Understanding E-commerce Logistics

Order processing in E-commerce: how it works

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What is E-commerce? All you need to know

How to manage order fulfilment in an E-commerce business

This article will address the topic of order fulfilment in an E-commerce business.

The term "E-commerce" has now become part of our daily lives, having seen significant development and diffusion in recent years. The word E-commerce derives from "electronic commerce", which is understood to mean the sale of products and services purchased via the web and paid for via dedicated transaction systems.

But what happens after an order has been placed? In this article, we will answer as many questions as possible about E-commerce logistics in order fulfilment. This process includes not only shipment of the item, but also all the activities needed to guarantee that the buyer will receive their order, as well as the management of any returns or exchanges and customer service.

In electronic commerce, there are several ways to manage E-commerce logistics when fulfilling orders. In this article, we will evaluate some of them, presenting their advantages and disadvantages.

What is order fulfilment in E-commerce?

Order fulfilment is the process that starts with a sale being made and ends with the item being delivered to the customer. Processing, packing, picking and shipping an item are all part of the process and are all fundamental steps for the success of an E-commerce business.
Without a precise strategy, this process would risk not being successful, encountering various obstacles, such as an item not being in stock or a delay in preparing the orders to be shipped.

E-commerce is based on an order fulfilment strategy, which must have two key elements:
  1. The location: intended both as the seller's headquarters and as a place where you can find the products to be shipped. In fact, both have an impact and consequences on customer expectations. The latter is often not willing to wait too long to receive their order; it follows that the seller must take this into account when choosing their reference market.
  2. The technology used for order fulfilment. There are many websites that deal with order fulfilment and shipping and it is often not easy to make the right choice.
Therefore, location and technology are the two key elements on which you can build your own order fulfilment strategy. Here is a list of possible alternatives:
  • Autonomous order fulfilment.
  • Order fulfilment through external companies.
  • Multi-channel order fulfilment.
  • Dropshipping.
  • Order fulfilment through Fulfilment by Amazon (FBA).
Autonomous order fulfilment

Autonomous order fulfilment

This strategy allows the seller to fulfil their orders autonomously, from the procurement of the product to its shipment, without the support of intermediaries.
Undoubtedly, this choice has lower costs compared to other alternatives, since the seller decides to carry out the entire process internally, with no or minimal external support. Such management is easier when the business is still in its infancy and is not highly structured.
On the other hand, however, carrying out the entire order fulfilment process autonomously requires a significant amount of time on the part of the seller. If the growth objectives are ambitious and the E-commerce business is showing good results, fulfilling orders without a warehouse, a support team or software that automates the entire process should not be considered.

Order fulfilment through external companies

Entrusting order fulfilment to an external party can be beneficial when space or time is limited, or when you prefer to focus your energy on communication and marketing strategies, relying on external support for logistics management. With this strategy, it is possible to store a larger number of products, depending on the growth of the E-commerce business and the goals you wish to achieve. Therefore, large investments will not be necessary to buy a warehouse or to hire staff to manage order fulfilment, as these activities will be carried out by an external company.
However, this strategy may have drawbacks: using external companies for logistics management could lead to a reduction in the quality of the service and affect the relationship with the customer. Any delays or shipping errors will come at the expense of the E-commerce business, even if it is not directly responsible.

Multi-channel order fulfilment

Multi-channel fulfilment allows the seller to simultaneously manage shipments of orders received from different platforms.
This service makes it possible to improve the customer's purchasing experience through faster deliveries and simplified operations and is great for multi-channel sellers. However, even this strategy has drawbacks. In fact, it is not permitted on all sales channels; moreover, you may run the risk of not being able to ship the products if they display the logo of a competing website on the packaging. In addition, in the case of an inventory that remains unsold for a period exceeding 6 months, the seller will be forced to pay storage fees.


The fourth strategy is called dropshipping. In this case, the entire management of the order fulfilment process is entrusted to the manufacturer.

The seller merely provides their E-commerce business as a “virtual space” which is needed for the manufacturer to bring their items to the attention of the end customer. However, the manufacturer is the one that manufactures, stores, packages and ships the products. The seller's task is to attract the attention of the greatest number of customers, encouraging them to buy. Among the advantages of dropshipping is the ease with which you can begin to sell, because the manufacture and shipment of the product are entrusted to someone else. In addition, through this service, the seller will find that they interact with a smaller number of suppliers than end customers. Often, they will only interface with one supplier.

However, dropshipping does not allow the customisation of items. Often, the seller will have to adapt to the product that is supplied by the external company without the possibility of customising it. In some cases, this may prove to be a disincentive for customers. In addition, by relying on a third party for the manufacture and shipment of products, dropshipping can pose great risks to the reputation of the business. Although the seller does not have direct control over order fulfilment, the product, once delivered to customers, bears the brand of their E-commerce business on the packaging; therefore, in the event of any complaints, the person with whom customers will try to get in touch will be the seller, or they will leave a negative review directly on their E-commerce business.

