Speed and efficiency are everything in eCommerce, especially when it comes to your order management process. However, there are a lot of manual tasks that can go into eCommerce, and these can slow your operations down significantly.
This is where automation comes in. According to recent studies, companies that embrace automation can reduce operational costs by up to 90%. Additionally, businesses that use automation save about 3.6 hours a week, or 23 working days per year.
The less hands-on management your eCommerce store needs thanks to automation, the more time you free up to spend on customer service, content marketing, and all of the other tasks that keep your business on top.
One aspect of your eCommerce business that you can automate is order fulfillment. These technologies automate everything from inventory management to shipping, so you process customer orders more quickly and accurately.
In this guide, we’ll explain how automated order fulfillment works and share nine steps to automate fulfillment for your store.
The Problem with Manual Order Fulfillment
When order fulfillment is handled manually, inefficiencies, errors, and scalability challenges quickly emerge.
While small businesses may be able to handle orders manually in their early stages, growth soon makes this approach unsustainable.
Below are some of the key issues with manual order fulfillment:
❌ Time-consuming and labor-intensive
Manually processing orders requires significant time and effort, as you must:
- Receive and review orders.
- Manually enter order details into various systems.
- Generate shipping labels and tracking numbers.
- Coordinate inventory availability.
- Package and dispatch orders individually.
As your order volumes grow, this process becomes cumbersome, slowing down fulfillment speed and delaying deliveries.
❌ High risk of human error
Manual processes leave plenty of room for mistakes, including:
- Entering incorrect customer details.
- Choosing the wrong shipping method.
- Mispacking or shipping the wrong items.
- Failing to update inventory levels properly.
These errors can lead to dissatisfied customers, increased return rates, and potential financial losses due to incorrect shipments and refund processing.
❌ Inventory management challenges
Manual fulfillment often results in poor inventory tracking. Without automated order fulfillment, eCommerce businesses may struggle with:
- Overselling products that are out of stock.
- Failing to reorder popular items on time.
- Holding excess inventory due to inaccurate demand forecasting.
The lack of real-time inventory updates can cause stockouts, lost sales, and poor customer experiences.
❌ Difficult to scale
As your eCommerce business grows, so does your order volume, and manual fulfillment doesn’t scale efficiently. More orders mean hiring additional staff, increasing operational costs, and creating bottlenecks that slow down fulfillment times.
If you want to expand into new markets, sell on multiple platforms, or handle seasonal spikes, you’ll quickly find manual processes a significant limitation.
❌ Slower shipping and delivery times
With customer expectations for fast shipping, manual fulfillment puts businesses at a disadvantage. Delays are common since orders must be processed, packed, and shipped by hand.
❌ Limited multi-channel integration
As mentioned earlier, if you want to sell across multiple platforms, manually fulfilling orders on each platform can lead to:
- Missing or delayed orders.
- Difficulty keeping stock levels synchronized.
- Inconsistent customer experience across platforms.
Without automation, you may struggle to maintain seamless order processing across multiple sales channels.
❌ Higher operational costs
While manual fulfillment might seem cost-effective initially, it becomes expensive as order volumes grow. Costs include:
- Hiring more staff to manage orders.
- Increased errors leading to more manual labor.
- Inefficiencies in shipping leading to higher shipping costs.
What Is Automated Order Fulfillment?
Automated order fulfillment is the ideal solution to the challenges mentioned above.
It’s a strategy that leverages technology to streamline the fulfillment process. It usually involves advanced software to handle tasks like automated picking, packing, and shipping customer orders.
Fulfillment automation streamlines the entire fulfillment process, from when the customer orders to when it reaches their front door.
With fulfillment automation, you automate several key processes in your eCommerce business, including:
- Inventory control, including instant inventory updates.
- Order processing.
- Warehouse management.
- Automatic selection of the best shipping prices.
- Intelligent routing features, which lower shipping costs by choosing the most efficient routes and carriers.
