In 2023, the National Retail Federation (NRF) expects retail to remain the primary point of purchase for consumers, making up 70 percent of retail sales. It’s important for firms to develop a strong retail fulfillment strategy that’s both compliant and meets rising consumer expectations. In this guide, we will provide an overview of retail fulfillment, optimization strategies, common challenges, and more.
What is retail fulfillment?
Retail fulfillment refers to the process of delivering products to individual consumers. This is typically done through an e-commerce platform or brick-and-mortar store. In the case of e-commerce, the process begins when a customer places an order online. The order is then processed by the retailer’s fulfillment center, where the product is picked, packed, and shipped to the customer’s address.
In a brick-and-mortar store, the process is slightly different. When a customer makes a purchase in-store, the product is typically taken directly off the shelf and brought to the checkout. In some cases, the customer may have the option to have the product shipped to their address instead of taking it home with them.
Regardless of the method used, the goal of retail fulfillment is to get products into the hands of individual consumers quickly and efficiently. This requires a well-organized supply chain, efficient inventory management, and reliable shipping and delivery methods.
The 7 steps in the retail fulfillment process
- Receiving inventory: The process of sending inventory to your own warehouse or 3PL partner is the first step of the retail fulfillment process. Once new inventory is received, it will be processed, organized, documented, and stowed away based on your unique business needs.
- Warehousing: After inventory is stowed away, it will be used to fulfill customer orders. Leverage an inventory management system to keep track of inventory and set reorder points to prevent stockouts.
- Order processing: Once the order is received, the retailer’s fulfillment center processes the order, verifying the payment information and checking the inventory to ensure that the ordered items are in stock.
- Picking and packing: Once the order is processed, the warehouse or fulfillment center will pick the items from the inventory, pack them, and prepare them for shipping. The items are typically scanned to ensure that the correct products are being shipped to the customer.
- Shipping: After the items are picked and packed, they are shipped to the customer using a shipping carrier. Retailers can choose from various shipping options depending on the customer’s needs and preferences.
- Tracking and delivery: Once the items are shipped, the customer can track the order through the retailer’s website or the shipping carrier’s website. The retailer also monitors the shipment to ensure that it is delivered on time and in good condition.
- Returns management: If the customer is not satisfied with the order, they may return it for a refund or exchange. The retailer’s returns and refunds policy should be clear and easy to understand, and the process should be efficient and hassle-free for the customer.
- Inventory management: Retailers need to keep track of their inventory to ensure that they have enough stock to fulfill orders. They can use inventory management software to track inventory levels, reorder products when necessary, and optimize their supply chain.
Retail fulfillment order models
In an in-house fulfillment model, firms handle all aspects of the fulfillment process themselves, from storing inventory to packaging and shipping orders to customers. This is best suited for startup businesses with low order volumes because it offers greater control over the customer experience and operational costs. However, it can lead to slower order processing times and has its growth limitations.
Third-party logistics (3PL)
Third-party logistics, or 3PL, is a fulfillment model where retailers outsource their warehousing, shipping, and logistics operations to a third-party provider. This model can be beneficial for retailers that want to focus on their core business and reduce operational costs. However, it can also reduce control over the customer experience and require significant investment in finding and managing a reliable 3PL provider.
Retail fulfillment optimization strategies
- Automate processes: Implementing automation technology, such as warehouse management systems and inventory management software, can help streamline their fulfillment process, reduce errors, and improve accuracy.
- Optimize inventory levels: Firms can optimize their inventory by using data analytics to track sales trends and forecast demand. This can help them to ensure that they have enough stock on hand to fulfill orders and avoid stockouts.
- Optimize inventory placement: Firms can leverage their outbound order data to uncover the ideal inventory placement to reduce operational costs and maximize network efficiency.
- Improve order processing: Improve order processing time by implementing a barcode scanning system, which can speed up the picking and packing process and reduce errors.
