WHAT IS E-FULFILMENT?

Ordering goods online is now an established part of everyday life. Amazon’s operations, for example, went from sending books, to shipping products in almost every category. Clothing, furniture, food, lipstick, washing machines, baker’s yeast – everything can now be purchased online. From the outside, the process looks pretty straightforward: search for a product, choose how many you want and hit send. In more cases than not – the package wilk then be at our door the very next day. However, anyone who looks a little closer will see how complex electronic fulfilment can be. The entire process needs to be digitally mapped – from the customer’s purchase order, order acceptance and order picking in the warehouse to logistics tasks such as shipping. E-fulfilment is therefore nothing more than a form of online order processing (= fulfilment).

HOW DOES E-FULFILMENT WORK?

Electronic fulfilment involves many steps. It starts with the customer’s order being accepted in the e-commerce shop. To process this order seamlessly, companies usually use several IT systems (ERP system, WMS, WaWi, etc.) that interact with each other. An example of the fulfilment process could look like this:

From the goods provider’s point of view, the process is initially completed when the parcels are handed over to the logistics partner. However, the e-fulfilment process can be defined even more broadly:

• What happens if customers want to return the goods?
• How are returns initiated?
• Is the returns label already in the parcel?
• Who bears the cost of the return?
• How are the reasons for returns tracked?
• What criteria decide whether the customer receives their money back or not?
• How are reminders sent?

Core e-fulfilment processes.

E-fulfilment involves much more than just shipping products. It is a complex interplay of different processes needs to be efficient and streamlined to satisfy customers. Let’s start at its core: warehousing. Optimised warehouse management ensures products are not only stored safely and properly but can also be prepared for dispatch quickly.

As soon as an order is received, the order fulfilment process starts. This requires precision: the right items must be put together in the correct quantity and design.

The next step is packaging, which needs to be safe and cost-efficient. Environmentally friendly packaging solutions are becoming increasingly important and contribute to brand identity. The packaging also needs to meet the specific requirements of the products and any local packaging guidelines.

Shipping is the point in the process where e-fulfilment becomes visible to the customer. Fast and reliable delivery is the be-all and end-all. Having the right logistics partner who can operate efficiently both nationally and internationally is essential.

The next step is returns processing. Customer-centric returns management is essential to ensure customer satisfaction. The returns process needs to be easy, offer fast refunds and efficient restocking.

Data management, including data analysis and data protection, is another factor to consider. Analysing order data helps optimise processes and manage stock levels efficiently. Data protection is essential to maintaining customer trust.

WHAT ADVANTAGES DOES E-FULFILMENT OFFER?

Considering the e-fulfilment as a whole can reveal potential for efficiency gains. Not just in individual areas (increased picking performance in the warehouse, minimised errors in invoicing (e-invoicing), increased shipping speed), but also in the synergies between the different stages.

These efficiency enhancements make all the difference in determining whether an e-commerce business will be successful. After all, having an attractive online shop is no longer a USP now that simple configuration tools for shop systems have become established (example: Shopify). In fact, customers now have high expectations of online marketplaces – largely due to the industry’s largest player, Amazon. Nobody wants to wait a week or two for their parcel to arrive on their doorstep! In this competitive market, platform retailers are forced to enhance their offering and customer services across the entire e-fulfilment process.

The benefits of e-fulfilment at a glance

1. Time savings through efficient storage and dispatch processes: Automated processes significantly reduce the time required for order processing and shipping. This allows online retailers to concentrate on core competences such as marketing and product development.
2. Easy scalability during seasonal fluctuations: E-fulfilment solutions adapt flexibly to different order volumes. During peak periods, such as the Christmas season, the system can easily be scaled up without needing additional resources. In quieter periods, capacities are reduced accordingly.
3. Cost reduction through optimised warehousing and automated processes: Efficient processes, due to bundled shipments and efficient route planning, reduce the costs associated with fulfilment, which can be passed on to customers through more favourable shipping conditions.
4. Lower error rates through automation and real-time monitoring: Modern systems enable streamlined warehouse management, minimising incorrect deliveries and returns. This not only increases customer satisfaction, but also saves resources.
5. Improved customer loyalty through greater speed and reliability: Fast and reliable deliveries foster trust. In addition, e-fulfilment systems allow for purchasing data and preferences to be collected and evaluated for each customer – ensuring a personalised approach.
6. Sustainable practices through optimised routes and packaging: Customers are looking for sustainable ways to shop. Efficient e-fulfilment meet this need by promoting economic and environmental sustainability.
7. Easier global expansion through streamlined logistics: Online retailers can engage specialist providers to deal with the logistical challenges and customs processes associated with entering new markets. This opens up new sales opportunities and promotes company growth.

Integrating e-fulfilment within existing shop systems

Step 1: Analysing requirements and planning

First, you need to analyse the specific needs of the online shop. Which products are sold? How high is the order volume? These questions help to define the requirements for the e-fulfilment system. It is also important to consider how to tool will be integrated within the existing IT infrastructure. What interfaces will be needed? What is the best way of optimising data flows between the shop and fulfilment partner?

