Creating an ecommerce operational storefront is quicker with the availability of affordable website hosting options, ecommerce themes, product and shipping integrations.

Combined with aggressive and impactful marketing strategy, getting the first 100 ecommerce customers isn’t tough either. What’s tough is managing the complete fulfilment cycle. In the brief guide, we will discuss the steps involved after an ecommerce store begins to receive orders. We will talk about ecommerce website fulfilment options and their suitability.

There are three types of ecommerce order fulfilment options. Let’s see what they are, and their advantages and disadvantages.

Dropshipping ecommerce model is popular. It is the method where the ecommerce seller acts as a medium between the buyer and the manufacturer/wholesaler. Shopify defines Dropshipping as “a retail fulfilment method where a store doesn’t keep the products it sells in stock. Instead, when a store sells a product, it purchases the item from a third part and has it shipped directly to the consumer”. You don’t need to maintain active product inventory. The Dropshipping fulfilment method implies three things: (1) partner with manufacturer/wholesaler and sell the products, (2) place the order of sold products with the manufacturer/wholesaler to pack and ship the product, (3) pocket the profit.

The Dropshipping product fulfilment method eliminates the need for the seller packing and shipping the product. You don’t need to stock inventory, pack the products, and ship it. Just place the order with the manufacturer, and everything is taken care of. It also means that there is no need for maintaining high business capital and since you aren’t maintaining product inventory in a warehouse, your ecommerce website can list tons of products risk-free.

You need to establish a strategic business relationship with the manufacturer/wholesaler to earn substantial margins. Most of the Dropshipping based ecommerce models find vendors on Alibaba.com and upsell their products at a margin. The idea is not viable always as the modern buyer isn’t a fool. An aware buyer can easily find the same product on Alibab.com and buy it at a fraction of the cost. Unless you enter into a strategic partnership where the cost of the product is less than anywhere else it is available, there is no point in the Dropshipping model. It would simply eat into the profits.

Again, if your ecommerce store is dependent on multiple vendors for product fulfilment, keeping track of all activities becomes tough. You must keep track of multiple suppliers, their rates, shipping fees (if any), and product fulfilment conditions.

It is always advisable to partner with reputable dropshippers.

The Dropshipping fulfilment model presents limited risks, and it is suitable for lean startups beginning a new ecommerce venture or for established businesses to test new markets without incurring heavy investments.

Also known as the 3PL method, you must own the product inventory before making a sale. You need to find ecommerce fulfilment service providers willing to store the inventory, pack and ship the product/s when an order is generated. An example here is the Fulfilled by Amazon (FBA) service where Amazon offers its sellers to store their top selling inventory in Amazon warehouses. Whenever a sale is generated on Amazon, they ship the product directly to the buyer.

The 3PL method also helps with economies of scale and COGS. Partnering with a third-party logistics provider makes sense because startup ecommerce setups don’t have the resources and finances to build a dedicated in-house team to handle the growing order fulfilment demands. You simply need to forward the order to the third-party, and they do the needful.

The first benefit is monetary. You don’t have to spend a lot in maintaining and processing the inventory. The third-party service provider charges a monthly fee for their services, and that’s a fraction of what you would otherwise incur in maintaining an in-house order fulfilment team. The time saved can be used to grow the ecommerce business.

Third-party services are scalable as their charges depend on the volume of orders processed. Ecommerce has its peak and lean times, and their services are accordingly customizable. The third-party service providers maintain a strategic partnership with freight companies like UPS and FedEx, and you get the benefit with regards to cheaper shipping costs.

You’re practically shifting the control of the product fulfilment cycle to a third-party service provider. The business relationship won’t work out unless you’ve firm faith in their working standards. You’ve to ensure that the products are shipped with proper packaging and on-time. Otherwise, the buyers are going to hit you with refund requests. Do due diligence before signing a contract.

Ecommerce businesses looking to scale up their productivity will find the method suitable. If you’ve hit enough buyers that it’s becoming tough to run a one-man show or to deal with multiple dropshippers, it’s time to scale up to the 3PL model. The option is also suitable for small-to mid-size businesses without much experience in the order fulfilment section.

Also known as Do-It-Yourself or Direct Fulfillment, you not only own the inventory but fulfil the orders yourself, without any involvement of any external service provider. The model involves maintaining a stock of inventory, renting a warehouse, and hiring pickers and handlers to process the orders. Profits might swing both ways, depending on the nature of the product and its price.

The first and primary advantage is total control. Even though it will cost the ecommerce venture time in picking, packing, and shipping the items in-house, it certainly keeps the seller in total control. You know how the goods are being packed, shipped, tracked and delivered to the buyer.

None as such. You have to spend more time in your business, but that’s hardly a disadvantage.

The self-fulfilment model is perfect for product creators and big brands. Big brands have the financial capacity to run in-house fulfilment channels. In the above two fulfilment methods, we are essentially looking at products sourced from manufacturers and retailed through the online store. The DIY model is suitable for product creators. Let’s say you create handmade jewellery and obviously, it’s nowhere available in the market but only with you. As such, you would want to keep creating unique jewellery pieces, stock it, and sell it. You must do the packing and the shipping. Once the business grows, you can choose to outsource the fulfilment part. 

Think and select an eCommerce website development company which can integrate the above ecommerce fulfilment options to suit your business requirements. Order fulfilment is as essential as having a beautiful ecommerce website and an aggressive marketing strategy.