Fulfilling orders with Fulfilment by Amazon (FBA)

This service enables the seller on the Amazon e-commerce site to send their inventory to an Amazon fulfilment centre and have Amazon itself take care of storage, packaging and shipping to customers. In addition, this service offers the end customer support in the original language: if the seller addresses a customer in Italy, Amazon will manage customer service in Italian; alternatively, in the case of a customer in Germany, customer service will be in German.

Fulfilment by Amazon means that the seller does not necessarily have to have their own warehouse, instead being able to take advantage of those owned by the company.

Furthermore, the selling partner on Amazon's e-commerce site no longer has to deal with logistics management and customer support, which are entrusted to Amazon. This gives the seller more time to devote to core business activities such as marketing and selling plans and strategies. The costs are, however, higher in this case: the seller will have to pay a management fee, which is fixed based on the size and weight of the product, and a storage fee, which varies based on the cubic metres of space actually used within Amazon’s warehouse. These rates, when added to the selling fees, have a significant impact on the profit margin. Therefore, if the volume of business is minimal, the system may not be convenient. Furthermore, although relying on third parties for logistics and customer service makes selling easier, the seller often loses direct contact with the customer, resulting in difficulty in retaining loyalty with their brand.

How to decide which order fulfilment model to choose

As we have seen, there are multiple order fulfilment strategies, all of which pursue a single objective: efficiency.
Every company seeks to improve the quality of its service, and the different order fulfilment strategies serve precisely this aim, by pursuing four main objectives:
  • Reducing errors.
  • Reducing shipping times.
  • Reducing the number and length of operations.
  • Maintaining a balanced range of goods.
Choosing the right model is therefore essential for the following reasons:
Helping you make more sales
A quick and professional order fulfilment process will help your company increase sales: it reassures customers, allowing them to receive what they have ordered correctly and quickly. This will help you to complete a greater number of sales and, consequently, to earn more.
Generating a positive impact for the company
In general, an order is defined as successful when it is complete, delivered on time and undamaged.
If you are unable to provide this service, this will affect your business and result in customers turning to other sellers.
To avoid this, investing in simple and fast order fulfilment will help you keep your business attractive in the eyes of customers.

Convincing buyers to buy your products

To increase the number of customers, taking care of their needs through effective order fulfilment is essential and will allow you to increase sales. To ensure that this happens, the process needs to go smoothly.
This will help you to attract the attention of more customers, satisfying their needs with your products.
When customers order a product, they expect to receive it by the specified date, without delay. The more reasons you give them to choose your products, the more likely they are to become loyal to your business.
A satisfied customer is generally a customer who returns to buy from the same seller, and who leaves positive feedback, which is always beneficial.

When choosing which order fulfilment strategy to adopt, it is first necessary to understand whether to manage the process internally, or to rely on third parties. This choice depends on your financial resources.
Internal fulfilment allows each seller to have greater control over operations and costs. It works well if you personally manage the fulfilment processes, but this often requires skills that a seller does not always have.
If there is a shortage of skills in the field of compliance and logistics, it is possible to outsource the entire process. This way, your team can focus only on producing or selling the product.
Leaning towards internal order fulfilment implies that the seller has their own warehouse and that they can ensure a certain level of care and attention to each order, dealing with the cost that managing a warehouse entails.
Of course, outsourcing processes helps to reduce challenges.
In general, internally managed order fulfilment works best if the volume of items sold is low, while fulfilment by third parties is more suitable for companies that hope to expand and that therefore prefer to spend their time building a structured marketing strategy.

For the proper functioning of a company, it is useful to adopt clear and direct communication, whether the company opts for an internal order fulfilment system or if it decides to outsource the process. All warehouse activities must be kept strictly under control.
It would be beneficial to consider creating and using a communication channel with the latter, perhaps an online chat or a call option.
Communication can also help you build a lasting relationship with customers. Always be sure to share the tracking information for each shipment with them. Also remember to send the buyers a thank you note when you receive an order.

If your choice is based on an internal order fulfilment system, you will need to take a variety of factors into account. First, the process of separating inventory in the warehouse; this is essential if you want to speed up collection operations.
To succeed in this optimisation, it is recommended to keep the most sought-after items close to the shipping areas.
Your products in the warehouse must be stored strategically and can be divided according to size, category, weight, use and temperature. According to the latter criterion, the most sensitive products must be stored in one place. For the most fragile items, it is recommended to store them in a safer location instead.
In addition, inventory accuracy is critical in warehouse operations. Use a real-time tracking system; firstly you will avoid the customer ordering a product that is already out of stock, and secondly you will reduce unnecessary stocks.