Order fulfillment and inventory management systems can handle most manual tasks for you, leading to a more accurate and cost-effective business.
The Benefits of Automating the Fulfillment Process
Whether you’re a start-up or an established eCommerce brand, automation has some huge advantages, including:
✅ Simpler multi-channel retailing
You probably don’t just sell products on your website. You’re on Instagram, eBay, Amazon, and maybe even Walmart Marketplace. That’s great for boosting sales, but manual multi-channel fulfillment requires a lot of legwork.
Automated order fulfillment simplifies the complexity of multiple sales channels and vendors.
By integrating all channels into a single system, you get consistent inventory management and order processing across all platforms, reducing the likelihood of errors and setting you up for multi-channel success.
✅ Better customer satisfaction
Online shoppers want a seamless experience, or they’ll take their business elsewhere. In fact, 63% of consumers will leave a brand after one poor experience.
Fortunately, automated order fulfillment has a significant impact on customer satisfaction.
A smoother shipping process and the potential for discounts encourage more customers to shop online. Faster delivery times and order accuracy also help you meet and exceed customer expectations.
✅ Efficient warehouse management
You might not manage your own warehouse, but if you do, order fulfillment automation is a must-have.
Automation makes it easy to pick, pack, and ship products in a warehouse management system. It can even maximize warehouse space and the overall picking process, maximizing productivity at all times.
✅ Improved inventory management
Do your inventory levels update once a day? This is an easy way to run out of stock, which results in a poor customer experience. eCommerce is a real-time business, so you must update inventory instantly and continuously.
Automated order fulfillment reduces the risk of overselling and stock shortages by automatically updating inventory figures across all channels.
This level of precision in inventory planning is essential for healthy supply chain management and keeping customers happy.
✅ Cost savings
As mentioned earlier, human error can lead to expensive mistakes. Automated processes eliminate human error; technology eliminates repetitive tasks while your team works on more complex issues.
As a bonus, eCommerce fulfillment automation cuts expenses associated with errors and your overall labor costs, leading to significant savings.
Additionally, automation typically results in cost savings of between 40% and 75%.
Efficient order fulfillment software isn’t free, but the savings and efficiency make up for the subscription costs. We’ll discuss this in more detail later on.
✅ Scalability
Growing businesses don’t stay small forever. With order fulfillment automation, you have the power to quickly scale up your eCommerce business and become more competitive in your niche.
In fact, 88% of small businesses say automation enables competition with larger companies.
Automation will set you up for long-term success: leverage economies of scale, score shipping discounts, and sell on more platforms without the learning curve.
How Automated Fulfillment Works
Automated fulfillment isn’t just a technological upgrade. It’s a strategic business decision that saves time, boosts customer satisfaction, and saves costs.
It doesn’t have to be complicated, either. Here’s a quick breakdown of how automated fulfillment works for eCommerce businesses:
➡️ Purchase
The order fulfillment process starts when a customer orders through your online store. The automated order fulfillment system integrates with your website or eCommerce platform, allowing it to receive and process the order instantly.
You’ll likely receive an email informing you about the customer order and that your fulfillment system processed the order.
➡️ Order routing
Once the system receives the order, it uses a series of algorithms to find the most efficient, cost-effective way to fulfill it. The system will:
- Find the right items from your vendors or inventory.
- Decide on the best packaging.
- Find the most cost-effective shipping method.
If you have your own warehouse, technologies like robotics, barcode scanners, and conveyor belts work with your fulfillment system to handle picking and packing.
Everything integrates with your warehouse management system (WMS) to guide workers and manage inventory.
➡️ Inventory management
When a product is low in stock, the system either notifies you or automatically reorders it. If you use a solution like Spark Shipping, the system will even order products from the lowest in-stock suppliers, giving you access to the cheapest products.
➡️ Shipping process
Once the order is picked and packed, the automated fulfillment system updates the shipping information. It selects the best shipping service based on cost, speed, and reliability to balance costs with efficiency.
