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The Founders Guide to eCommerce Order Fulfillment Terminology
Order fulfillment has many moving parts. As a small business owner, it is a good idea to familiarize yourself with the terminology. That way, there will be no surprises if you outsource fulfillment to a company that charges a fee for different parts of the fulfillment process. It will also help you handle in-house fulfillment professionally if you decide to go that route.
Here is a list of all the order fulfillment terminology you need to know:
Key Terminology for eCommerce Order Fulfillment
SKUs
SKUs (Stock Keeping Units) are unique identifiers assigned to each product variant in your inventory. When a customer places an order, the SKU allows your system to pick the correct item to fulfill the order. Proper SKU management is critical for accurate order fulfillment.
Stickering
Some retailers require custom stickers or product codes to be applied to shipping boxes. Fulfillment centers can provide this "stickering" service for an additional fee.
Picking and Packing
"Pick and pack" refers to physically locating inventory and preparing it for shipment based on the customer's order. Outsourced fulfillment centers charge fees for picking items from inventory and packing orders, but can provide volume discounts. Necessary packaging materials are usually included.
Slotting
Slotting refers to the organization of inventory inside a warehouse, which impacts picking efficiency. Optimized slotting can increase fulfillment speed and reduce errors.
Receiving
When using a 3PL (third party logistics) provider, you will ship your inventory to their warehouse. The receiving team inputs your products into their system before storage and order fulfillment. Some providers charge receiving fees based on volume or SKU count.
Storage Fees and Insurance
3PLs charge monthly storage fees based on space utilization. Many also offer inventory insurance options. This is often much less expensive than owning your own warehouse.
Customer Support
Order issues like shipping delays, damages, and order changes necessitate customer support. The level of support varies - some 3PLs offer 24/7 teams while others provide self-service options. Consider your support requirements when selecting a fulfillment partner.
UPC Codes
UPCs (Universal Product Codes) are barcodes that allow products to be scanned and identified globally. Though not always required, using UPCs can improve fulfillment accuracy.
Bills of Lading
A bill of lading is a receipt showing a carrier has received shipment contents in good condition. Always validate orders upon delivery before signing.
Shrinkage
Inventory shrinkage refers to losses from theft, damages, spoilage etc. Professional fulfillment centers store products in secure, climate-controlled environments to minimize this.
Set Up
Fulfillment centers can set up and input your inventory into their systems to enable organized storage and order processing. There may be one-time set up fees involved.
Supply Chain Management
The supply chain encompasses sourcing, manufacturing, warehousing, order fulfillment, shipping and last mile delivery. Strategically outsourcing fulfillment and logistics allows small businesses to focus on sales and marketing.
Let Us Help With Your Order Fulfillment
If managing your own fulfillment in-house has become complex and overwhelming, outsourcing to experts can help your business scale. We specialize in providing ecommerce order fulfillment solutions, including integration with sales channels like Amazon. Contact us to learn more!
Next article: Common Acronyms and Terms for Amazon FBA sellers
Commonly Asked Questions
What is the difference between fulfillment and warehousing?
Fulfillment refers specifically to storage, picking, packing and shipping of customer orders. Warehousing encompasses broader supply chain functions like receiving, inspecting, storing, managing and transporting goods.
What are the most common fulfillment fees?
Typical fees charged by 3PL fulfillment centers include storage fees, pick/pack fees per order, and shipping fees if they handle delivery. There may also be receiving, handling and monthly software fees.
What is slotting in fulfillment?
Slotting refers to the organization and shelf location planning of inventory inside a warehouse. Optimal slotting improves picking accuracy and order processing speed.
What is shrinkage in relation to inventory?
Shrinkage means unexpected inventory losses from factors like theft, damages, spoilage and administrative errors. Fulfillment centers use security and climate control to minimize shrinkage.
What is a bill of lading (BOL)?
A BOL is a shipment receipt listing contents and proving the carrier received them in good condition from the shipper. Always validate orders against BOLs before formally accepting.
Why are SKUs important in fulfillment?
SKUs (stock keeping units) uniquely identify each product variant on-hand. Accurate SKU assignment and inventory tracking enables efficient order picking and shipping.
What are common reasons to outsource fulfillment?
Outsourcing can save ecommerce businesses money on labor, warehouse space and inventory management systems. It also provides flexibility to scale up storage and staff as needed.
How can outsourced fulfillment improve my customer experience?
Fulfillment experts provide reliable fast shipping, top-tier customer service, effective inventory and order management and other benefits merchants often struggle with in-house.