The location where the products are stored has a significant influence on your commercial business and is strategic to your E-commerce order fulfilment strategy. Customers demand fast delivery at an affordable price.
To deliver according to their expectations, it is necessary to minimise the number of steps and intermediaries between the warehouse and the end destination. This reduces shipping costs and ensures that end customers are satisfied.
Real-time monitoring of the supply chain is therefore essential, helping the seller and manufacturers to stay up to date and plan their strategy in advance.
However, if your E-commerce business were to grow exponentially, substantial economic investments will be necessary to purchase automated warehouse management systems, which help to increase accuracy and efficiency and reduce human errors.
In fact, these systems help manage inventory, update it in real time, track packages and reduce costs.
Having a detailed report on the stocks that are still available helps to predict any customer demand. This only happens in the case of a smart warehouse. Considering its high costs, however, the easiest solution is to rely on an external company that already has this type of technology.
How to choose the right supplier for order fulfilment?

How to choose the right supplier for order fulfilment?

There are many companies that deal with order fulfilment and often the choice is not easy. The key elements to look for in each are:
Speed of delivery
Customers today demand faster shipping than in the past, with the preferred scenario being the option of receiving a package within two days. How can we keep up with these ever-changing standards? Working with an order fulfilment provider who can genuinely deliver quickly. If you don't opt for this solution, you risk losing customers, who could abandon an online transaction due to long lead times.
The order fulfilment company should in fact have efficient and productive methods that allow products to be delivered to customers quickly. This is possible when the companies in question have a large number of carefully located order fulfilment facilities and warehouse management technology that is simple to use.
Customer service
There are many operations involved in shipping an order. First, the goods must be packaged and a packaging label must be affixed to each package. After the product has been prepared for transport, it is picked up by a courier. This is how the order moves from one centre to another and ultimately reaches the end customer. There are many steps, meaning that the risk of an error occurring is very high.
A minor inaccuracy is enough for the goods to be delivered to the wrong address. This can happen, albeit rarely. As a result, you need to ensure that the order fulfilment company you select provides excellent customer service. You need a reliable supplier who accepts returns and is able to deal with and resolve inevitable difficulties.
The location of an E-commerce distribution service could have a significant impact on the profitability of your business. To reduce shipping costs, the recommendation is to choose a supplier that has an office close to your customers. If most of your buyers are in a specific area, you could opt for an order fulfilment service provider located nearby, who is also able to ship outside the reference area, for a small minority of orders.
In addition, if you're operating internationally, make sure that the company you're thinking of working with provides international shipping. If you can't get your items to customers, your business won't be successful.
Technology used
When choosing an order fulfilment provider, you must consider the technology they use. As you have seen, the process is complex and requires several steps. It follows that the choice must be directed towards those suppliers that use cutting-edge order fulfilment systems, such as a smart warehouse. By “smart warehouse” we mean a facility in which logistics processes are predominantly carried out by automatic lifting equipment or robots, managed by software and integrated with advanced technologies.
A supplier with a smart warehouse guarantees:
  • greater fluidity in logistics processes;
  • optimisation of warehouse resources;
  • total control of the condition of the goods;
  • increase in productivity – increase in the storage and collection cycles of goods;
  • automated and complete product traceability;
  • option of consulting the inventory in real time;
  • greater security for goods, storage systems and employees;
  • increase in the storage capacity of the facility;
  • greater efficiency when preparing orders;
  • more accurate demand forecasting.


As we have explained in this article, the options for fulfilling orders can seem endless. The seller must therefore thoroughly evaluate these options. This should not be based solely on costs, but also on the benefits that the correct choice may bring.
In the event that you choose to outsource the process, it is essential to find a reliable supplier to manage inventory, provide a positive customer experience and, finally, expand your business.
The successful delivery of the products to the customer represents the final phase of the sales process, and it is essential that it be carried out correctly to guarantee that they are satisfied. In a competitive market such as that of online sales, customer satisfaction is a key factor in differentiating between competing companies. Those who are successful in the world of E-commerce make customer satisfaction a fundamental part of their business strategy. Therefore, when choosing an order fulfilment strategy, in addition to purely technical aspects, you must also keep customer expectations in mind, choosing a model that suits your company, and the buyer. A satisfied customer who has received the product they purchased on time will generally leave positive feedback for the seller, which encourages other potential customers to buy. This will allow you to expand your business.


How do I manage orders on Amazon?
On Amazon, you have the option of managing orders yourself or using Fulfilment by Amazon (FBA).

Fulfilment by Merchant is the process in which fulfilment is carried out internally. This type of order management is recommended for products that are not suitable for Fulfilment by Amazon, such as hazardous materials or other seasonal goods that could result in high storage costs.

Fulfilment by Amazon (FBA) assists sellers in all aspects of order management. Sellers send an inventory of goods to Amazon fulfilment centres, and Amazon takes care of the processing, preparation, packaging and shipping of orders, as well as returns. Amazon also handles customer service.