The system then prints shipping labels and sorts packages. Some fulfillment centers will even offer shipping discounts by aggregating your orders and negotiating better rates with carriers.
➡️ Reporting
Fulfillment automation gives you detailed reports on various aspects of your business, including:
- Shipping costs.
- Fulfillment speeds.
- Inventory levels.
10 Steps To Set Up Fulfillment Automation
A fulfillment automation setup might sound daunting, but it comes down to choosing the right platform. Follow these steps to set up hands-free order fulfillment processes:
1. Assess your needs
Every business is different. Before you look for an automation solution, understand exactly what you’re looking for. Your order volume, product variety, and future plans impact your chosen platform.
Define clear goals for what you want to achieve with automation, such as faster fulfillment, cost reduction, or improved customer experience. There’s no perfect automated fulfillment solution, but you need one that covers these basics.
You may also want to audit your current order fulfillment system to identify bottlenecks and inefficiencies, especially areas requiring manual data entry.
You can do this by examining metrics like time-to-ship or order accuracy rates to better understand your current processes.
2. Choose the right fulfillment technology
There are many fulfillment automation platforms to choose from, so it’s important to do your research.
Firstly, look for a platform that solves your biggest problems. Budget is always important, but the goal is to find the best option for the money.
When in doubt, sign up for a few free trials or demos to get firsthand experience using each platform.
The more features the platform offers, the more valuable it is to your business. Look for features like seamless integration with your existing systems, scalability, ease of use, and robust inventory management capabilities. For example, Spark Shipping manages not only order fulfillment but also:
- Vendor integrations.
- Product management.
- Price automation.
- Fitment data.
- Tracking updates.
Spark Shipping offers advanced features like intelligent routing, automatically selecting the lowest-cost in-stock vendor for each order.
This capability reduces fulfillment costs and optimizes the fulfillment process by choosing the most efficient route and vendor based on real-time data.
3. Integrate with your eCommerce channels
It’s time to integrate the automation tool with your sales channels. It should integrate with your accounting software, marketing tools, customer relationship management (CRM) systems, and other platforms to keep everything running smoothly.
Integrations facilitate real-time data exchange, which is essential for accurate inventory management and order processing, so ensure these connections are available and in working order. It doesn't hurt that these integrations pave the way for even more automation down the line.
4. Select a fulfillment center
If you aren’t fulfilling orders in-house, you must choose a fulfillment center that supports fulfillment automation. Consider factors like the distribution center location, infrastructure, and how well they can handle your products and order volume.
Fortunately, if you use platforms like Amazon or Walmart Marketplace, you can pay a fee to access their fulfillment center. They’re a little pricey, but professional sellers swear they’re worth the money.
5. Conduct vendor management
Do you work with multiple vendors and distribution centers? Your fulfillment automation system needs to manage and coordinate between these different providers.
Ensure it works well with your vendors’ systems; this is key for store inventory tracking and automatic order status updates, especially across multiple locations.
6. Automate inventory management
An advanced automated order fulfillment system will offer features such as automated restocking alters and predictive analytics for demand planning.
If you’re running your own warehouse, these tools allow for real-time inventory management, reducing storage costs.
7. Optimize warehouse functions
You likely don't have a warehouse if you’re running a small dropshipping business. However, if you have a larger business with a warehouse, you’ll need to automate your operations.
A good idea is to use a system that offers warehouse slotting algorithms for automated picking and packing to optimize your warehouse resources and space.
Automating your warehouse effectively can significantly reduce human error and manual labor, speeding up your fulfillment process.
8. Implement automated returns management
Depending on your agreement with your dropshipping suppliers and platform policies, you may be responsible for handling returns.
For example, if you’re selling on Amazon, the platform requires you to offer a return policy that aligns with its customer service standards.
Investing in a returns management solution that automates returns can enhance customer satisfaction. It also helps with real-time inventory updates when you receive a return and automatically triggers refunds.
When you automate your returns, you speed up the process for customers and allow for a faster inventory turnover.
