The average eCommerce business faces a few ominous statistics in 2024’s increasingly competitive online shopping space. According to Baymard, over 70% of purchases are abandoned in the shopping cart, with nearly half of those shoppers citing shipping costs and additional fees as the reason.
These are scary statistics, scary enough for 74% of global supply chain leaders to make demand planning their number one priority for digitization since 2022. However, refining your existing fulfillment process may not be enough. For many businesses, the eCommerce fulfillment method they choose is the most significant factor in determining how efficiently they can ship purchases to their customers, lowering cart abandonment and increasing customer loyalty in the process.
What distinguishes each method? How can businesses accurately match the method to their fulfillment structure? This guide will answer those questions and explore the key methods to fulfill orders for eCommerce businesses.
Key Takeaways
- eCommerce fulfillment covers the entire process from purchase to delivery, including receiving goods, storing inventory, picking, packing, and shipping.
- Self-fulfillment gives businesses full control over operations but requires higher overhead, while outsourced fulfillment offers scalability through third-party expertise at the cost of reduced control.
- Drop shipping eliminates storage costs by having manufacturers ship directly to customers, though businesses lose control over shipping timelines and pay higher per-unit costs at scale.
- 3PL fulfillment reduces operations costs and provides access to industry expertise, but requires careful partner selection to align with your processes and customer service model.
What Is eCommerce Fulfillment?
Ecommerce fulfillment is the complete process of managing a customer’s order from the moment they click “buy” to the moment it arrives at their door. It covers every step of the supply chain: receiving goods, storing inventory, picking, packing, and shipping.
Many businesses underestimate this scope. The fulfillment method you choose determines where items are stored, who ships them, and how they’re picked—each with distinct trade-offs for your logistics.
Each fulfillment method changes a specific step—where items are stored, who ships them, or how they’re picked—with distinct trade-offs to match against your logistics.
Versatile fulfillment software solutions like Sellware come with the benefit of tailoring the solution to the need, particularly for multi-channel fulfillment structures. Yet, businesses still need to know how different methods will impact their fulfillment process.
What Is the Difference Between Self-Fulfillment and Outsourced Fulfillment?
Different fulfillment methods fit broadly into the categories of self-fulfillment or outsourced fulfillment. The distinction is straightforward:
| Fulfillment Type | Who Handles It | Best For |
|---|---|---|
| Self-Fulfillment | Your in-house team manages storage, picking, packing, shipping, and customer service | Businesses wanting full control and customization |
| Outsourced Fulfillment | A third-party retailer, logistics company, or warehouse handles part or all of the process | Businesses prioritizing scalability and reduced overhead |
It depends on your priorities:
- Self-fulfillment: Easier to start, more control over processes, but higher overhead and time-intensive management.
- Outsourced fulfillment: Easier to scale with third-party expertise, but less control over day-to-day operations.
Whether your business chooses to handle the process in-house or hire a third party, the fulfillment method you use will still need to be matched to your logistical needs.
Dropshipping
Dropshipping takes the crucial aspect of storing and shipping a business’s merchandise and gives control over that step to the manufacturer. When customers order a product from your online store, the manufacturer picks, packs, and ships it for you without ever needing to store it in a warehouse.
Businesses that utilize dropshipping naturally cut down on storage costs. Inventory management becomes easier because suppliers handle storage and stock updates for you
- Lower storage costs: No warehouse space required since suppliers hold inventory.
- Simplified inventory management: Suppliers handle stock updates, reducing your admin burden.
- Lower barrier to entry: Ideal for testing new markets or launching with limited startup capital.
Additionally, when testing a new market with products they don’t want to store or when breaking into a market with limited startup resources, businesses can benefit from using dropshipping to focus on marketing, leaving the logistics to the manufacturer.
Disadvantages of dropshipping
Despite these benefits, dropshipping comes with trade-offs:
- Limited shipping control: Delays depend entirely on supplier performance, not your operations.
- Stock dependency: Your ability to fulfill orders hinges on supplier inventory levels.
- Higher per-unit costs at scale: Businesses with high order volume lose bulk
3PL fulfillment
In this method, an eCommerce business hires a 3PL company, which offers its warehouses and fulfillment infrastructure to take over the entire fulfillment process.
3PL fulfillment offers key advantages for growing businesses:
- Reduced operations costs: Leverage existing warehouse infrastructure instead of building your own.
- Industry expertise: Access analytics, strategies, and fulfillment insights from specialists.
- Scalability: 3PLs typically know more about scalable fulfillment models in your industry than in-house teams.
Disadvantages of 3PL fulfillment
Despite the ease of use, 3PL fulfillment comes with challenges:
- Partner alignment: The 3PL must fit your existing processes, values, and customer service model—or risk friction.
- Loss of control: Offloading operations means less visibility into day-to-day fulfillment decisions.
- Margin impact: 3PLs take a percentage of revenue, which can erode profits if not carefully calculated.
If you want to elevate your eCommerce game, try Fishbowl’s e-Commerce for seamless processes and integrations, and check out The 15 Best Ecommerce Inventory Management Software Solutions to learn all you need to know about the top techniques and software to stay ahead of the competition.
Frequently asked questions
What does ecommerce fulfillment mean?
Ecommerce fulfillment is the complete process of managing a customer’s order from the moment they click “buy” to the moment it arrives at their door. It covers receiving goods, storing inventory, picking, packing, and shipping.
What are the 7 steps of the order fulfillment process?
The seven steps are receiving inventory, storage, order picking, order packing, shipping, delivery, and returns. Each step plays a role in getting products from your warehouse to your customer’s hands.
What are the two types of ecommerce fulfillment?
The two main types are self-fulfillment and outsourced fulfillment. Self-fulfillment means your in-house team handles storage, picking, packing, and shipping, while outsourced fulfillment means a third party manages part or all of the process.
What is 3PL fulfillment?
3PL fulfillment is when an ecommerce business hires a third-party logistics company to take over the entire fulfillment process using their warehouses and infrastructure. This method reduces operations costs and provides access to industry expertise but means less control over day-to-day operations.