In 2020, online shopping grew by 43%. That's about a $244 billion jump from the previous year.
We needed things and couldn't buy them from nearby stores — so we turned to the internet.
Businesses started focusing more on online sales as physical stores temporarily closed. Others rushed to create online shops to stay in business.
In 2024, online shopping is thriving, and customers are used to fast delivery. Their expectations are higher than ever.
Namely, back in 2021, 36% of Amazon shoppers enjoyed same-day delivery.
With online shopping growing, more orders are coming in than ever, and businesses are feeling the pressure from high customer expectations.
If you can’t fulfill all your orders on time, you’re facing a serious issue.
In fact, customers are inclined to stop buying from a company after a late delivery.
That’s lost business and revenue for you.
When deliveries are late, 51% of Americans blame the company.
Late or messed-up deliveries hurt your business and drive customers away.
So, how can you keep up without disappointing customers? The key is in retail fulfillment.
We’ll cover everything you need to know about retail fulfillment, how it impacts your business, and tips to improve your strategy in 2024.
In this post:
Retail fulfillment, also known as order fulfillment, is all about receiving orders, processing them, and getting them to customers quickly and accurately.
The order fulfillment process includes:
We’ll dive deeper into each of these steps in the next section.
But before we get into that, let’s look at some ways your business can handle order fulfillment and the different options available:
These services can be a huge help for businesses in 2024 especially those that are growing and don’t have the resources to hire staff or manage everything in-house.
Whether you’re managing the entire fulfillment process yourself or outsourcing to a 3PL, understanding how each step works is crucial for a smooth retail fulfillment experience.
If you’re not clear on these key fulfillment steps, you could lose customers due to late deliveries and miss out on potential sales.
Let’s take a closer look at each step in the order fulfillment process to see how it all works:
The first step in fulfillment is receiving inventory from your suppliers.
This involves checking each delivery to make sure you’ve got the correct items and quantities.
You’ll need to compare your inventory order with what actually arrived, verify the stock-keeping unit (SKU) numbers to ensure you received the right products, count the items, and check for any damage.
Since you paid for this inventory, quality control is crucial.
It’s important to confirm that you received everything you paid for and that nothing is damaged. Damaged goods can cut into your profits and lead to returns from customers.
Now it’s time to store and manage your inventory. This means setting up an effective system to organize and keep track of everything.
Here are some key points to consider:
When new items arrive, scan and record each SKU in your inventory management system using barcodes.
Next, place the items in their designated storage spots, like on a pallet, in a bin, or on a shelf, so they’re easy to find later.
Tracking items when they leave your warehouse is just as important as when they arrive.
(Check out our guide on Warehouse Audit: How to Do It + FREE Checklist)
Make sure to reorder products as needed or set up an automatic system to restock as inventory levels change.
Skipping this step could lead to running out of stock and missing out on potential sales.
You’ll also need to handle backorders if you sell items that are out of stock.
After an online order comes in, the next step is to pick and pack the items for shipping.
You want your orders to reach customers safely and accurately, so this step is crucial for smooth fulfillment.
When orders come in, your business might use a retail electronic data interchange (EDI) to handle documents like purchase orders and invoices electronically.
Use this information to pick the right items from your inventory, pack them in the proper box or packaging, and attach the correct shipping label.
Packaging is important for customer satisfaction. Make sure you use the right materials to protect your items so they arrive intact.
Be mindful of packing materials because larger and heavier packages cost more to ship.
(Read our guide Why Is Shipping So Expensive in 2024? [Reasons + Tips to Reduce It])
Now that your eCommerce orders are packed and ready, it’s time to ship them.
Shipping can vary depending on the size and type of your business (think back to the fulfillment models we discussed earlier).
If you’re running a small business from home, you might handle shipments by dropping them off at the post office or scheduling a carrier pickup.
If you’re using a 3PL to manage your orders, they’ll handle shipping with their preferred carrier.
Or, if you’re managing last-mile delivery from your retail store, you might consider using route optimization software like eLogii. This software helps you plan the most efficient delivery routes, saving time, money, and effort.
eLogii can help cut your delivery costs in half and assist with other tasks like payroll, real-time driver tracking, proof of delivery, and automatic delivery updates for your customers.
It’s unfortunate, but returns are a part of business. In 2021, returns increased to 16.6%, which amounts to over $761 billion in returned products.
Here are some ways to lower your return rate:
Even with these measures, returns will still happen occasionally, and you need to be prepared.
This is where reverse logistics comes into play.
Reverse logistics is when products come back from the customer and make their way back to the distributor. This includes handling exchanges, returns, and even waste that needs to be disposed of, reused, or recycled.
When returned items arrive, you’ll need to verify that the correct items were returned and in the condition reported.
