What Is Ecommerce Order Fulfilment and How Does it Work?

Your business is growing, so it’s time your processes did the same. Read on to learn more about ecommerce and order fulfilment, and why you should outsource yours.

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Ecommerce fulfilment is the process of storing, sorting, selecting, and ultimately shipping your goods to your customer. As your business grows, order fulfilment becomes as much a chore as it is an expense… so sooner or later, you’ll want to think about outsourcing it.

The importance of fulfilment has been highlighted in a recent study from Juniper Research, which found that ecommerce transactions are forecasted to exceed $7.5 trillion globally by 2026, up 55% from $4.9 trillion in 2021.

The fallout from the COVID pandemic has permanently changed consumer buying habits and as more consumers purchase products online, it is fundamental to your business' success that you have the right fulfilment process in place.

If your business is scaling and has outgrown its current fulfilment solution (like dropshipping), then rest assured you’re in the right place and order fulfilment is for you.

However, there are so many fulfilment providers to choose from, and it can be difficult to determine which company is the right fit for your business' budget, order volume, and ambitions. Sometimes, particularly for small businesses, it comes down to the cost involved.

This is where our order fulfilment services cost comparison tool comes in. Designed by our team of ecommerce experts, this free, easy-to-use tool provides you with direct pricing quotes from some of the UK's best fulfillment providers.

Not only will using the tool save you time and money, but it also requires zero obligations on your part.

But if you want more information first, read on to learn more about what ecommerce fulfilment is, how it works, and what costs are involved.

Compare costs and save on order fulfilment services Do you already use an order fulfillment provider? Receive quotes in minutes
Before we get too far – is order fulfilment the right choice for you?

Order fulfilment or 3PL services might not be the best option for you if…

  • You're shipping low volumes, like less than 10 products per day
  • You have a limited budget for fulfilment
  • You're not yet trading, or are in the first months of doing so

If any of these apply to you, dropshipping may be a better option. Take a look at our page on the best ecommerce platforms for dropshipping. Or, if you're already using Shopify, don't miss our guide on how to dropship with Shopify.

What is ecommerce fulfilment?

Ecommerce fulfilment (also known as order fulfilment) is a key part of the supply chain for all online businesses. Essentially, it’s the process of getting the right stock to the customers that have ordered it.

Even before your customer makes an order, your inventory needs to be stored and sorted in a warehouse. And, after that customer hits ‘Buy Now’, those goods still need to be selected, packaged, and shipped off for delivery.

You can manage your ecommerce fulfilment in-house – though we don’t recommend this for businesses looking to scale – or by outsourcing the job to a 3PL (third-party logistics) provider to do it for you.


How does ecommerce fulfilment work?

When your customer first places an order, the ball of the ecommerce fulfilment process starts rolling. So, what is the order fulfilment process?

Step 1: Receiving

Powered by integration with your shopping cart software, details of the order are sent straight through to the 3PL provider. This information arrives at a fulfilment centre, which is basically a big warehouse where your goods are stored.

Step 2: Picking, packing, and shipping

With your product’s unique SKU (stock-keeping unit) in hand, the 3PL provider’s fulfilment centre staff go about locating it. This is known as ‘picking’, and ensures that your customer receives the right stock, from the right inventory (fulfilment centres can store goods from thousands of different sellers, with many offering the same products).

Once it’s picked, the stock is then ‘packed’ – wrapped, boxed, and sealed according to the specific instructions you’ve issued to your 3PL supplier.

It’s then shipped to the customer. Simple!


What is 3PL ecommerce fulfilment?

3PL means ‘third-party logistics’ and refers to a service that allows you to outsource each link in the supply chain. This service is provided by a company known as a 3PL provider.

From having your products delivered to a warehouse, storing them there, and then sorting, packing, and shipping them off, a 3PL provider can take care of the whole process for you.

To keep you in the loop, 3PL providers work closely alongside your existing systems. They offer integrations with ecommerce platforms such as Magento, Shopify, WooCommerce, and BigCommerce, allowing for real-time, two-way transmission of stock and order information.

You’ll also be provided with an online reporting dashboard, allowing you to utilise your business’ sales information to inform smarter decisions going forward. With a 3PL provider’s cloud-based software’s live insights, you’ll know exactly what’s working, what’s not selling, and where there’s room for your business to grow.

