Unveiling the Most Effective E-Commerce Fulfillment Strategies

February 15, 2024

e-commerce fulfillment

Are you a seller?

In e-commerce, simply providing quality products or competitive prices won't necessarily attract loyal customers.

There is another secret — a fast and reliable e-commerce fulfillment strategy. A single delayed delivery can turn customers away, making them reluctant to return to your business.

So, if you're aiming to craft a perfect order fulfillment strategy, you've come to the right place! In this article, we will shed light on effective e-commerce fulfillment strategies. 

What is e-commerce fulfillment?

E-commerce fulfillment is the A to Z process involving product sourcing to selling and delivery at the customer's doorstep. You can even include customer returns in this process.

In e-commerce fulfillment, sellers or businesses receive orders and then ensure the prompt picking, packing, and delivery of those orders. 

Post delivery, the company manages customer inquiries and returns, and occasionally, sellers may also need to deliver replacement products. 

7 steps involved in e-commerce fulfillment

There are seven fundamental steps in the e-commerce logistics and fulfillment process. 

1. Sourcing inventory

Before shipping any inventory, you must source it from your preferred supplier. Sourcing involves locating product suppliers and acquiring the necessary inventory.

Some businesses utilize sourcing agents to negotiate prices and acquire merchandise efficiently.

2. Storage

Once you have procured your inventory from the supplier, it needs proper storage. Ensure you have adequate space to store your stock safely and maintain easy tracking.

Smart warehouses offer monitoring and storage facilities to safeguard products. You can have your own warehouse or opt for third-party storage options in your area.

3. Receiving orders

Create a store on popular e-commerce platforms like Amazon or Shopify. List your products and start selling. Customers will evaluate your products, so including high-resolution images to showcase quality is always a good idea.

4. Order processing

Before shipping, there's much more work to be done. For instance, retrieving products from the warehouse and packing them appropriately.

This process involves two main steps:

  • Pick: A warehouse is often a congested place where hundreds of products are stored. Smart warehouses often utilize technologies like RFID to locate items, ensuring efficient inventory management.
  • Pack: Are you a brand? If yes, offer branded packaging, as it helps promote the brand. More importantly, ensure proper packaging to safeguard items from any damage.

5. Shipping fulfillment

Once items are prepared, select the appropriate shipping method based on budget and security preferences. You can offer in-house delivery or collaborate with trusted logistics providers.

6. Customer service

Customers may face issues with the product when they receive the items. Efficient customer service is vital for maintaining a competitive edge. Address post-sale issues promptly to build customer trust and maintain business reputation.

7. Returns management

Despite efforts to maintain quality, some customers may need to return products due to damage or low quality. This can be frustrating, but you must ensure full customer satisfaction.

Disclose your return policy and efficiently manage product returns to ensure the customer leaves happy.

4 fundamental e-commerce fulfillment strategies

There are numerous strategies that sellers can employ. Based on your budget and method of operations, you have to decide what to choose. 

We've outlined the four primary methods for e-commerce fulfillment below.

1. In-house fulfillment

In-house fulfillment is one of the best strategies, but only if you have enough budget. 

With this approach, sellers have their own fulfillment infrastructure, directly shipping products to consumers. That means you must have a warehouse to keep the products in place and have a team for picking, packaging, and shipping orders to the consumers. 

Notably, this grants comprehensive control over the supply chain. You can better optimize your supply chain to ensure customer satisfaction through premium packaging and timely deliveries.


  • Inventory control: You have your warehouses and manage all orders yourself. So, it offers full-fledged control and mitigates risks. 
  • Safe and reliable shipping: Since product shipping falls on you, you can ensure proper packaging and product safety.


  • High budget: Building warehouses and hiring operational teams require significant expenses and effort.

2. Third-party fulfillment

Third-party fulfillment involves outsourcing fulfillment tasks to other companies that handle all aspects of fulfillment, from sourcing inventory to order fulfillment.

This option is more attractive, particularly if the third-party logistics provider of choice offers comprehensive services.


  • Cheaper shipping rates: Third-party providers typically offer cost-effective shipping solutions. You can save extra costs and increase your profit margins.
  • Reliable shipping: Trusted third-party services can help you minimize shipping issues and reduce customer returns.


