What is ecommerce fulfillment? A step-by-step guide

What is ecommerce fulfillment?

Ecommerce fulfillment is the set of operations that gets an online order to a customer: receiving and storing inventory, picking the order, packing it, shipping it and handling returns. Order fulfillment is the same idea applied to any order, online or wholesale: everything that happens between the moment an order is placed and the moment it is delivered.

A fulfillment center is a warehouse organized for that work: lots of small orders shipped every day, rather than a few large pallets. Fulfillment differs from two related ideas:

• storage only, where the warehouse holds goods without picking individual orders;
• dropshipping, where the supplier ships straight to the customer and the merchant never touches the inventory.

The order fulfillment process in 6 steps

1. Receiving: inventory arrives, is counted and put away.
2. Storage: every product has a location, tracked in real time.
3. Order transmission: the integration sends the order from the store to the warehouse.
4. Pick and pack: items are picked, verified and packed.
5. Shipping: the parcel leaves with the right carrier, and the tracking number flows back to the store.
6. Returns: returned items are inspected, then restocked or set aside.

Here is what actually happens at each step.

1. Receiving and put-away

It all starts when your goods arrive at the warehouse, on pallets or in a container. The team unloads, counts, checks quantities against your advance shipping notice, inspects the cartons and puts each product away in a specific location in the system. Only then does the inventory become available to sell in your store.

Fast, accurate receiving prevents artificial stockouts, when the product is physically there but not yet sellable. Learn more about our receiving services.

2. Storage and real-time inventory

Every product has its place: pallets for bulky or fast-moving items, shelves for small ones. The warehouse management system (WMS) knows at all times how many units are where, and that quantity is synced with your store so you don’t sell something that is out of stock.

At Kolineo, you can see inventory levels, order status and ongoing operations in real time from your phone or computer. In a well-run warehouse, regular cycle counts also confirm that physical stock matches the system.

3. The order comes in: why integrations matter

As soon as a customer pays, the order needs to move from your store to the warehouse without anyone retyping it. That is the job of the integration, a direct connection between your sales platform and the 3PL’s system. Three types of data flow through it:

• orders, sent automatically to the warehouse with the address and chosen shipping method;
• inventory levels, updated in the store based on actual stock;
• tracking numbers, sent back to the store, which notifies the customer that the parcel is on its way.

Kolineo connects to Shopify, WooCommerce, Amazon, BigCommerce, Magento, eBay, Squarespace and ShipStation. If you sell on Shopify, for example, our Shopify integration page explains the setup.

4. Pick, pack and label

The order becomes a pick list: the picker goes to each location, picks the right items and confirms each pick by scanning the barcode. Depending on volume, the warehouse picks orders one at a time or groups several orders into a single pass (batch picking).

At the packing station, the team chooses the right box size, protects the products, adds your inserts if needed, seals the parcel and prints the carrier label. A right-sized box protects better and costs less to ship, since carriers bill the greater of actual weight and dimensional weight. See how we do it on our B2C fulfillment page.

5. Shipping and tracking

Parcels are sorted by carrier and handed over at scheduled pickups. The carrier depends on weight, destination and the delivery promise made to the customer: Canada Post, Purolator, UPS, FedEx, GLS, Nationex or, for the U.S., USPS, among others. The tracking number is sent back to your store, which passes it on to the customer.

Kolineo commits to shipping orders the same day, and our clients save 28% on shipping on average thanks to our negotiated rates. Within Canada, parcels generally arrive in 2 to 5 business days, depending on the region. Details are on our shipping services page.

6. Returns, or reverse logistics

In ecommerce, returns are part of the model, especially in apparel and footwear. An efficient returns process has four stages: the customer gets an authorization and a label, the parcel comes back to the warehouse, the team inspects it, then the item is restocked, set aside or disposed of according to your rules.

The faster the inspection, the sooner the product is sellable again and the sooner your customer is refunded. Define your restocking criteria upfront (original packaging, tags, condition) so the warehouse can decide without checking with you on every return.

Fulfillment KPIs worth tracking

What you don’t measure, you can’t improve. The table below lists the KPIs to ask your 3PL for, or to calculate yourself if you run your own logistics.

Two of them matter more than the others to your customers: order accuracy and on-time shipping. Scaled to 10,000 orders, Kolineo’s rates speak for themselves: 99.98% accuracy means only two orders need to be corrected, and 99.87% on-time shipping means 9,987 orders leave within the promised window. At 1,000 orders a month, 99.98% accuracy works out to about two errors a year; at 99%, it would be around ten errors every month.

In-house, a 3PL or Amazon FBA?

An online store has three main options:

• In-house fulfillment: you keep full control, but you carry the space, equipment, staff and shipping rates. It is often the right choice early on, while volumes stay modest.
• A 3PL: a partner fulfills orders from all your channels (your store, Amazon, other marketplaces, retailers) out of one inventory, with its negotiated shipping rates. It is the most flexible option when you sell on several channels.
• Amazon FBA (Fulfillment by Amazon): Amazon stores your products in its network and ships your Amazon orders. It works well for that channel, but it comes with its own prep requirements, inventory limits and storage fees. For orders from your own store, Amazon offers a multi-channel service with its own fees and conditions.

Many brands combine these options, for example a 3PL for their store and retail accounts, and FBA for part of their Amazon sales. Kolineo integrates with Amazon and also ships to Amazon: see our Amazon integration. For the challenges specific to online stores, visit our ecommerce fulfillment page.