What Is Fulfillment? Definition and Guide


Fulfillment refers to the process of preparing and delivering a customer’s order. While catalog companies and larger operations typically are equipped to handle customer order fulfillment themselves, ecommerce companies and smaller businesses often hand over that aspect of the business to companies that specialize in ecommerce fulfillment.

The fulfillment process

Shipping a customer’s order often involves more than simply putting it in a box and dropping it off at the post office. Fulfillment companies take care of:

  • Warehousing, or storing, the product or its components
  • Producing or assembling the product, such as photocopying pages of a binder of materials or copying a CD to be mailed out
  • Packing the order in an envelope or box
  • Labeling the order for shipment
  • Shipping it using a major carrier, such as FedEx, UPS, or the U.S. Postal Service
  • Notifying the customer via email that their order is on its way
  • Processing payment and transferring funds to the business

Does it make sense to outsource?

For many small businesses, the decision to outsource comes down to time. Not just whether they have the time to prep and ship customer orders out, but whether they can ship them in a timely manner consistently.

If you suddenly received a large influx of orders, does your business have the resources to produce, pack, and ship all the orders quickly enough to keep customers satisfied? Or does it make more sense to turn the entire process, and responsibility, over to a company that specializes in fulfillment?

The other issue is space. Does your business have the space available to stockpile quantities of your product(s) to satisfy customer demand? Or is that space better put to some other use? Only you can answer that.

Another consideration is consistent quality. Is your business able to consistently deliver the same reliable quality of finished product to customers? Or would a fulfillment specialist be better able to do that? It may depend on the company.

How fulfillment houses are paid

Each fulfillment house has a different fee structure and capabilities. Some can print and assemble binders, books, and packets, or burn CDs and DVDs, while others can warehouse completed products and ship them as ordered.

Many fulfillment houses will charge on a per-piece basis up to a set quantity, so that you can confirm up front that each order will still be profitable for you, even after shipment. The higher the quantity, the lower the per-piece cost.

Fulfillment FAQ

What does order fulfillment mean?

Order fulfillment is the process of managing and completing customer orders. This includes receiving orders, processing payments, picking and packing items, shipping orders, and providing customer service. It is a critical part of the e-commerce process and involves several stages, each of which must be carried out accurately and efficiently to ensure customer satisfaction.

What is an example of an order fulfillment process?

An example of an order fulfillment process would be as follows:
  1. Receive order: The order is received from the customer and entered into the system.
  2. Pick and pack: The items ordered are picked from the warehouse and packed into boxes.
  3. Invoice: An invoice is created for the customer.
  4. Ship: The order is shipped to the customer.
  5. Confirm delivery: The customer is notified of the delivery and is asked to confirm receipt.
  6. Close order: The order is marked as completed in the system.

What is the difference between shipping and fulfillment?

Shipping is the process of transporting goods from one place to another. Fulfillment is the process of ensuring that all the necessary steps are taken in order to deliver the goods to the customer. This includes packing, labeling, and arranging for a carrier to deliver the goods. It also involves providing customer service, tracking orders, and managing returns.