As customers get used to speedy deliveries of their online orders, a slow fulfillment process can lead to abandoned carts and lost sales. So, if you’re a Shopify store owner who’s thinking of growing their shop, consider looking at your fulfillment process. This under-appreciated channel could be the key to taking your business to the next level.
But planning your logistics operations and order fulfillment process can be daunting, especially if you’re new to the game. Fortunately, many fulfillment service providers are helping Shopify businesses expand their reach every day.
In this guide, we’re going to cover the basics of fulfillment and touch on more complex topics – like, knowing when the right time is to upgrade your fulfillment game, and what you need to know about partnering with a third-party fulfillment provider.
What is eCommerce Fulfillment?
eCommerce fulfillment is the process of fulfilling orders placed by customers through an online store. This can include receiving and processing orders, packing and shipping orders and handling returns and customer service inquiries.
Why is it Important to Stay on Top of eCommerce Fulfillment Services?
Fulfillment is a critical part of operating an online store, and it can have a major impact on the customer experience.
A well-run fulfillment operation can help to ensure that orders are shipped accurately and on time. Considering that most customers are used to big companies like Amazon promising two-day delivery, online businesses that can keep up with customers’ high expectations and deliver in a timely fashion gain a competitive edge over other small businesses.
In turn, small businesses can see their customer satisfaction, customer retention rates and sales soar to new heights.
What Does Shopify’s Fulfillment Service Look Like?
Shopify store owners have three main fulfillment options:
In-house fulfillment often entails hiring staff and renting a warehouse to manage your Shopify store’s inventory, pack orders and ship them to customers.
For businesses that are just starting, this could be a feasible option. But as your business grows, you may find that maintaining a warehouse and staff just contributes to greater overhead costs and takes up too much of your time.
Dropshipping is when stores don’t keep the products they sell. Stores that dropship instead buy products from manufacturers or sellers and handle the distribution themselves. In that sense, store owners don’t have to think about storage, handling and packing.
Third-party Fulfillment Service Providers
Shopify fulfillment services or third-party logistics (3PL) service providers are companies that cover every stage of the fulfillment process. 3PLs for Shopify are alerted of placed orders, take care of picking, packing, labeling, and see through the delivery of each order to customers’ doorsteps.
With 3PLs, Shopify store owners don’t have to rent warehouses or store stock at home. Instead, they can use the warehouses or fulfillment centers provided by the fulfillment companies.
Why Do You Need a 3PL Shopify Fulfillment Service?
There are many reasons why you might need a third-party Shopify fulfillment service. Perhaps you have a high volume of orders and can’t keep up with the demand yourself. Or maybe you’re selling products that are too big or heavy to ship without professional help. Whatever the case may be, fulfillment software and remote fulfillment service providers can help you win back your time and focus on improving other aspects of your business.
A good fulfillment service will be able to handle any size or type of order. They will have a network of warehouses and distribution centers around the country to ensure that your products are shipped quickly and efficiently. They will also have an experienced team of customer service representatives who can help resolve any issues that may arise. In addition, most fulfillment services offer competitive rates, so you can be confident that you’re getting the best value for your money.
Look at it this way: 3PLs improve the entire process of fulfillment by providing end-to-end service. Starting with inventory storage down to delivery and customer service, fulfillment services provide help to minimize logistics costs and maximize efficiency. And by teaming up with the best carrier services to provide you with fast shipping options and affordable shipping rates, they keep your customers happy.
How to Work With a 3PL For Your Shopify Store
Here’s a rough guide to how fulfillment solutions work for Shopify stores:
Send Your Products to the 3PL
The fulfillment process starts with merchants sending their products to be stored in warehouses and fulfillment centers by the fulfillment service providers. Some 3PLs host a large network of fulfillment centers around the world so that you can choose to store your products at locations nearest to your customers.
Having a network of fulfillment centers at many locations gives Shopify users a geographical advantage as it saves on transportation costs and restocking is done more efficiently upon need. Your products are stored at warehouses that comply with industry standards.
3PLs Leverage Inventory Distribution
Depending on where the bulk of your customer base is located, 3PLs recommend inventory storage at different inventory levels and locations so that your customers get their products delivered to them faster. For example, if the majority of your customer base is in the United States, it’s smart to have your products stored there.
