  • An order is received
  • The customer information is checked, verified and recorded
  • Inventory levels are confirmed. If the item is out of stock, a substitute item is requested
  • The order is packaged and shipped by either a 3PL fulfillment service or by the business. Updates are sent to the customer throughout this process
  • The order is confirmed as shipped
  • Tracking information is sent to the customer

At Sourcingbro, we add an additional step where we oversee the entire shipping transit phase, keeping a vigilant eye on the order. This allows our clients the added convenience of staying on top of orders that go missing or are slow.

What is Fulfillment Method?

As implied by the term, it’s the method that a business uses for fulfilling orders.

There are four common ones that businesses generally employ.

  1. Inhouse-Fulfillment – The business stocks inventory in their warehouse and ships to customers themselves.
  2. Third Party Fulfillment – The business outsources fulfillment to a third party logistics company.
  3. Dropshipping Fulfillment – The business sells products to customers, but doesn’t store inventory themselves. They fulfill orders by sending the order to the manufacturer or supplier who will fulfill it.
  4. Hybrid Fulfillment – The business uses a combination of self-fulfillment, third party fulfillment and dropshipping fulfillment depending on what’s convenient and cost effective.

What is a Fulfillment Partner?

A Fulfillment Partner is any organization(s) or individuals that help you facilitate order fulfillment for your business.

It’s usually a third-party logistics (3PL) company or dropshipping partner who will take care of all aspects of order fulfillment for an ecommerce business.

It’s cheaper and easier to manage a business while working with a fulfillment partner, than using your own resources for fulfillment.

What are fulfillment services?

Fulfillment services are specialized logistics services that help you manage your ecommerce business with ease.

Whether it’s a service like drop shipping or third-party fulfillment, or both, fulfillment services are perfect for ecommerce entrepreneurs who don’t want to spend too much time on managing order fulfillment.

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What do fulfillment companies do?

Fulfillment companies help online merchants outsource fulfillment for their businesses. They take care of everything from receiving, storing and packing inventory to arranging shipping and tracking orders.

What is a fulfillment center or warehouse?

A fulfillment center or warehouse is a location where products are stored and packaged before being shipped to customers.

Fulfillment centers are either owned by the business (big ticket brands), or used by the business in conjunction with a fulfillment partner, who may lease it for their clients. This collaboration with a fulfillment partner enables companies to expand their reach geographically, having warehouses in Texas, for example, to strategically cater to customers in the Northeastern region.

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What is fulfillment cost?

Fulfillment cost is the expense of fulfilling orders. That’s including the cost for storage, pick and pack, shipping and returns. Other costs that factor into fulfillment cost, include order processing and customer service.

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