If you run a retail business or are planning on starting one, you have probably heard of order fulfillment. If you are not sure what order fulfillment is, we will explain it to you in this guide.

In simple terms, order fulfillment refers to the entire process from the sale of a product to the moment it arrives with the customer. Order fulfillment is an essential component of online retail, and the efficiency of the process can make the difference between a happy customer and one who will never return to your business!

The Different Stages of Order Fulfillment

The process of order fulfillment is not always the same, but there are some standard steps that occur in the majority of cases, which we will describe here.

Receiving and Storing the Inventory

Once items arrive at a fulfillment center, they are stored as part of an inventory. An inventory is usually reflected by documentation issued by the retailer and is used to keep stock organized. Once the inventory items are received, they are typically stored in the warehouse and the retailer’s website is updated to reflect how many of each item is in stock.

Picking Items

Once an item is ordered by a customer, the warehouse’s picking team receives notification (usually in the form of a packing slip) and collects it.

Packing Items

The item is packed into boxes, bags, or other forms of packaging. Sometimes this packaging is supplied by the retailer with their branding on it, and other times it is sent using generic unmarked packaging.

Shipping Items

The package is marked with a shipping label and passed over to a courier service. Some fulfillment companies have their own couriers, while others partner with other courier services. The courier delivers the package to the customer’s address. At this point, order tracking information is usually shared with the retailer, and often, the customer.

How to Choose an Order Fulfillment Solution

There is no one specific solution that will fit every business. If you are wondering how to choose the best order fulfillment process for your business, there are a few things to consider:

What Kind of Products Do You Sell?   

An order fulfillment process will need to work well with the size, shape, and other aspects of your products. If your products are personalized and customized by the consumer, this may have to be factored in.

How Many Orders Do You Receive?

Your order volume plays a huge role in what kind of process will work best and will affect the size of the warehouse needed and other factors.

Where Are You and Your Customers Based?

Where you are shipping your products to and from is very important to consider. For example, if you are shipping internationally, your process must be able to manage this. If your customers are all relatively local, you may be able to be more flexible.

What Order Fulfillment Options Are There?

There are a few different types of order fulfillment to choose from:

Third-Party Fulfillment

Third-party fulfillment is outsourced to a separate company from the retailer. Choosing a fulfillment company can reduce overhead and improve distribution and enable you to focus on other aspects of business such as marketing, sales, and product development.

Merchant Fulfillment

Merchant fulfillment is carried out by the retailer themselves and is often also referred to as self-fulfillment or in-house fulfillment. It enables greater control but can be time-consuming and expensive.


With the dropshipping model, manufacturing and order fulfillment are both outsourced, and the retailer focuses only on hosting the website, carrying out admin, and sales and marketing. Although overheads are much lower with this approach, control is also sacrificed.

By Eddy

Eddy is the editorial columnist in Business Fundas, and oversees partner relationships. He posts articles of partners on various topics related to strategy, marketing, supply chain, technology management, social media, e-business, finance, economics and operations management. The articles posted are copyrighted under a Creative Commons unported license 4.0. To contact him, please direct your emails to [email protected].