9. Test and train
Always test automation before you implement a new system. Conduct thorough testing to make sure everything works as expected.
Training is also important. Whether you’re a team of one or have a small group of employees, everyone using the system needs training on using it correctly.
Most automated order management software will offer free training to get your team up to speed.
Not only does this minimize the chance for error, but it also increases time to value and speeds up implementation. Budget in a few weeks for training while you and your team get used to the new way of doing things.
10. Monitor and optimize
After implementation, continuously monitor the system’s performance. Analyze metrics like order processing time, shipping costs, and customer satisfaction to identify areas for improvement.
You should test the system when you set it up and make it a point to test the automation at least once a month—or more frequently. A broken integration can be a disaster for an eCommerce brand.
Be open to adjusting and updating your approach as needed to ensure the system remains effective and efficient.
Automation should free up your time to focus on more high-value tasks, so if you find you’re still stuck fulfilling customer orders, look for more opportunities to automate order fulfillment.
Cost Considerations: Is Automated Order Fulfillment Worth It?
For many dropshippers, the decision to invest in automated fulfillment comes down to cost. While automation streamlines operations and improves efficiency, it requires an upfront investment.
Before deciding whether to automate, comparing the costs of manual versus automated fulfillment is important. Let’s unpack both:
💰 Manual fulfillment costs
Many dropshippers assume manual fulfillment is free because they don’t pay for software, but this isn’t entirely true. Manual processes come with hidden costs, such as:
- Time spent processing orders manually: Entering order details, checking inventory, and sending orders to suppliers can take hours each day.
- Increased staffing costs: As order volume grows, businesses must hire more staff to handle fulfillment, adding to payroll expenses.
- Human error costs: Incorrect order entries, fulfillment delays, and miscommunication with suppliers can lead to refunds, returns, and lost sales.
- Slow order turnaround times: Delays in processing and fulfilling orders can result in dissatisfied customers, negative reviews, and lower conversion rates.
💰 Automated fulfillment costs
With automation, businesses must pay for a fulfillment platform, but this investment replaces many of the inefficiencies and hidden costs of manual fulfillment. Some of the costs to consider include:
- Subscription fees: Most fulfillment automation tools operate on a monthly or annual subscription model.
- Setup and integration costs: Depending on the system, there may be initial costs to integrate suppliers, marketplaces, and eCommerce platforms.
- Transaction or order-based fees: Some platforms charge per order processed or per supplier integration.
- Potential supplier compliance costs: Some suppliers may charge fees for API integration or require minimum order volumes for automated fulfillment.
When does it make sense to invest in automation?
Not every dropshipper needs automated fulfillment right away. However, automation becomes essential as order volume increases.
Here are key indicators that it’s time to invest in fulfillment automation:
- Your business processes more than 20 daily orders, making manual fulfillment too time-consuming.
- You have a high order error rate, leading to frequent returns or refunds.
- You’re working with multiple suppliers and struggling to manage inventory across them.
- Orders from multiple platforms require manual updates, slowing down fulfillment.
- Customers are complaining about slow shipping and order delays.
- You want to scale but spend too much time on fulfillment tasks instead of growth activities.
Manual fulfillment may still be manageable for businesses in the early stages with low order volumes. However, automation quickly becomes a cost-saving necessity for businesses experiencing growth or wanting to streamline operations.
How Does Automated Order Fulfillment Work with Spark Shipping?
Our solution automates the entire order fulfillment process for eCommerce businesses, especially drop shippers. Spark Shipping integrates with suppliers, marketplaces, and shipping carriers. In doing this, it eliminates manual tasks, synchronizes inventory, and streamlines order processing.
Let’s look at how Spark Shipping automates order fulfillment to streamline your eCommerce operations:
1. Order placement by a customer
When a customer places an order on your online store, Spark Shipping automatically captures the order details. This includes the:
- Customer’s name.
- Shipping address.
- Product ordered.
- Quantity.
- Shipping preferences.
- Payment confirmation.