Already sold on the idea of finding a 3PL provider? Save yourself time and money by using our free cost comparison tool to compare order fulfilment service quotes directly.

Or, read on to find out more about the best 3PL providers for small businesses.

Is order fulfilment right for you?

Before you sign up with an ecommerce fulfilment provider, it is important to understand whether order fulfilment services are right for you and your ecommerce business.

To make it clear and easy to distinguish between a business that would benefit from setting up 3PL services and a business that wouldn't, we've put together the table below which specifies the requirements to be eligible for the service.

0 out of 0
You don't yet have a website set up for online selling
You have been selling products for longer than six months
You are shipping more than ten items per day
You are an established business with a budget to invest in proper fulfilment

Suitable for order fulfilment?

Suggestions

A crucial first step: set up your online store with one of our best ecommerce platforms for businesses

If not, we'd recommend maintaining sales volumes for around 12 months with a dropshipping ecommerce solution before investing in fulfilment services

Shipping less than this? Save money by trying dropshipping while shipping small volumes

If you haven’t got the budget to invest in order fulfilment, try self-fulfilment or dropshipping until you're able to scale

If you’d answer ‘yes’ to all of the above ecommerce fulfilment criteria, then your next step is to read our review of the best order fulfilment services in the UK. Or save yourself time and get a quick answer to that question by using our free, no-obligation cost comparison tool.

If order fulfilment services are not suitable for your business, we would recommend dropshipping as an excellent alternative for your ecommerce needs. Take a look at our dedicated review of the best ecommerce platforms for dropshipping for more information.


What are the best fulfilment services for small businesses in the UK?

0 out of 0
Provider
Best for
Transparent pricing

Huboo

BOXStation

Bezos.ai

MyWarehouse

Green Fulfilment

Amazon FBA

Core Fulfilment

ShipBob

Minatus

Cloud Fulfilment

Red Stag Fulfilment

Low storage and packing prices

Micro businesses requiring order fufilment services

Small businesses that need fulfilment services to handle specialist goods

Reliability with a 100% accuracy guarantee on its picking and packaging service

Small businesses wanting to reduce carbon emissions by working with eco friendly providers

Small businesses that need speedy shipping

Businesses that need to integrate other software with its order fulfilment service

Small businesses selling products to the US

Companies that want friendly, personal customer service

Small businesses wanting real-time insights and stock level movement reports

Small businesses wanting to protect stock from being lost or damaged

To find out more about each of these providers, including costs and pros and cons, read our dedicated guide to the best order fulfilment services for startups in the UK.


How much does ecommerce fulfilment cost?

Outsourcing your order fulfilment comes with a number of different expenses, these include:

Fulfilment services costs

Some providers will charge an onboarding fee when you get started. They will also charge ongoing fees that cover your licence of the order fulfilment software, along with customer support and integration with your shopping cart.

Fulfilment centre costs

This is what you’ll pay to receive your goods at the order fulfilment centre, and includes storage fees. Storage fees are typically charged by pallet space (around 1m3), or per individual letter or parcel.

Below is an example of what some of the top fulfilment providers charge:

  • Amazon FBA’s storage fees range between 43p and £1.05 per item
  • Core Fulfilment’s storage fees are £10.88 per pallet
  • Minatus charges £2.48 per cubic metre, per week for storage
  • Huboo offers two months of free storage, and free stock replenishment

Order fulfilment costs

These costs cover the picking and packaging of stock and include returns handling. Some example costs are below:

  • myWarehouse’s picking and packaging costs £2.61 per order
  • Huboo charges between 30p and £2.95 for packing and packaging
  • Minatus picking prices for 100+ orders per month start from £1.48, with 0.08p per additional pick

Many providers, such as Huboo, offer subscription rates for a more cost-effective approach – particularly for businesses with large sales volumes.

For a single, fixed monthly fee, you’ll get an agreed amount of orders (units) fulfilled. Huboo’s rates, for example, start at £25 per month for businesses that dispatch a maximum of 300 units per month, going up to £150 for 5,000 units, with customisable rates negotiable beyond that.

Not all ecommerce fulfilment services are transparent about pricing...

This can make it difficult for you to make an executive decision, particularly when the cost is an important factor for small businesses.

By using our free cost comparison tool, you’ll be able to compare quotes from providers easily, saving you time and money researching and signing up for an overly expensive service.