  • No control over shipping: Third-party companies handle sourcing and shipping, so you do not have control over inventory.

3. Dropshipping fulfillment

Dropshipping is a great option due to its simplicity and ease of management.

In this method, sellers do not directly handle shipping. Instead, suppliers ship products to customers upon receiving orders and remain responsible for delivery.


  • Minimal shipping responsibilities: Order fulfillment is handled by suppliers, which helps streamline management tasks. 
  • Lower shipping costs: Suppliers often operate locally, which means reduced shipping expenses and faster delivery.


  • Reputation risk: One major disadvantagе is that delays in shipping can negatively affect the seller's reputation, despite the fault lying with suppliers.

4. Hybrid shipping models

The hybrid shipping model is revolutionary, combining aspects of in-house storage with third-party fulfillment services. Sellers operate their own warehouses for storage while collaborating with third-party shipping services for order fulfillment.


  • Control over inventory: Storage depends on you so you can effectively manage inventory. 
  • Cheaper and more reliable shipping: Companies like USPS have years of experience and are pioneers in the shipping industry. So, you can expect timely fulfillment and an elevated brand reputation. 


  • Inventory management burden: Managing inventory alongside third-party fulfillment requires additional effort and attention.

E-commerce fulfillment challenges

Shipping is not a piece of cake; in fact, slow shipping can result in a significant loss of consumers.


customers may be lost due to delays.

Source: Forbes

To safeguard your business from such setbacks, you must anticipate and address the challenges associated with shipping, mainly when unexpected spikes in order volume occur. 

Let's delve deeper into some of these challenges.

Lack of experience 

Starting a new business means navigating uncharted waters, particularly regarding fulfillment. Without a solid strategy, fulfillment processes can pose a significant risk to your business. 

Plus, there are several hurdles, including managing orders, ensuring safe storage, and guaranteeing timely shipping. All of these require expertise that beginners may lack. Involving experienced professionals or seeking guidance can be key to avoiding negative outcomes.

Shipping volume fluctuations

Shipping volumes often fluctuate unexpectedly, bringing about challenges in maintaining an efficient supply chain.

Sudden surges in orders, especially during peak seasons or holidays, can be overwhelming, especially without the whole staff present. Planning for such fluctuations and having strategies in place to manage increased demand is vital for effective fulfillment.

Lack of strategy

Balancing the business's demands while ensuring timely shipping is a common challenge. Mitigating delayed shipping, managing surges in orders, and fulfilling all demands are not feasible without a proper strategy. 

Most fulfillment providers fail in the primary phase because they can’t focus on two things — business growth and order fulfillment. Failing to prioritize shipping operations can result in delays and damaged business reputation.

You must dedicate time for fulfillment or partner with third-party providers to help streamline operations and support business growth.

Well-established competitors

In a competitive fulfillment landscape, new entrants face the challenge of competing against established businesses. For example, Amazon offers worldwide shipping at competitive rates, which poses a significant challenge for new newcomers.

Choosing between in-house fulfillment and third-party logistics is a big decision, and you must consider the market dynamics and competitive pressures.

Poor packaging

The importance of packaging cannot be overstated, as it is the first point of contact with customers. A lack of premium packaging can negatively impact the customer experience and the brand's first impression. 

Competitors with better packaging may gain an edge in the market; hence, investing in quality packaging solutions is vital. 

Inadequate technology

Technology plays a major role in streamlining order management and shipping processes. However, improper or inadequate technology deployment can lead to inefficiencies and delays. 

Investing in the right software is vital for optimizing operations and ensuring timely order fulfillment, ultimately contributing to overall business success. 

How do technology integrations streamline the e-commerce fulfillment process?

Don't underestimate the transformative potential of technology in streamlining order fulfillment processes. Technological integrations help simplify complexities within order fulfillment, facilitating faster and higher-quality shipment experiences. 

When collaborating with third-party logistics providers, the following integrations can make the entire process nearly effortless:


Integrating plugins into your fulfillment process is crucial for automation. 

For instance, you install a Shopify plugin and integrate your store directly with the warehouse. This integration triggers automated order processing messages to the warehouse upon receiving orders.