Step 2: Selecting the right e-fulfilment service provider

Not every e-fulfilment service is suitable for every online shop. Choosing the right partner will be determined by the product category, storage capacity, shipping options and technological compatibility. Thorough market analyses is key here to compare different providers.

Step 3: Integrating the software

As soon as you have found the right service provider, you will need to integrate it. This includes setting up the interfaces between the shop system and the fulfilment software. The aim, here, is to ensure a seamless exchange of data so orders are automatically transmitted to the fulfilment system.

Step 4: Test phase

Before the system goes live, there will need to be a test phase. This allows for order and delivery processes to be simulated to ensure all components function correctly. This is the time to identify and address any errors and weak points.

Step 5: Staff training

Employees must be trained to handle the new processes, both within their own company and the fulfilment partner. This includes handling the software, understanding the logistics processes and what steps to take in the event of issues.

Step 6: Going live and ongoing optimisation

Once the test phase has been completed, the e-fulfilment system is put into operation. It is important to continuously monitor performance and adjust as necessary. This ensures processes are continuously improved adapted to changing market conditions.

Step 8: Data analysis and management

Customer feedback and process data must be continuously evaluated. Stock levels, delivery times, customer ratings and return rates are just some of the key figures that need constant monitoring. This data provides valuable insights that can be used to optimise processes and increase customer satisfaction.

Step 9: Scaling and adapting to growth

As the online shop becomes more successful, it will be necessary to adapt the e-fulfilment system. This may include scaling warehouse capacities, adapting logistics processes and possibly expanding into international markets. Integrating e-fulfilment into existing shop systems is a dynamic process that requires close cooperation between online retailers, fulfilment service providers and IT specialists to create a solid foundation for an e-commerce business to flourish.

Technological innovations and e-fulfilment trends

Automation and AI

Logistics automation is advancing rapidly, particularly thanks to artificial intelligence (AI). Intelligent algorithms optimise stock levels and forecast demand trends, leading to more efficient warehousing and faster delivery times. Robotic picking systems that pick items independently are no longer a futuristic concept but are already being used in many modern warehouses.

Drone and robot delivery

Delivery by drone or by robot is another trend that is revolutionising e-fulfilment. These technologies enable fast and environmentally friendly delivery, especially in urban areas. They reduce road traffic and offer an alternative to conventional parcel deliveries.

Blockchain for transparency and security

Blockchain technology is becoming increasingly important in e-fulfilment. Transactions can be processed more transparently and securely. For cross-border deliveries in particular, blockchain offers reliable tracking and improves customer confidence.

Sustainable packaging solutions

Sustainability is a key consideration for e-fulfilment. The focus, here, is on identifying innovative packaging solutions that are environmentally friendly and reusable. Companies are increasingly moving towards biodegradable materials and ways to reuse packaging to reduce their ecological footprint.

Personalised customer experience

Technologies that enable a personalised customer experience are becoming increasingly important. Big data and AI are used to better understand customer wishes and make the appropriate recommendations. This leads to greater customer satisfaction and strengthens customer loyalty.

Integration of augmented reality

Augmented reality (AR) offers new possibilities in e-fulfilment. AR applications can, for example, support warehouse employees during order picking by displaying information directly in their field of vision. AR can also be used to enhance customer service, for example with virtual fitting rooms or product previews.

WHAT ELSE DO YOU NEED TO CONSIDER?

From this brief overview, it should be clear that clicking an order button triggers a multitude of physical, digital and administrative steps. To meet customer’s expectations and ensure rapid delivery, all fulfilment stages must be closely timed. So, in a sense, e-fulfilment is the engine of online retailing. And just like an engine, many e-fulfilment components must work together perfectly to keep commerce running.

Aside from the sheer number of people, places, systems and organisations involved, electronic fulfilment can always be fine-tuned to optimise storage, save time, add value and generate savings.

As a complex system, e-fulfilment calls for extensive coordination, so online retailers tend to outsource it to specialised logistics companies with the necessary know-how. These service providers operate warehouses, coordinate with shipping service providers and more. A logistics service provider will therefore ensure that e-fulfilment is as automated as possible so all people, departments and systems involved can follow a standardised process.

The challenge with automation is ensuring the precise process knowledge is available, but it can vary from department to department:

• For example, what changes on the warehouse shop floor if a parcel is ordered as a gift?
• What impact do free returns have on invoicing?
• What warehouse organisation changes need to be made if hazardous substances such as aerosol cans, batteries or chemical agents are added to the inventory?
• The list of potential considerations is long and can vary greatly from company to company.

Another challenge in the context of automation is incorporated all plans into the IT system communication. Because interfaces between systems require well thought-out API management:

• What system needs to talk to each other when, and at what frequency?
• What processes need to be triggered in other systems following a specific interface message?
• Does it make sense to use the format of the source or target system?
• Do the formats need to be adjusted irregularly?
• Who is responsible making these adjustments?
• Does a third party IT service provider need to be commissioned?
• Who bears the costs of potential customisations?
• Who is responsible for monitoring?

Despite these numerous questions when establishing e-fulfilment processes, companies should not be deterred from automating their order processes as much as possible.