Fulfillment Terms Beginner

Order Fulfillment

Also known as: Fulfillment, Order Processing, Order Execution

Definition

Order fulfillment is the end-to-end process of delivering products to customers after they place an order. It encompasses everything from receiving the order through picking, packing, shipping, and delivery—the operational heart of e-commerce and retail.

The Fulfillment Process

Step-by-Step

1. ORDER RECEIVED
   Customer places order online/phone
         ↓
2. ORDER PROCESSING
   Payment verified, order validated
         ↓
3. INVENTORY ALLOCATION
   Stock reserved for order
         ↓
4. PICKING
   Items retrieved from storage
         ↓
5. PACKING
   Items packed for shipping
         ↓
6. SHIPPING
   Carrier label, package dispatched
         ↓
7. DELIVERY
   Package delivered to customer

Fulfillment Components

Receiving

Inbound inventory
Quality inspection
Put-away to storage
Inventory updates

Storage

Organized warehouse
Bin/location management
Inventory control
Easy retrieval access

Picking

Retrieve ordered items
Various methods (zone, batch, wave)
Accuracy critical
Efficiency focus

Packing

Appropriate packaging
Protection for shipping
Branding opportunity
Packing slip included

Shipping

Carrier selection
Label generation
Package handoff
Tracking initiated

Fulfillment Models

In-House Fulfillment

Pros	Cons
Full control	High overhead
Brand experience	Scalability limits
No third-party fees	Staff management

3PL (Third-Party Logistics)

Pros	Cons
Scalable	Less control
Expertise	Per-order fees
Network access	Integration needs

Drop Shipping

Pros	Cons
No inventory	Low margins
Low startup cost	Less control
Wide selection	Supplier dependent

Hybrid

Mix of models
Products in-house + 3PL overflow
Strategic allocation
Flexibility

Fulfillment Metrics

Key Performance Indicators

Metric	Description	Target
Order accuracy	Correct orders shipped	>99%
On-time shipping	Shipped by promise date	>98%
Fulfillment time	Order to ship time	<24 hours
Pick rate	Items per hour	Varies
Return rate	Orders returned	<5%

Measuring Performance

Last month:
- Orders processed: 10,000
- Shipped on time: 9,850 (98.5%)
- Shipped same day: 7,200 (72%)
- Order accuracy: 9,920 (99.2%)
- Avg fulfillment time: 18 hours

Fulfillment Technology

Essential Systems

System	Function
OMS	Order management
WMS	Warehouse operations
TMS	Transportation management
Inventory	Stock tracking

Automation Options

Conveyor systems
Pick-to-light
Automated storage
Robotics
Sorting systems

Fulfillment Costs

Cost Components

Component	Typical % of Order
Labor (pick

Ready to ship? Compare shipping rates instantly

Try Free

Back to Glossary