- Re-evaluate fulfillment providers: If you’re experiencing cost or service level issues, it might be time to re-evaluate your fulfillment provider. Check out our in-depth article on switching 3PL partners.
- Implement quality control measures: Retailers can implement quality control measures, such as inspecting products before they are shipped, to reduce the number of returns and vendor chargebacks.
Common retail fulfillment challenges
Retail vendor chargebacks
Late or incomplete shipments, product quality issues, incorrect packing or labeling, inventory overages or shortages are some of the common reasons for vendor chargebacks. It’s important to partner with an experienced retail fulfillment provider to drive operational precision.
Retail vendor scorecards
Most major retailers have retail vendor scorecard programs to measure supplier performance. It’s important for brands to stay in compliance and meet on-time in-full metrics to maintain strong relationships with retailers.
Growing order volumes
As your business expands into new markets and sales channels, it’s important that firms have a scalable fulfillment strategy that can meet consumer demand.
Solution: WarehouseQuote’s retail fulfillment program
Nationwide warehouse network
WarehouseQuote’s hybrid warehouse network of 250+ facilities provides clients with flexible warehouse solutions supporting B2B and B2C fulfillment. Your firm can add as many warehouses as needed while maintaining a single point of contact across network.
Extension of your operations team
From onboarding to quarterly business reviews, WarehouseQuote’s warehouse and fulfillment operations team acts as a true extension of your operations. We work to help our clients reduce vendor chargebacks, improve on-time-in-full scores, and continuously improve warehousing and fulfillment programs.
Business advisory and consulting services
Drive operational efficiency with our suite of business advisory and consulting services including but not limited to: distributed SKU placement, SKU rationalization, warehouse location optimization, total cost of ownership, and build vs. lease vs. asset-light model analysis.
Integrated technology platform
Gain inventory visibility across sales channels and enhanced turn analytics with our integrated technology platform. Our recently released inventory reconciliation tool helps firms quickly identify inventory discrepancies and improve data accuracy.
MightyGood & WarehouseQuote: Explosive Retail Growth
MightyGood is a retail company specializing in health and hygiene products. MightyGood produces a variety of product lines including Wipe That Tush, Wipe Those Hands, MightyMoe, and Express Health.
MightyGood was in search of a scalable fulfillment partner to meet rising consumer demand and improve their customer experience.
When COVID hit in 2019, MightyGood saw explosive growth as the demand for health and hygiene products skyrocketed. “Visibility of order tracking & location of our former warehouse caused serious problems. Suddenly pickups were getting missed, containers were delayed, prices continued to increase, visibility declined, and at the end of the day, MightyGood suffered,” said Mindy Haas, Operations Manager at MightyGood.
A scalable and fully-managed fulfillment solution with inventory and order visibility across all sales channels.
WarehouseQuote tapped into their agile warehouse network to design a retail fulfillment solution with custom-built standard operating procedures tailored to MightyGood’s business needs.
With a single point of contact and complete inventory and order visibility, MightyGood can focus on scaling their fast-growing business.
“We have continuous visibility when products come in and out, and it is communicated with efficiency. When things don’t go as planned, we are the first to know and WarehouseQuote is already taking corrective action,” said Haas.
Today, WarehouseQuote handles the operations, storage, and distribution for all of MightyGood’s product lines. In addition to providing visibility into their orders, they now have a solution for specialized fulfillments, build to spec, labeling, and much more.
Since September 2022, MightyGood has increased shipments by roughly 30% to one of the largest retailers in the U.S. With the help of WarehouseQuote, they’ve expanded into many other big box retailers and have quickly become Kansas City’s Fastest Growing Company with revenue skyrocketing from $540,000 to $41 million in one year.
MightyGood continues to increase their order volume since partnering with WarehouseQuote, and they plan to continue growing together.
- 30% increase in shipments to one of the largest U.S. retailers in six months
- Revenue growth from $540,000 to $41 million in one year
- Continuous increase in order volume month over month