If you're selling using Amazon e-commerce, you can select the order management strategy that will work best for your business.
How long does it take to complete an order?
The time it takes to complete an order varies depending on the type of product, the logistics option selected or the service outsourced. Through Fulfilment by Amazon (FBA), some products are eligible for one-day shipping to Prime members.

You can even manage your orders from your warehouse by taking advantage of Seller Fulfilled Prime. You just need to ensure that the orders will be delivered in one day at no additional cost to Prime customers, using transport solutions approved by Amazon.
How does e-commerce logistics work?
In e-commerce, logistics involves managing the flow of products from online sellers to customers.

This entire process includes order registration, processing, picking, packaging, shipping and delivery.
Who is in charge of delivering packages for Amazon?
To manage package deliveries, Amazon has its own delivery network, which includes a fleet of vehicles. In addition, we work with partner carriers and third-party delivery service providers to ensure that products are delivered quickly and on time to customers across the country.

Factors such as the customer's location, the size of the item and the choice of service may influence the delivery method used.
How much does Fulfilment by Amazon (FBA) cost me?
With Fulfilment by Amazon (FBA), you pay only for the services you use, with no subscription costs, contracts or minimum inventory requirements. You send your products to an Amazon fulfilment centre and pay only for the logistics services and storage space used.

Please note that the cost of FBA may vary depending on the volume of the product and the size of the inventory. Monthly inventory storage fees are calculated based on the daily average volume (measured in cubic metres) of the space your inventory occupies in Amazon fulfilment centres. The volume is determined by the size of each unit, properly packaged and ready for delivery.

To view the full list of FBA fees in detail, click here.
What does an e-commerce fulfilment centre do?
E-commerce fulfilment centres are structures that manage the fulfilment of orders for online businesses. They manage inventory and ensure that customer orders are processed accurately and quickly.

Online businesses can securely store and organise products in their warehouses, and they usually use modern inventory management systems to monitor stock levels and ensure inventory is correct.
Is order fulfilment the shipping process?
No, order fulfilment is the process that starts with a sale being made and ends with the item being delivered to the customer. Shipping is therefore just one of the many steps in order fulfilment. Processing, packing and picking an order, as well as shipping it to the customer, are all fundamental steps in the order fulfilment process.
Why is order fulfilment so important?
Order fulfilment is a fundamental process because it directly impacts customer satisfaction. Not having a clear and professional order fulfilment process could lead to delays or errors in delivering what buyers have ordered. The fulfilment of orders is also essential to avoid additional costs: if there are errors in the shipment, the seller will be forced to repeat the operation by paying for a second one out of their own pocket.
What are the two key elements on which the order fulfilment strategy is based?
The two key elements are:
  1. Location: understood to mean both the headquarters of the seller and the customer, and also the place where the items are produced. For example, let's suppose that the seller is in Italy and so are the products they sell. However, if the customers were located in the United States, for example, are we sure that they would be willing to wait a long time to receive their order?
  2. Technology: understood to mean all the technology used to fulfil orders, from software through to smart warehouses.
What are the main order fulfilment strategies?
The main order fulfilment strategies are:
  • Autonomous order fulfilment.
  • Order fulfilment through external companies.
  • Multi-channel order fulfilment.
  • Dropshipping.
  • Order fulfilment through Fulfilment by Amazon (FBA).
Is the autonomous order fulfilment option always the most convenient?
This strategy undoubtedly has lower costs compared to the other options, because the seller chooses to internalise the entire process, with no or only minimal external support. Clearly, such management is easier when the business is still in its infancy and is not highly structured.
On the other hand, however, managing the entire order fulfilment process takes a significant amount of time and if the volume of business grows, the seller will undoubtedly be unable to manage everything. If the growth objectives are ambitious and the E-commerce business is showing good results, it is unthinkable to manage orders without a warehouse, a support team or software that automates the process.
What is the best order fulfilment model?
No one order fulfilment model is better than the others. It depends on the needs and objectives of each company. The purpose of every order fulfilment model is to improve customer satisfaction. A satisfied customer is a customer who repeats the purchase and who leaves positive feedback that may encourage others to buy. Every order fulfilment process must therefore pursue the following objectives:
  • Reducing errors.
  • Reducing shipping times.
  • Reducing the number and length of operations.
  • Maintaining a balanced range of goods.
What characteristics should I look for in an order fulfilment provider?
The order fulfilment service provider must be quick to deliver and guarantee excellent customer service. Then there are also two other fundamental factors that cannot be ignored:
  1. the location: i.e. the place where the service provider is located, which should not be too far from where the majority of customers live;
  2. technology: this is because the choice must always involve suppliers that guarantee a good technological level, which is essential to avoid errors in shipments and warehouse stocks.

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