The whole process significantly reduces human errors and delays.


Middleware acts as a bridge, eliminating hurdles in the path of fulfillment pathways by connecting ordering systems with warehouse management systems.

For example, if you operate an eBay store, a middleware helps integrate the store with your warehouse management system and instantly notifies the warehouses whenever you get an order. This urgency in processing and shipping spares you from further hassles along the way.

API integrations

Custom APIs are also game-changers in the e-commerce fulfillment landscape. They facilitate rapid and tailored connections between stores and warehouse management systems.

You can get the API integration code from your system and paste it into the warehouse management system to automate the entire process.

Instant responses for the orders will minimize time wastage and ensure timely fulfillment, enhancing the overall reputation of your business.

Tips to choose the best e-commerce logistics strategy

Choosing the right fulfillment method isn't always about opting for in-house fulfillment. There are several factors to consider when looking for alternative fulfillment options. 

Let's explore these considerations in detail.

Measure your business needs

Do you run a six or seven-figure store?

Assess the scale of your business by looking at your product orders. The volume of orders helps determine whether in-house or third-party fulfillment is more suitable. 

In-house fulfillment can be a good idea if you have a large volume of orders and the capacity to handle the fulfillment internally. Alternatively, if operating on a tight budget, consider third-party logistics that offer more accessible and efficient order fulfillment.

Determine your selling channel

The platform through which you sell is pivotal. Platforms like Shopify offer integrated shipping facilities and streamline order fulfillment processes. 

Similarly, if you sell through Amazon, let them fulfill your order. That would be cheaper, better, and more convenient for you. Moreover, customers prefer premium packages from Amazon (Prime, to be more precise).

Understanding your selling channels can shape your fulfillment approach and help you avoid potential pitfalls.

Consider your fulfillment budget 

While in-house fulfillment offers a personalized experience, it can be costly. On the other hand, third-party fulfillment poses inventory risks due to a lack of control over products. 

Sometimes, a hybrid fulfillment strategy can be a great compromise. Align your fulfillment strategy with your budget and shipping capabilities to maintain a competitive edge.

Identify your target market

Understanding your target market is essential, as fulfillment capabilities can vary based on geographic constraints. 

In-house fulfillment may suffice for local operations, but international markets often require you to rely on third-party fulfillment service providers. Tailoring your shipping services to align with your target market and operational scope is vital.

Assess your software integration capabilities

Do you have a software integration strategy?

To create one, you must consider factors like budget and technical capabilities. 

Whether investing in middleware software or API integrations, you should aim to prioritize automation to streamline fulfillment processes. However, ensuring your infrastructure can support these integrations effectively is the most critical factor.

Choose the e-commerce fulfillment strategy that works best for you

Before diving into fulfillment, it's vital to define your budget, capacity, and range of orders. Then, you can go ahead and explore fulfillment strategies. 

Not every method fits every business, so remember to select the one that best aligns with your needs. The goal is to find the ideal balance that optimizes efficiency and meets customer expectations.

From personalized customer experiences to efficient supply chain management, generative AI is changing e-commerce. Find out how.

Edited by Jigmee Bhutia

Shipping Software
Ship smarter

Integrate shipping software with your retail systems to coordinate, track, and manage outgoing orders and ensure efficient returns processing.

Shipping Software
Ship smarter

Integrate shipping software with your retail systems to coordinate, track, and manage outgoing orders and ensure efficient returns processing.

Unveiling the Most Effective E-Commerce Fulfillment Strategies In e-commerce, a single delayed delivery can cause irreversible damage to customer experience. This gives rise to the need for an e-commerce fulfillment strategy. https://learn.g2.com/hubfs/iStock-1478421401.jpg
Sharline Shaw Sharline Shaw is the founder of LeelineSourcing. With 10 years of experience in the field of sourcing in China, her company helps 2000+ clients import from China, Alibaba,1688 to Amazon FBA or Shopify. https://learn.g2.com/hubfs/Sharline-shaw-leeline.jpg https://www.linkedin.com/company/leelinesourcing/

Never miss a post.

Subscribe to keep your fingers on the tech pulse.

By submitting this form, you are agreeing to receive marketing communications from G2.