This is the fourth article in our six-part series on the E-Commerce Customer Lifecycle (ECL). It documents the stages of your online shoppers’ interaction with your brand, and provides a reliable, measurable, and predictable process to take your store from inception to success!
On the surface, fulfillment seems pretty straightforward. Once you figure out how to get shoppers to visit your online store and entice them to buy your products, then you just need to find a way to get the product to the buyers.
When your business is starting out, you probably just put the item in a box, slap a stamp on it, and drop it off at the post office.
But as your business (and the number of orders) grows, it’s not worth your time to do the shipping yourself. There comes a point when it becomes important to establish a more formal and scalable fulfillment and shipping process.
E-commerce shoppers are pretty consistent about what they want the most from e-commerce retailers: affordable prices, flexible shipping options, and fast delivery.
In fact, according to a 2015 e-commerce survey, two-thirds of shoppers bought goods from one retailer in preference to another because the delivery services offered were more appealing. The same survey also found that 96 percent of shoppers said that a positive delivery experience would encourage them to shop with a retailer again.
Merchants that make the entire shopping process - including fulfillment and shipping - as smooth as possible for the consumer are rewarded with positive customer reviews and usually enjoy the greatest longevity in the business. For example, online merchant Bottlekeeper includes customer reviews on its site to reinforce the company’s attentive customer service and reliable shipping.
And that’s all without even considering the significant financial impact that fulfillment and shipping decisions can make.
This sample fulfillment pricing proposal from FulfillmentCompanies.net shows the major cost categories that merchants can expect from a typical fulfillment engagement. Add to this shipping costs, taxes, and customs, and it’s easy to see that your fulfillment strategy can be the difference between being profitable or not.
So, what do you need to know about fulfillment and shipping to make sure it’s working well for your customers and your business?
The Keys to Successful Fulfillment
You have products, and you need to get them into your customers’ hands. What’s the best way to do that? It’s not a simple answer, and there are a lot more factors than you might expect.
The Shopify backend offers all of the tools you’ll need for basic e-commerce fulfillment. As your business grows, you may also consider supplementing Shopify’s built-in capabilities with external apps from the Shopify App Marketplace (we mention a few of our favorites below), or partnering with a Third Party Logistics (3PL) company to manage your fulfillment process.
> Get Shopify’s Beginners Guide to E-Commerce Shipping and Fulfillment
1. Online Checkout
The fulfillment process begins with your online checkout process. It should be short and easy, with delivery options and dates clearly displayed, like the above example from Mahi Gold. Your payment provider should be trustworthy and secure.
2. Order Management System
This internal-facing system tracks all your current (and past) orders, including where exactly the product is and how long it will take to get to the customer. It can also give you triggers for the next phase of the e-commerce customer lifecycle: retention.
Shopify’s Orders tab is a simple way to manage your online orders. Every order goes through three stages:
If you choose to work with a 3PL, the company will likely have its own order management system.
3. Order Status Tracking
This customer-facing system tells buyers when their product has shipped, when it is expected to arrive, and provides frequent status updates to manage expectations and set the customer at ease.
Shopify’s order status page shows customers:
- Status of their shipment
- Real-time updates on the location of their shipment
- Options for Messenger, SMS, and email notifications
Tracking information can also be pushed out to customers via a series of automated emails, text, social media direct message, or other platforms. One great app integration to check out for added functionality here is AfterShip.
4. Inventory Management
Inventory management may be a standalone system or may be integrated with your order management tool so you can:
Track how much stock you have available for every product you sell (including multiple variations on a single product in different sizes, materials, colors, etc. with individual SKUs, prices, weights and inventory numbers)
Know when to place orders or manufacture more product
Update inventory numbers when you receive a shipment
Ensure that your website accurately represents your available stock at any moment
To get you started, here’s our step-by-step guide for How To Add Inventory Management to Shopify. Our favorite app for standalone inventory management is Stitch Labs (for an alternate choice, check out SKUVault). If you prefer to integrate your order and inventory management in a single system, Hublogix and EcomDash both offer great functionality with an easy-to-use interface.
