Ecommerce fulfillment: fulfillment of orders and fulfillment of promises

This page is part of our Resources section. The aim of this section is to provide useful information to support clients interested in our ecommerce order fulfilment services.

Ecomerce order fulfillment - Introduction

Once a customer purchases a product from your website, you should ensure delivery in a timely and efficient manner. For some items such as music and software, customers can download the product directly to their computer. However, as more businesses look to sell physical products via the web, there is also a need for delivery to the customer's doorstep.

The solution is an effective ecommerce fulfillment service capable of handling all of the stages from processing the order to delivery.

For products requiring physical delivery, a large portion of the cost of selling online can be attributed to fulfilling the customer's order. The effectiveness of your ecommerce fulfillment process can therefore have a major impact on the profitability of your operation.

This guide describes the various options for delivering both physical and digital products to your customers and provides guidance on how to ensure that you meet their expectations.

Ecomerce order fulfillment - Automated order processing

The first stage of the ecommerce fulfillment cycle is the way in which your business processes a customer's order.

How your business handles orders has a major impact on customer service, from encouraging initial interest to prompting repeat business. While several factors - price, quality of product or service, range of goods, stock availability - are vital to achieving sales in the first place, a responsive, fully automated order-fulfillment procedure plays a key part in overall customer satisfaction.

You need to know exactly how well your business deals with ecommerce order fulfilment before you can make improvements. You should evaluate how orders are processed by:

• Identifying the connections between sales, planning, purchasing, etc. Tools such as flow charts and activity diagrams can help you map out your processes and highlight the links. There are simple software tools available to help you do this.
• Considering linking your systems to those of your customers if you operate in a business-to-business environment. Find out what systems they use and determine if yours are compatible.
• Asking staff for their input - they may be able to help you identify problems and solutions.
• Encouraging customers to give you feedback on how their orders were handled.

Automating your internal systems can help achieve the speed and efficiency you need from order processing. It brings together all departments that handle the order, from website or sales reps to warehouse staff. You can do this by:

• Considering using enterprise resource planning software which can tie in your website with other facets of your business, such as planning, manufacturing and distribution. Decide whether an off-the-shelf package will be sufficient, or whether it is worth investing in a bespoke system tailored to your particular industry and supply chain. More basic order and stock management software that is cheaper and easier to implement is also available and this might suit some smaller businesses.
• Connecting your suppliers and customers to the system. Integrate your system with your website, then customer orders that arrive in your system can be transformed into orders to your suppliers. This is so that they can benefit from more timely, accurate order information, with invoices sent and processed automatically.

Automating your internal systems may speed up order processing, but remember that some customers may still prefer personal interaction to maintain the customer service experience.

Ecomerce order fulfillment - Physical delivery of goods

Ensuring that customer orders are delivered quickly and efficiently is integral to any e-commerce service. Delivering what you promised relies on seamless interaction between your business processes and the actual ecommerce fulfillment service that you use.

For those products requiring a physical delivery, the issues associated with conventional logistics need to be addressed alongside the technology needed to manage the process.

Distribution channels

The distribution channels available for the delivery of these goods include sending the goods directly from:

• your own business to your customer
• a local warehouse to your customer
• national distribution centres to your customers
• digital distribution

For businesses selling small numbers of small items, using the post or couriers is likely to provide a satisfactory solution. However, outsourcing your distribution may also provide your business with an affordable alternative. See the page in this guide on outsourcing the delivery of your goods.

Linking processes and tracking goods

Linking processes and tracking orders are important in allowing you to predict delivery times earlier on, so you can keep customers updated on where their goods are and improve your service.

This can be achieved through a single, shared database as long as your staff are trained to keep it up-to-date at all stages of the process. If you outsource your delivery requirements, many logistics companies now offer delivery tracking as part of their service, which you can use to advise customers.

More sophisticated techniques for doing this include:

• Enterprise resource planning software, which integrates product planning, parts purchasing, maintaining inventories and tracking orders into one system.
• Radio frequency identification (RFID), which involves tagging objects so that they can be tracked. RFID tags can be read by equipment that is out of line of sight, at a range of less than 20 feet to 100 feet or more, depending on if they are passive or active tags. While the reading range of passive tags is less, they are considerably less expensive - they also don't use battery power like active tags - and can be disposed of with the product packaging.

Handling customer returns

Not all customers will be happy with the quality of products purchased via the internet and there will undoubtedly be a certain percentage of defective or damaged products, irrespective of the quality or type of product being sold.

The efulfillment process must therefore include the capability for handling the returns. This should include giving the customer the option to have a replacement item supplied or their money refunded. Agreed procedures should be in place to facilitate either option. See our guide on customer protection.

It is important that your business records the reasons and frequency with which individuals or companies return goods. If your business runs a customer relationship management system then this is the best place to do it.

Efulfillment - Outsourcing the delivery of your goods

If delivery is central to your business then you might want to consider the use of a third-party logistics and distribution service. This will enable you to focus on your core competencies, such as optimising productivity, increasing revenue and controlling costs, while exploiting the third party's logistic expertise. Outsourcing can incorporate not only the delivery of goods but also order handling, stock control and the storage, packing and despatch of goods. If you run an e-commerce business outsourcing your efulfillment can also include the development and management of your website, providing complete support to ecommerce order fulfillment.

Why outsource?

The demand for order-fulfillment solutions is growing with the requirement of e-commerce providers to serve the small-package, individual-oriented needs of their customers.

As online sales increase, several factors combine to put new pressures on efulfillment systems. These include:

• an expanded selection of products sold online
• the need to move a large volume of small parcels
• rising customer expectation

Outsourcers have the ability to share warehouse space and resources among other online merchants.