Just answer a few simple questions and we will get quotes from the UK’s top providers sent to you!

How to choose the right 3PL provider

Selecting the right ecommerce fulfilment supplier might be the most important decision your business makes this year. Read on to find out which questions you need to be asking any potential provider before you sign a deal.

Is it quick?

Anyone who’s ever ordered anything online will tell you that time is of the essence. Consumers value speed and convenience, and the faster you get them their purchase, the more likely they’ll be to buy from you again.

With that in mind, seek some assurances from your 3PL provider. How quickly can they turn around orders? Is same-day (or at least next-day) delivery available? Ask any prospective provider about their returns handling process, too. How quickly can they turn around a returned item, and have it back on the shelf ready for resale?

Is it cost-effective?

Fees for picking, packing, delivery, and storage all tend to differ wildly across 3PL providers.

Amazon FBA, for instance, offers value for businesses trading in small-sized, low-value goods, sold at high volume. It’s one of the reasons the ecommerce behemoth has all but cornered the market, but it’s not for everyone.

Among the admirable alternatives is Huboo, which caters to businesses of all sizes. Unlike Amazon FBA, Huboo offers big savings on storage fees – your first two months are on the house, and discounted rates are available beyond that.

You’ll also want to know your supplier’s shrinkage rate. ‘Shrinkage’ is a euphemism for ‘breakage’, and also includes lost or stolen items. Most 3PL providers have a shrinkage rate written into their contracts; this is usually between 2% and 5%, but can be as high as 10%.

For your ecommerce fulfilment deal to be cost-effective, you’ll want this figure to be as low as possible. Luckily, it’s negotiable, so… negotiate!

Did you know?

According to Shopify, businesses outsourcing their fulfilment responsibilities can save between 15% and 35% on published shipping rates.

Next steps: comparing order fulfilment service providers

Now you know more about what ecommerce fulfilment actually is, how it works, and who it is suitable for, you can determine whether the service is right for your business, and move forward with speaking to providers.

To recap, order fulfilment is suitable for businesses that:

  • Have a website that is set up for online selling
  • Have been selling products for longer than six months
  • Are shipping more than 10 items per day
  • Are an established business with a budget to invest in proper fulfilment

If your business fits the above criteria, all that is left to do is get more information and quotes from the UK’s top 3PL providers.

This is where our cost comparison tool comes in handy. Simply answer some questions and you’ll then receive bespoke, personalised order fulfilment services quotes from leading suppliers, who’ll help your ecommerce business come up with a plan that works for you.

If, however, you decide that order fulfilment isn’t right for your business, why not look into dropshipping?

It’s an excellent alternative to ecommerce fulfilment and is more suitable for some businesses.

For more information, check out our best ecommerce platforms for dropshipping review.

FAQs
  • What is fulfilment in ecommerce?
    ‘Fulfilment’ is, essentially, what it says on the tin. It’s the act of ‘fulfilling’ an order, ensuring goods are selected and packaged with care, before being delivered to the correct address. In ecommerce, fulfilment is the whole process that takes place after a customer places an order, and before they receive their purchase. Businesses around the world outsource their fulfilment duties to save time, free up storage space, deliver better customer service, and relieve themselves of the duties of managing (and paying) a team of staff.
  • What does an ecommerce fulfilment centre do?
    A fulfilment centre is the physical location where a 3PL provider stores your inventory. Fulfilment centres are also where the picking and packing of goods occurs, prior to their shipment to the customer.
  • Is ecommerce fulfilment the same as dropshipping?
    Dropshipping businesses sell products online that, when purchased, are delivered directly from the supplier to the customer. These businesses never actually own their own stock. Dropshipping is a more hands-off approach, but has implications for your business’ reputation and quality standards. You’ll have no control, for example, over how the goods are packaged and shipped. The profit margins are also slim, and you’ll have little – if any – control over the process.

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Ross has been writing for Startups since 2021, specialising in telephone systems, digital marketing, payroll, and sustainable business. He also runs the successful entrepreneur section of the website.

Having graduated with a Masters in Journalism, Ross went on to write for Conde Nast Traveller and the NME, before moving in to the world of business journalism.

Ross has been involved in startups from a young age, and has a keen eye for exciting, innovative new businesses. Follow him on his Twitter - @startupsross for helpful business tips.

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