April 24th, 2020

How to Handle Ecommerce Fulfillment and Order Processing

Author: Laura Lynch
Laura Lynch
Director of Marketing

How do online orders go from “buy now” to a package in the mail?

One of my summer jobs in college was working in the warehouse of a company that sold textbooks. My first position was in the shipping and handling department. My coworkers would deliver stacks of books separated by order slips. I would put the books in a box, fill up the extra space with Fill-Air packaging cushions, and then pass it on to the next station, which was in charge of scanning the order slips, weighing the boxes, and printing the labels. The final station taped the boxes shut, making sure the packing slip was inside, applied the label, and tossed the box (often unceremoniously) into a gaylord for shipping.

If that sounds like an involved process, it was. And that was only the warehouse side.

For an ecommerce business to operate successfully, it must integrate the backend warehouse environment where I worked with the sleek online storefront that the customers experience. To do so, it must link several systems, including your online store, your inventory management system, and your order processing system. If you operate out of a storefront rather than a warehouse (or both!), this can become even more complex.

Fortunately, others have gone before you. Lots of them. And their experiences have fueled an online market designed to streamline the process for others. So if you’re wondering how to set up an online store for yourself, here’s where to start.

1. Inventory management.

Before you start accepting payments for online purchases, you need to be sure your inventory is up to date. If physical inventory is not reflected in online availability, you could end up selling items you don’t have. While some customers are happy to purchase items they know are on backorder, they’re not happy to find out about it after their order has been placed. Similarly, you don’t want to lose sales because you’re showing an item as being out of stock when you still have a box taking up space in the back warehouse.

The solution to this is to integrate your inventory software API with your online store. As orders are placed online, it can track inventory in your warehouse and update which products are spoken for. This should also be integrated with Point of Sale (POS) software for multichannel inventory coverage.

2. Payment processing and sales tax.

For the first-time business owner, payment processing sounds intimidating. When your entire business depends on being able to successfully handle an online payment, getting those details right is pretty important.

The irony is that actually setting up payment processing isn’t all that hard. Mostly it’s a matter of deciding what payments you want to accept, and then hooking up the accounts. However, the part many businesses overlook is sales tax.

Businesses have been handling sales tax for POS transaction for years, but in the early days of the Internet, online businesses didn’t collect it. However, in 2018, the Supreme Court ruled that states could require businesses to collect sales tax on online purchases. Given that each state has different tax requirements, and that online stores, their customers, and even their supplier warehouses are in different states, putting this into practice was more difficult than simply adding a percentage onto each sale.

Fortunately, there are now several online tools that make this process easier. WooCommerce has sales tax functions built into their standard plugin, and for those who need more complex options, their TaxJar plugin offers additional features and automations.

3. Linking your order processing API and printing order slips.

The moment an order is processed through your payment system, several things have to happen. First, your inventory needs to automatically update for the reasons we discussed earlier. Second, an email needs to land in your customer’s inbox to confirm that you received their order. This is where order management software comes into play. This software may be the same as your inventory software, or you may have them linked together. Either way, your software should have an API that can be linked to the online store.

With this connection made, you can set up your system to send orders to the warehouse, supplier, or storefront where your products are sold. If your order needs to be split between these places, this can also be done automatically, based on information from your inventory system.

Order slips should contain all the information needed to complete an order at each location. These are not necessarily receipts, and do not need to list product prices, especially if they’re a gift. However, they should list each item, include an order number, and contain a bar code that can be quickly scanned during the packaging and shipment process. After that, the order slip goes with the order itself, so that the customer can compare it against the products they received.

4. Packing labels and order tracking.

For the most part, packing and shipping happen independently of your online store. However, there is one component that should be connected: the tracking code.

When your employee scans the order slip and generates the package label, it should also generate a tracking code. This tracking code inters the system of your shipment carrier, but it should also be sent to the customer so that they can follow the progress of their order. Again, linking this system to your website can auto-generate emails to your customers that let them know that their order has shipped.

5. There and back again: processing returns and restocking inventory.

There’s a lot that can be said about processing returns. In many ways, doing so is just like the previous steps, but in reverse: The customer needs to be able to go to an online portal where they can enter in their order number and request a return slip and shipping label. They must then be able to print each out from their home and drop off the return at the post office.

You should be able to track the progress of the return package, process it once it reaches your warehouse, send a refund to the customer’s account, and update your inventory with the restocked merchandise.

The specifics of how this happens can vary on the products sold, and on your return policy. If you sell consumable goods, or products that might have been tampered with post-purchase, this can affect your return strategy. However, you must have a clearly-stated returns policy on your website. Doing so can even win you some sales.

Yes, it’s a complex process. That’s why we’re here to help.

Ecommerce fulfillment is a complicated process, but from a customer standpoint, every stage has to operate seamlessly. A breakdown at any point can result in lost orders and a damaged reputation with your customers. That means whatever system you build must be reliable.

Fortunately, we can help.

Talk to us about your business structure, and we can work with you to find an ecommerce solution to fit your needs. Whether you’re a national retailer with brick-and-mortar locations across the country, or a local business running small batch manufacturing, we can help you create an online store that integrates all your order fulfillment systems seamlessly.

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