The in-house order fulfillment model is the process where the business uses its employees to handle the fulfillment procedures. So, no matter it is shipping or storing the products, it is the employees who take care of all the steps of the fulfillment process.

This order fulfillment type is best for established companies requiring end-to-end control over the whole operation. At times, home-based startups use in-house fulfillment to save money. Nevertheless, as the initial space enlarges, they move on to hybrid or outsourced fulfillment models.

Drop shipping is just like outsourcing, except for the fact that there isn’t an inventory to take care of. The retailer doesn’t have the items in stock. Rather, when a customer places an order, the retailer gets it from a third-party supplier. The supplier can be a company or manufacturer that has the product with them and sells them to drop shippers.

It is the job of the supplier to handle all orders and ship them to the customers placing the order. So, you are just billed for the item you sell. This is common for startup retailers and few e-commerce stores.

When storing, ordering, refund processing, and shipping are managed by third-party logistics, it is called outsourced order fulfillment. The companies that do not have enough storage space or people to handle the process can opt for this option. Hence, third-party employees handle the fulfillment process. The inventories are stored in the warehouse that is controlled by 3PL. So, when a company invests in outsourced fulfillment, it doesn’t have to worry about warehouse facilities.

Any company using the combination of all the order fulfillment options given above is using the hybrid fulfillment model. For example, a company can process a few orders in-house like customized items that have to be assembled before shipping but using dropping services for all non-customized items. Many companies choose to drop-ship items that cannot be stored in-house or are purchased frequently. Hence, it is best for companies that require more flexibility.

The order fulfillment team needs the inventory in-hand to start fulfilling the orders. Receiving orders refers to accepting and storing the incoming inventory at the fulfillment center. Every order fulfillment team has its process to receive and store inventory. This helps in keeping things organized so that the order can start shipping sooner. As soon as the fulfillment center receives the inventory, the fulfillment center stores the item in the warehouse.

Picking is the start of the order fulfillment process. When a certain order is pushed to the order fulfillment center, it gets assigned to the picking team. Thereafter, they get a packing slip stating the items, quantities, and storage location at a facility for collecting the items from the respective locations.

After picking the order, the next step is to pack it. If you are outsourcing, the fulfillment centers might charge for the packing materials. While packing, the fulfillment centers pack materials that protect the products and add minimal weight. The materials that they use for packing are bubble mailers, boxes, bubble wrap, air fills, packing tape, etc.