Inspect the item for damage and document its condition. You’ll also need a plan for what to do with the item next.
If the item can be restocked and resold, log the return in your system and add it back to your inventory.
If it’s damaged or can’t be resold, you’ll need a process for proper disposal.
It’s also important to meet customer expectations according to your refund policy. This might mean offering a refund or store credit and providing a receipt.
Items like food, drinks, and perishables shouldn’t be returned (and aren’t worth the return shipping). Similarly, items like undergarments can’t be resold due to hygiene standards.
Effective fulfillment practices can boost your business by enhancing the customer experience, cutting down on returns, and increasing profits.
We’ve talked about how meeting customer expectations is crucial—failing to do so can lead to lost business.
Proper packaging helps ensure your items arrive intact, which reduces returns and saves you money.
But how does this affect your bottom line?
To grow your business and boost profits in 2024, you need to keep up with order volume and customer demand.
A streamlined fulfillment process is essential for scaling your retail business.
If your competitors can meet customer demand and you can’t, you’ll struggle to keep up.
Also, shipping costs can eat into your profits if you don’t choose the right packaging.
Wasting time searching for inventory to ship is inefficient and costly.
Finally, if you don’t track inventory properly and reorder when needed, you risk running out of stock and missing out on sales.
Ready to improve your retail order fulfillment in 2024? Here are the top tips for making your process more efficient:
Whether you’re using a 3PL for fulfillment or managing it from your own fulfillment center or warehouse, location plays a big role in efficiency and cost.
Consider the shipping costs from different locations, labor costs in various cities, and the price of renting warehouse space.
You should also think about how quickly you can deliver products to customers from each location.
Choosing a centrally located fulfillment center might be beneficial. If most of your customers are in one region, selecting a location in that same area can be a smart move.
A well-chosen, strategically located fulfillment center can be a valuable asset for your business. It can save on shipping costs and help you meet customer expectations with timely deliveries.
Automation refers to technology that operates with minimal human input.
Automating tasks—especially those related to inventory control—can save you time and money by letting technology handle most of the process.
An automated system can help you keep track of inventory, manage stock levels, and send alerts when it’s time to reorder.
For example, if your stock is running low, you can set up an automated alert or even automate the process of ordering new inventory from suppliers—without needing to do it manually.
Some businesses take automation even further:
(Read our guide How Logistics Scheduling Keeps Everything on Track (and How to Simplify It))
Good communication is vital for any business, especially when it comes to eCommerce fulfillment.
A huge 91% of consumers track their packages. If you don’t keep them informed, they’ll notice.
Make sure your customers receive important details like tracking numbers and delivery updates.
You can automate many of these communications through your retail point-of-sale (POS) system.
For example, when a customer places an order, they should instantly get an email confirmation with an order number. Once the order ships, they should receive another email with a tracking number so they can follow the delivery.
It’s also crucial to get accurate and timely information from your vendors about their products and inventory levels.
Communicate clearly with your vendors and set expectations about what you need.
This might include timely deliveries, competitive pricing, and quick resolutions for issues like damaged or low-quality goods.
You need to know when new shipments are coming when stock isn’t available for reorder, and what your lead time is for restocking.
Once your fulfillment system is set up, it’s crucial to keep an eye on key metrics and make changes as needed.
Track things like order volume, shipping costs, inventory levels, and delivery times.
This data helps you spot areas for improvement and find ways to save money.
Also, pay attention to customer feedback and reviews to catch any issues with your fulfillment process.
For example, if your metrics show a product is getting poor reviews or frequent returns, investigate the cause and consider removing that product from your inventory.
Your shipping partners are crucial to your business. They need to be reliable, efficient, and cost-effective.
With high order volumes, it’s easy for issues to arise, like missed or delayed deliveries.
Make sure your shipping partners are living up to their promises and providing the service you expect.
If your website says delivery will take seven to ten days, your shipping partner should meet that timeframe.
If they’re not delivering on time, contact them by phone or email to resolve the issue.
If packages or products are damaged during shipping, you should follow up with the carriers to get an insurance refund.
You also need to figure out who’s responsible if the carrier loses packages.
That’s why insuring your shipments in the right way is important, especially for valuable items.
If packages are lost or damaged, you might be able to file an insurance claim to recover some of your losses.
Not addressing these issues can lead to lost money and unhappy customers.
Getting your retail fulfillment process right in 2024 is crucial for your business’s success.
We’ve covered several ways to improve your fulfillment, such as automating where possible, ensuring your inventory and shipping processes are efficient, and managing returns effectively.
As eCommerce grows, it’s important to make sure your processes can handle increased demand and stay flexible.
You want satisfied customers, quick delivery times, and increased revenue to support your business growth.
By refining your fulfillment process, you can reach your goals and set yourself up for success.