Choose the right outsourcing partner

Businesses find that it's relatively easy to distribute products in bulk through traditional distribution channels such as wholesalers and retailers. However, if you are a smaller web-based business selling a wide range of products that need sending to customers' homes, distribution can be more difficult, particularly if you also have to deal with the associated inventory control and customer support.

If you are considering outsourcing your efulfillment services, then you should look for a partner who:

• is dedicated to ensuring that your brand name is properly represented
• understands e-commerce market opportunities and offers reliable back-end technology to support the efulfillment activities
• has experience in inventory management, logistics, information systems and customer service
• is able to move goods effectively and efficiently in order to meet customer needs, both now and as your ecommerce fulfillment requirements grow

Ecomerce order fulfillment - Delivering digital products

Using the internet to buy digital goods means that your customers can have the products delivered directly to their computers. Examples of such products include software, music, e-books, reports and training materials.

There is a variety of approaches that can be taken for delivering digital products.

Email

Smaller files such as e-books can be delivered directly to the customer via email, with the customer receiving their book after purchasing the product from the e-commerce site. The advantage of this method is that it is very simple to set up. However, it is time consuming to manually send each product via email and the file can easily be shared with others.

Autoresponder

Once a customer has confirmed their purchase you can connect the order form to an autoresponder, which will send them an automatic email. This will contain a link which they can click to download the digital product. This is obviously a more automated option, though there is the potential for the product to be subsequently copied and distributed by the customer. This issue is addressed by digital rights management software. See the page in this guide on digital rights management.

Download page

It is possible to set up a simple payment system on your site using a facility such as PayPal. Once payment has been approved, customers can be automatically directed to a download page where the file can be downloaded, possibly as a compressed zip file.

Shopping-cart software

A number of e-commerce providers offer software that delivers downloadable product files and protects against unauthorised digital product downloads. This type of software can be a fully integrated function of the shopping-cart product. After payment is processed, a password and link to download product files is sent to the customer as part of the receipt.

You will also need to think about how to protect the copyright of your data and prevent illegal distribution of your digital products. In its most common form, digital rights management (DRM) protects intellectual property by either encrypting the data so that it can only be accessed by authorised users, or marking the content with a digital watermark, so that the content can't be freely distributed. Increasingly, DRM also provides tracking capabilities to identify who is using what content, where and when. See the page in this guide on digital rights management.

Efulfillment - Digital rights management

Major problems associated with distributing digital products via the internet include protecting the copyright of data and preventing illegal distribution of this data. Both of these issues are addressed by digital rights management (DRM) technologies.

In its most common form, DRM protects intellectual property by either encrypting the data so that it can only be accessed by authorised users, or marking the content with a digital watermark, so that the content can't be freely distributed. Increasingly, DRM also provides tracking capabilities to identify who is using what content, where and when.

DRM can allow the release of multiple versions of a single document - each group of users is permitted to view only the version appropriate to them. In some contexts, this can be used simply to restrict disclosure on a need-to-know basis. However, where the content is itself a saleable product, it can help create new business. This could be by offering the recipients of a free summary version of a research report the chance to upgrade, for a fee, to the full report.

DRM systems can protect against the following threats to your digital rights:

• Render rights cover simple acts such as displaying content on a screen or playing it through an audio system. These are fairly easily protected by relatively simple encryption-based systems allowing only the appropriate users to render the content.
• Transport rights relate to the ability to move or copy the data. Again, this involves simple forms of DRM. However, in this area it can be difficult to balance the rights owner's interests with the user's legitimate expectations, eg to make backups.
• Derivative work rights cover the ability of users to modify or extract the content and use it in another way. Here, there will need to be flexible ways of identifying separate parts of the content, tracking the different ways in which they are used and, where necessary, collecting payment for them.

Used creatively, DRM can do much more than protect intellectual property and commercially sensitive material - it can also protect and even enhance revenue.

Ecomerce order fulfillment - Meeting customer expectations

Successful fulfillment of a customer's order is about meeting their expectations in terms of delivering the product on time and keeping them informed of any unforeseen delays. Here are some tips to help ensure that your fulfillment process provides a satisfactory conclusion to the whole purchasing cycle:

• Process all orders at a line-item level, so that each individual item ordered is clearly identified. This is particularly important where a multi-item order is placed and one or two of these items are out of stock.
• Personalise orders so that the customer feels that full account has been taken of their individual needs.
• Track the status of the order so that any customer enquiry can be resolved promptly and efficiently. Formal tracking of progress ensures that any problems arising out of non-delivery of the order are quickly identified and remedied.
• Communicate the order status to the customer to ensure that they are kept fully informed of progress. Many carriers now use email to notify a customer that an order has been dispatched. Others have implemented online tracking systems enabling the customer to log on to their website in order to check progress.
• Turn the order around quickly, preferably within 24 hours. The customer will be keen to have their order delivered as soon as possible, so any delay in actually dispatching it will have a negative impact.
• Consider your packaging not only in terms of ensuring safe delivery, but also in relation to branding on the outside and what you can put inside the package that might increase the likelihood of additional sales, eg brochures and special offers.
• Be practical about delivery and ensure that you set realistic customer expectations in terms of the likely delivery date.
• Manage the differing scales of business by ensuring that you have sufficient resources to handle the peaks and troughs of demand.
• Choose the right carrier if you decide to outsource your distribution activity, especially if your product requires special handling.
• Handle returns efficiently and effectively and ensure that any customer dissatisfaction is professionally resolved.