Fulfilment is a fundamental part of e-commerce, and doing it efficiently has important implications across metrics ranging from operational costs to customer satisfaction.

But with the process encompassing factors as diverse as order processing, demand forecasting, warehouse layout, and returns management, there are plenty of places that inefficiencies can creep in.

So, whether you’re just getting started or are considering if there’s room for improvement, check out these five ideas on making fulfilment operations more efficient.

When striving for efficiency, staying on top of your inventory is essential. It’s the bedrock of the operation, and it’s not just about understanding what stock you currently have, what’s coming in and what’s going out. It’s also knowing where everything is, whether that’s along the supply chain or in the warehouse.

Get it right, and you can have better control over stock levels, costs, and the ability to meet customer expectations. Get it wrong and you raise the risk of mistakes and missed sales opportunities.

There’s a lot to factor in with inventory management but a good place to start is in ensuring you understand your par levels, which are the minimum viable amounts of stock you should hold. Making sure you don’t dip below these levels avoids items becoming out of stock, while also helping to minimise excess inventory.¹

One method of doing this is to take the usage per week + safety stock, and divide that by the number of replenishment deliveries per week. But you should also factor in other elements such as expiry dates (if appropriate) and seasonal sales trends too.

You could also conduct an ABC analysis of your stock. This divides it into how valuable each of the products are to your business – with A being the most valuable and C being the least – and allows you to prioritise and tailor strategies such as resource allocation, pricing and inventory control more effectively.²

And then, using a good inventory management software system to tie everything together could certainly boost efficiency. How to find the right one? While requirements will vary by business, some common essentials include scalability, ease of integration with other systems, and the ability to provide real-time stock updates.³

Automating your fulfilment processes increases speed and minimises mistakes from human error. It’s also a great way to grow in scale, with automation meaning you can handle a lot more than would be possible using manual processes. On top of that, it can also reduce costs and make managing inventory much easier.

On average, 23% of e-commerce orders are sent out incorrectly,⁴ so it’s worth thinking about where in the process you can automate. This could start right at the beginning in the order processing stage, where software can integrate with the online store to automatically verify and process orders as they are placed, as well as update the order status and notify customers.⁵ If you are taking lots of orders, this can speed up the process dramatically.

Similarly, automating shipping processes later on can improve accuracy and save huge amounts of time. In fact, it’s claimed that the right software can cut up to 80% of your team’s time by automating tasks such label generation and address validation.⁶

Returns are an unavoidable part of e-commerce, with the average return rate running at 20-30%.⁷ That means that getting those goods back and available for resale and reshipment is a crucial part of an efficient fulfilment operation.

The smoother and more streamlined you can make returns, the better it is for your customers and your business. A clear policy is a great start, as is making the process as easy as possible. Providing ready to use returns labels and commercial invoices (if necessary), along with enabling customers to drop parcels off at retail points or lockers, are good ways to do this.

On the operations side, using software can help make the process more efficient, while you could also consider how you manage the goods when they come back into your warehouse. Ways to boost efficiency there include having a dedicated area to receive returns, investing in technology such as RFID scanners and warehouse management software, and paying close attention to quality control to ensure unsuitable stock doesn’t make its way back on sale.⁸

Data provides powerful insights that can help boost efficiency in your fulfilment operations. Used correctly, it could help show where improvements can be made, improve stock controls, and reduce the rate of returns.

There are many areas that data analysis could prove to be fruitful. So first decide which key performance indicators (KPIs) you’re going to track. These can include order processing time, accuracy, cost per order and on-time delivery, among others.⁹ Understanding more about performance in these areas can help you identify where improvements could be made.

You can also track useful KPIs in your returns operations. Metrics such as processing time, reasons for return and which products have the highest return rates can help drive efficiencies by identifying problems and reducing the amount of returns overall.¹⁰

And historical and real-time sales data can also be used to better forecast demand, helping you to avoid both running out of key items and becoming inefficient by stocking too many of them.¹¹

One other way to improve efficiency is to scrutinise the way you pick orders and aim for improvements that could make it quicker. The faster you pick orders, the more you can get through and the quicker they get to the packing department – meaning more orders can be ready for shipping sooner.¹²

Consider your warehouse layout. This is essential to the efficiency of your picking, and it should be designed in a way that priorities efficient movement and logical stocking – for example putting high volume items closer to the packing area.¹³

You could also assess picking strategies to see if yours could be improved. There are a number to consider, including single-order picking, batch picking (selecting for several orders at a time) and zone picking, where pickers work in assigned warehouse zones and pass orders along to other workers to complete them where necessary.¹⁴

Different strategies work best for different businesses – getting the right one for yours is the key to success.