Whether you’re simply placing the product into a standard cardboard box or assembling a branded package complete with decorative tissue paper or filler, a flyer, and a gift-with-purchase (check out our post on “Making Fulfillment Fun”), your packaging is a significant part of the fulfillment process.
Your choices here are limited to either doing the packaging yourself (realistic only for small quantities with simple packaging processes) or partnering with an external shipping service.
Online shoppers love free shipping. The infographic above from Commerce Hub shows that nearly two-thirds of people surveyed said they care more about free shipping than fast shipping. But even if your brand is all about free shipping, your customers are paying for it in other ways. Because shipping is a costly and labor-intensive process.
E-commerce shipping follows a somewhat predictable path as your business grows from its first initial orders into a booming business:
Ship it Yourself (Option 1: Starter): This is a fully manual shipping process. You write out the mailing label, take the package to the post office, and mail it to your customer.
For a new business, this manual approach is a great learning opportunity. It helps you understand the many elements that come into play when shipping products, giving you the experience to later refine your operations and better control your brand while you scale your business.
Ship it Yourself (Option 2: Intermediate): You’re still doing all the shipping yourself, but now you move up to automated label printing and scheduling package pickup from a courier.
Shopify makes this process easy with the option to “Buy Shipping Label” on the fulfillment screen. You choose a box size and shipping method (first class, priority, priority express) and Shopify automatically calculates the shipping costs based on your box size, product weight, and shipping method. Integrating your Shopify store with an app like ShipStation can further extend your shipping capabilities.
Fulfillment Warehouse: Once your e-commerce business has established some order predictability and regularity, partnering with a fulfillment warehouse will save you time and let you focus on growing your business and acquiring new customers. It can reduce your overall cost of doing business (with a single flat fee instead of multiple fees for storage, packing, shipping, etc.). You’ll also be able to maintain more accurate inventory control to know exactly how much stock you have at any point in time.
Working with an external partner also makes it easier to scale your fulfillment as your business continues to grow.
Dropship: Orders are shipped directly from a dropship partner on behalf of your brand. You never purchase inventory upfront or hold inventory yourself. Learn more about this option with Shopify’s Ultimate Guide To Dropshipping.
Using a fulfillment warehouse or dropship service is most beneficial for businesses that have grown to require multiple location fulfillment, inventory housing, and multi-channel sales (wholesale, Amazon, online, brick + mortar).
When considering a fulfillment partner, it’s important to consider their ability to respond to changes in your fulfillment process, such as additional SKUs, peak periods (like Black Friday), seasonal spikes of select products/categories, over-stocking, and express deliveries. You need a partner who can be flexible and respond to your business’s needs as they grow and change over time.
8. Returns Management
Almost half of online shoppers would shop more with retailers that offer hassle-free returns. That means quickly and easily processing returns, refunds and exchanges.
Shopify provides basic returns management functionality that allows you to refund an entire order or part of an order, or cancel an order and issue a refund. Integrations like Returnly (our fave) or Return Magic can offer more robust returns functionality.
The Next Phase of the E-Commerce Customer Lifecycle: Retention
Your customer has happily received your product. Yay! But now is not the time to sit back and reflect on your success. You’ve gotten a first-time customer - you’ve cleared the biggest hurdle! Now is your opportunity to make the most of all the energy and time that went into acquiring that customer. You need to figure out how to entice them to return, shop again, and buy more.
Stay tuned for our next post in this series to learn all about E-Commerce Customer Retention.
Read more about fulfillment:
How To Add Inventory Management to Shopify
- Global Fulfillment for Shopify: Delivery and Inventory Management Overseas
Other posts from our “Shopify 101” series:
- Introduction to the E-Commerce Customer Lifecycle (ECL)
- Customer Acquisition: How to Drive Traffic to Your Online Store
- How to Increase Conversions for Your Online Store