Instead of requiring manual intervention to log or process the order, our software instantly processes and prepares this data for fulfillment.
2. Automatic order routing to the right supplier
Once an order is placed, our platform determines which supplier will fulfill it based on your predefined rules. These rules include:
- Selecting a preferred supplier for specific products.
- Choosing the right supplier with the lowest cost.
- Routing orders based on location to ensure faster shipping times.
By automating this process, Spark Shipping ensures your orders are sent to the most efficient supplier.
3. Sending the order to the supplier or third-party logistics (3PL) supplier
After identifying the appropriate supplier or third-party logistics provider, Spark Shipping sends the order details automatically. Depending on the supplier’s technical capabilities, the platform can send orders through various methods, including:
- API Integration: Spark Shipping sends the order in real-time for suppliers that support API connections.
- Electronic data interchange (EDI): If a supplier uses EDI, Spark Shipping converts order data into an EDI format and transmits it.
- CSV, XML, or email: Some suppliers require order data in a specific file format, which our platform generates and emails automatically.
- Direct portal entry: Spark Shipping can enter orders into a supplier’s online portal if needed.
This flexibility ensures you can work seamlessly with multiple suppliers without manual effort.
4. Real-time inventory synchronization
As your orders are processed, our platform updates inventory levels across all your connected sales channels in real-time. This prevents common issues such as overselling out-of-stock products or failing to reorder popular items in time.
The system continuously tracks stock levels and ensures your listings remain accurate on every platform that you sell on.
If an item is running low or becomes unavailable, Spark Shipping can automatically route future orders to an alternative supplier or adjust product availability on your sales channels to prevent further purchases.
5. Order processing and fulfillment by your supplier
Once the supplier receives the order, they begin processing it. This typically involves:
- Retrieving the item from inventory.
- Packaging the product.
- Generating a shipping label.
- Preparing the delivery for dispatch through a carrier.
Since this process is automated, you don’t need to manually track when orders are picked up or shipped. The supplier handles the physical fulfillment while we ensure that the process runs smoothly and that updates are sent back to your store.
6. Automatic tracking updates
Once the supplier ships the order, our platform retrieves the tracking information and updates it across all platforms. Customers automatically receive tracking details, allowing them to monitor their shipments without contacting customer service.
Spark Shipping also updates tracking information within your store’s dashboard and syncs it with marketplaces. This ensures you have complete visibility into the shipping process without requiring manual tracking updates.
7. Order status updates and confirmation
Throughout the shipping process, Spark Shipping continuously updates the order status. The system ensures this information is reflected across all integrated platforms when an order is shipped.
Once the order is delivered, the system updates the final status and can trigger follow-up actions, such as sending delivery confirmation emails or requesting customer reviews.
These automated updates reduce the number of customer inquiries related to order status and improve the overall shopping experience.
8. Handling returns and refunds
If a customer requests a return, Spark Shipping facilitates the process by routing the request to the appropriate supplier.
Depending on your supplier’s return policy, the system can automate refund approvals, generate shipping labels, and track return shipments.
If the supplier accepts returns, we ensure the process runs smoothly by updating the return status and refunding the customer according to store policies.
9. Reporting and analytics
Our platform provides advanced real-time insights into fulfillment performance, allowing you to monitor your:
- Order processing speed.
- Supplier efficiency.
- Delivery times.
- Shipping costs.
The platform generates detailed reports on inventory management and fulfillment strategy, identifies potential bottlenecks, and reduces unnecessary expenses.
Streamline the Order Fulfillment Process With Spark Shipping
Manual order fulfillment is time-consuming, error-prone, and challenging to scale. However, with automated fulfillment, you provide a better customer experience and save significantly on costs.
The key to automating this aspect of your dropshipping business is choosing the right platform, and that’s where we come in. Spark Shipping’s advanced automation capabilities and intelligent routing help modern eCommerce retailers scale efficiently across multiple platforms.
See the Spark Shipping difference firsthand by signing up for a no-hassle demo today.