3PLs know the importance of customer satisfaction and the impact it can have on a business. This is why they provide you with smart suggestions for inventory distribution based on our advanced software.
3PLs Ship Your Orders
3PLs partner with carriers to provide a wide range of options for shipping methods. Depending on what suits you and your company’s needs the best, 3PLs provide you with the optimal carrier combination for your shipment. For example, a 3PL like ShipHero partners up with USPS, UPS and DHL.
You Delight Your Customers
The shipment process has greatly improved over the last few decades. For example, the use of tracking numbers now makes it easier for stores and clients to keep tabs on their shipped packages as they move from the warehouse to the client’s front door.
Aside from this, faster shipment times, lower shipment costs, and more packaging options all come together to provide a better, more enjoyable online shopping experience. And by keeping customers satisfied, you secure yourself great reviews and, in turn, a more promising future for your shop.
What is the Shopify Fulfillment Network?
The Shopify Fulfillment Network (SFN) is a network of fulfillment centers across North America.
If you have a business with a Shopify integration, you can utilize the Shopify Fulfillment Network to access Shopify warehouses for storage, picking, packing and shipping.
The SFN comes with a bunch of neat features, including:
- Syncing with your online shop so that you can process orders and get notifications on inventory levels from one platform.
- Distributing your products to the most efficient locations, helping you deliver your goods to customers faster.
- Sending products in customized branded packaging.
When is the Right Time to Switch to Outsourced Fulfillment?
The advent of the internet coupled with the rise of technology has caused the eCommerce industry to have a massive growth spurt. And due in part to the COVID-19 pandemic, more and more people have turned to online businesses to sustain themselves, whether as producers or consumers. Many existing brick-and-mortar stores have also transitioned to eCommerce platforms to keep up with the growing demand for online shopping.
Most eCommerce companies usually start local and handle inventory management, order fulfillment and shipping on their own by storing products in their garage, for example. But as your business grows, storing products in your garage and handling shipments on your own no longer seems like the smart thing to do. There will come a time in your business journey when you will need to switch to a more robust fulfillment strategy.
So, what are the signs that you should start outsourcing your order fulfillment?
Cyclical or Uneven Sales
In case your business has already outgrown the inventory space in your garage and you are thinking about investing in a warehouse, take a minute and weigh your options. For companies with a fluctuating frequency of orders throughout the year, it might be counterproductive to spend money on a warehouse.
Such an investment will probably cost you more money than you’re expecting to make by this upgrade. This is where a fulfillment company shines. Fulfillment companies provide you with warehouse services that are adaptable to your needs. If your business is related to a niche that makes the sales uneven, it might be time for you to partner up with a fulfillment company.
You Don’t Have Time to Fulfill Orders
A booming business means a greater deal of orders coming in. Sometimes, business owners spend all their time keeping up with the fulfillment of the order instead of improving their business. This can limit the growth of your business in the long run, and no one wants that. If you spend all your time handling orders, it is a clear sign that you’re too busy and you need to switch to other fulfillment options.
Lack of Logistics and Fulfillment Infrastructure
External order fulfillment provides you with flexibility that your business might not have encountered while doing self-fulfillment.
Good fulfillment partners are equipped with the infrastructure to meet the needs of your growing business. International shipping is usually much more difficult to handle than local shipping due to the involvement of foreign rules and regulations. This is just one of the major areas where a fulfillment company can help you and keep your order fulfillment smooth and hiccup-free.
Who Should Not Work With a Third-Party Logistics Company
While third-party fulfillment providers certainly make the job easy for eCommerce businesses, not all businesses can manage a successful partnership with such fulfillment service providers. So, what type of companies should reconsider before opting for external order fulfillment?
Here are a few indicators that suggest it might not be time for you to switch to outsourced order fulfillment just yet.
Businesses With Limited Cash Flow
If a business is struggling to allocate enough funds for its shipping costs, it might not have enough capital to pay for a third-party fulfillment company at all. Such businesses are better off with the self-fulfillment option because outsourcing your order fulfillment demands a steady inflow of money.
Highly Specialized Businesses
Highly specialized projects with unusual products often demand custom packaging and shipping conditions. Fulfillment companies usually provide clients with standard default options for shipment unless specified.
Even if some fulfillment companies agree to provide fulfillment services for special orders, it might turn out to be costlier than if you went for the option of self-fulfillment. This is why highly specialized businesses are better off going for self-fulfillment rather than outsourcing their order fulfillment.
