An online grocery store’s success is tied directly to how quickly and efficiently it can ship orders to customers. Setting up an effective grocery order fulfillment process can be the difference between turning profits or facing losses.
In this article, we will learn how to prioritize fulfillment as a critical aspect of your online grocery strategy.
What is order fulfillment?
Order fulfillment is an umbrella term for all the activities involved in ensuring that purchased products are delivered to customers. This chain of processes begins before orders are placed and ends when the products have reached their destination.
The 5 stages of order fulfillment are as follows:
1. Receiving
Online fulfillment begins even before customers complete a purchase. The receiving stage refers to accepting and storing inventory in a fulfillment center, such as a warehouse.
During this stage, grocery stores receive and organize fresh produce, frozen meats, processed foods, and other perishable items.
2. Picking
After a customer places an order, the picking stage of grocery fulfillment commences. The items in the customer’s order are selected from the inventory stored at the fulfillment center.
The warehouse or store picking team will pull the products from storage after receiving a packing slip containing the order details.
3. Packing
The third stage of grocery ecommerce fulfillment is packing the products. The aim is to protect the goods during delivery and ensure the customer doesn’t receive damaged items.
For example, a grocery store could include extra foam wrapping around egg cartons or thermally sealed packaging for ice cream.
4. Invoicing
Once the order is packed and ready for shipment, the invoicing system generates a formal invoice. This invoice includes a detailed breakdown of each item, its price, the total amount, taxes, and shipping costs.
The invoice is sent to the customer via email or through their online account. It may also be included in the shipment if a physical copy is preferred or required.
5. Shipping
Once the order is packed, a shipping label is created, and it is ready for delivery. Whether your grocery store uses a third-party logistics (3PL) partner or makes in-house deliveries, having the correct information on the shipping label is essential.
6. Returns
If the customer is unsatisfied with their goods, the final step of order fulfillment is activated. You must collect the items and provide a replacement if needed.
For example, a customer may have received a different product brand than what was indicated in their order. The store must coordinate the pickup of the wrong item and delivery of the correct one.
Models of order fulfillment in online grocery
Grocery order fulfillment is a multi-stage process that involves many aspects and departments of your online store. Because of its complexity, retailers use different ways to handle the process.
Let’s look at the four most popular online grocery fulfillment models:
Site-to-store
Another name for this method is Buy Online, Pickup In-Store (BOPIS). It involves customers placing orders through an ecommerce website or app and completing the payment. The ordered items are picked and packaged in preparation for customer pickup.
Customers can simply collect their grocery orders from the curb or a designated area in the store.
Direct delivery
Data from McKinsey shows that customers’ demand for delivery over other methods has increased with each passing year. The convenience of receiving items at home without visiting a store is what draws many consumers to online grocery.
Store owners can hire delivery executives or partner with a 3PL company to ensure timely deliveries.
3rd party delivery services
Not all grocery stores can provide direct delivery. These businesses can explore other options, such as third-party delivery services that service the local areas.
It’s worth evaluating the pros and cons of such an approach to grocery order fulfillment. A 2021 study found that nearly 60% of grocery store owners weren’t making a profit when using third-party delivery partnerships.
Micro-fulfillment centers
Micro-fulfillment centers can fortify your distribution network and streamline fulfillment. They are typically attached to an existing physical retail location and serve as a hub for gathering localized data. They also refine last-mile delivery and expand the customer base.
Making online grocery order fulfillment profitable for your store
The wrong fulfillment approach can cost your store and make your online grocery business unsustainable. The fact is that fulfilling orders is undoubtedly more expensive for the store than when customers shop in a physical location.
Online grocery delivery is more costly, so owners must optimize their fulfillment processes to ensure profitability. Here are five practices all grocery store owners should adopt to ensure the order fulfillment process turns profits:
1. Deliver an omnichannel experience
A seamless shopping experience that spans multiple channels makes your store more accessible, encouraging customers to shop there more often. It also prompts shoppers to participate in omnichannel fulfillment methods, like BOPIS, which is the most profitable.
2. Prioritize the right products
It is important to monitor market trends and customer preferences as they evolve. You will know which products are high-demand and low-competition. Stocking up on these items drives revenue, as you can easily fulfill many online grocery orders.
3. Accurately forecast demand
Forecasting demand is vital for profitability. For example, cookies and baked goods might fly off shelves during the festive season. Liquor bottles are more in demand over the weekend. You can drive sales by running promotions based on demand.
4. Adopt localized delivery models
Speedy delivery is becoming increasingly important in the online grocery arena, and customers expect deliveries within the hour. This requires a localized delivery model, a network of micro-fulfillment centers, support for local sellers, and a defined coverage area.
5. Reduce costs with automation
Many tasks in the grocery order fulfillment process can be automated, like picking, packing, and preparing orders for delivery.
Delivery orchestration is another area that reduces costs through automation. Driver apps can optimize delivery by finding the best routes and automated scheduling. Picker apps streamline order picking through task prioritization based on order urgency, order location, and driver availability.
You can also save costs on handling customer queries by implementing artificial intelligence (AI) capable chatbots.
Despite the many challenges of online grocery fulfillment, it’s possible to deliver a superior customer experience. It will help your store stand out in the crowded grocery ecommerce arena!