Businesses With Limited Daily Order Volume
If your business is only receiving a limited amount of orders per day, it might not be the right time for you to outsource your order fulfillment just yet. You might be able to handle the order fulfillment on your own.
This is because companies save more by bundling their orders. For example, if you have a low influx of daily orders, it can become uneconomical for you to store your inventory at a third-party warehouse because you will end up paying more for storage costs than what you’re making from your business.
How to Choose a Fulfillment Service for Your Shopify Store
So, what should business owners look for when selecting a fulfillment service provider?
Experience in Your Industry
Not all eCommerce businesses are alike. Different businesses have different customer bases and different needs. Likewise, different fulfillment companies have different capabilities and offer different services to their clients.
Before committing to a fulfillment service provider, make sure that what they offer aligns with what you’re looking for. While searching for fulfillment companies, look up what business niches they cater to and which industries they specialize in. Base your decision on which companies have a similar industry experience to your company’s demands.
Similar Existing Clients
While looking for a service provider, target the companies that cater to sellers of the same business niche as yours. This ensures that the fulfillment company has experience with a company with similar needs and will thus be a suitable option for you. If you are having trouble finding the right fulfillment company, ask for recommendations from merchants in your niche and then weigh your options.
While doing your research, don’t be afraid to contact fulfillment companies and ask any questions you have about their services.
Pricing Isn’t the Most Important Factor
An important determinant while choosing a fulfillment company is the offers and shipping costs that they provide. While it is wise to look for an option that gives you low shipping costs, price should not be the only factor in your decision.
Customer experience is more important in the long run and so you should look for companies that align with your values and your penchant for customer satisfaction. If your company requires custom packaging for products, it is better to invest in this rather than have all your products spoiled. So, look for factors other than price when deciding on a fulfillment service provider.
Technology and Integrations
While choosing a fulfillment partner, look for a company that is up to date when it comes to technology. Having the option of a provider with easy integrations into your existing online platform translates into smooth transitions and better coordination. Shopify integrations for your online shop make your fulfillment process seamless.
With Shopify’s premium technology, we provide our customers with the best fulfillment services. Our fulfillment network uses machine learning to suggest the optimal inventory storage options for you so that you save both time and money.
Data and Analytics
Data and analytics are powerful tools in the world of e-commerce when used properly. Fulfillment provides you with a fresh set of data that you can then analyze and use to your advantage to improve your services and business.
While working with a fulfillment provider, it is smart to partner up with a provider that provides real-time tracking and analytics. Shopify provides its users with a tracking number for every order so that you can track it in real time. Shopify also provides its users with customer order data so that it can be analyzed to yield points for improvement.
Let ShipHero Handle Fulfillment for Your Shopify Store
ShipHero is the only commercially available hybrid solution offering both warehouse management software and fulfillment service.
Should you decide to handle fulfillment in-house, ShipHero improves your warehousing capabilities by automating key processes and consolidating information such as real-time stock levels and shipping time into one platform.
And with one-click integrations with platforms like Shopify, you can take care of managing orders and processing returns in just a few simple steps.
ShipHero’s Shopify-integrated fulfillment service lets you ditch paper pick lists with its native iOS app so you can cut down errors by up to 99.9%. We also offer seamless connections to top carriers like UPS, USPS and FedEx.
Take your Shopify store to the next level with ShipHero!
For eCommerce brands, the order fulfillment process is what makes or breaks a business. And while small shops can get by handling their own logistics, as brands grow, it’s worth considering outsourcing the process to service providers that are designed specifically to streamline this part of eCommerce.
When it comes to choosing the right fulfillment partner, be sure to look for a service provider that offers you value for money, high-tech software and seamless integrations, useful analytics and a similar industry experience. Keep this in mind and make an informed decision to find the best fulfillment partner to help your brand grow sustainably!
Shopify Fulfillment Service FAQs
What is a fulfillment service?
A fulfillment service is a logistics service that takes care of things like inventory management, storage, order sorting, packing, shipping and returns.
Who can use Shopify Fulfillment Network?
A Shopify fulfillment network can only be used by businesses that have fulfillment centers in the US and Canada and that are based in the US.
How is your fulfillment fee decided?
Fulfillment fees are decided by the costs of your inventory storage, picking and packing, receiving, kitting and customer support.