TRƯỜNG ĐẠI HỌC KINH TẾ ĐÀ NẴNG

KHOA THƯƠNG MẠI ĐIỆN TỬ

--------

HỌC PHẦN: KINH DOANH ĐIỆN TỬ

ORDER FULFILLMENT IN E-COMMERCE: STRATEGIES FOR EFFICIENT

DELIVERY AND CUSTOMER SATISFACTION

GVHD : ThS. Lê Diên Tuấn

Lớp: : 48K22.1
Nhóm: :7
Thành viên nhóm : Lê Nguyên Hân
Phạm Hoàng Mẫn
Lương Thanh Trà My

Đà Nẵng
OUTLINE
Abstract
The main objective of the study is to understand and examine the process of order
fulfillment in the e-commerce sector of businesses in the Vietnamese market. In addition,
the study also seeks to understand the knowledge about order fulfillment and describe
case studies of the order fulfillment process of businesses not only in Vietnam but also
around the world. From there, lessons can be drawn, analyzed, and proposed effective
strategies for building efficient order fulfillment processes to improve customer
satisfaction. In addition, the study also investigates the behavior of Vietnamese consumers
expressing their attitudes and opinions in online shopping experiences, particularly in the
stage when consumers receive goods from online shopping transactions.

In the study, the theoretical part includes many significant theories and concepts. There
are three main themes in this section, and from there, the main concepts and theories are
identified. Theoretical sources from books, scientific articles, and articles on specific
academic websites are used to reference these theories and concepts.

The results of the study show some important theoretical and experimental findings to
gain a deep insight into the overall e-commerce situation and the operations of the two
main stages in completing orders, specifically in the Vietnamese market. The customer's
perspective is also considered to evaluate how to implement the order completion process
and propose more effective process improvements.

Key words: Order Fulfillment, Electronic Commerce, Customer Satisfaction,

 1. Introduction (Hân)
1.1. Overview of the Study:
In recent years, E-commerce has become a leading and rapidly growing
field worldwide. Along with the continuous development of technology and the outbreak
of the COVID-19 pandemic, when people have to practice social distancing and cannot
shop directly at stores, this has created a major change in customer shopping behavior.
Instead of going to traditional stores, consumers have shifted to online shopping and E-
commerce has become their top choice. Moreover, E-commerce also brings many
conveniences and flexibility to customers, opens up many business opportunities for
enterprises, helps businesses reach many potential customers without being limited by
space and time.

But with great opportunities come great challenges, and E-commerce is no exception. One
of the most critical challenges is Order Fulfillment, which is crucial for businesses to
maintain their edge in the fiercely competitive online market. To succeed, businesses
must develop an efficient and flexible Order Fulfillment process that helps them gain
competitive advantages over other competitors

Nowadays, businesses are coping with these questions: How can we effectively manage a
large volume of orders? How can we optimize inventory while minimizing costs? And
how can we ensure that our products reach customers quickly and efficiently, without
compromising on quality? In today's fast-paced and ever-evolving market, the answers to
these questions are more important than ever. Businesses that can effectively address
these challenges will be well-positioned to succeed in the dynamic world of e-commerce.

Therefore, in this report, we have decided to choose the topic "Order Fulfillment in E-
commerce: Strategies for Efficient Delivery and Customer Satisfaction" to conduct further
in-depth research.

1.2. Study ‘s Subjects and Objectives

In this report, we will take a deep dive into the order fulfillment process in the e-
commerce industry in Vietnam.
The Vietnamese e-commerce market has seen tremendous growth in recent years
and is projected to be among the top 10 countries with the highest growth rate in e-
commerce worldwide by 2023. According to data from the E-commerce and Digital
Economy Agency, domestic trade has made a significant breakthrough through e-
commerce, reaching $20.5 billion, with an annual growth rate of approximately 25%,
which accounts for 8% of the total revenue of goods and consumer services in the
country. The potential of this market is immense, and as a business owner or marketer, it
is crucial to stay informed and up-to-date on the latest trends and strategies.
One of the most critical components of the e-commerce process is the order fulfillment
process. As technology and the internet continue to advance rapidly, online shopping is
becoming increasingly popular, and customers are expecting more from businesses when
it comes to the quality of delivery. Customers want their purchased goods to be packaged
with care, delivered quickly and efficiently, and presented in an aesthetically pleasing
manner. This is where the order fulfillment process comes in. By understanding and
implementing effective order fulfillment strategies, businesses can meet and exceed the
expectations of their customers, and gain a competitive advantage in this dynamic market.
In conclusion, this report aims to provide valuable insights and proposals for businesses
operating in the Vietnamese e-commerce market. By understanding the potential of this
market and the importance of the order fulfillment process, businesses can stay ahead of
the curve and provide exceptional customer experiences.
By conducting a comprehensive analysis of the aforementioned factors, our aim is to
comprehend the order fulfillment process within the Vietnamese e-commerce industry.
With the insights gained, we can then devise effective strategies to optimize and simplify
the order fulfillment process, ultimately leading to heightened customer satisfaction.

1.3. Research Questions

Based on the topic, there are three questions formed to find answers to review the
situations of an issue with details.
 Research Question 1: What are the key strategies for efficient order fulfillment in
e-commerce?
 Research Question 2: How can e-commerce businesses enhance customer
satisfaction through effective order fulfillment?
 Research Question 3: What are the challenges and obstacles in achieving efficient
order fulfillment in e-commerce?

2. Literature Review
In the E-Commerce industry, order fulfillment plays a fundamental roles in their
prosperity and continued success. It serves as a cornerstone in the industry, representing a
critical function that can make or break a business's reputation and influence its position
in the market. Efficient delivery, in particular, is a key component of the order fulfillment
process, as it ensures that goods reach customers in a timely and reliable manner, which
can have a profound impact on customer satisfaction. In turn, positive experiences can
significantly impact customer loyalty, making them more likely to return for repeat
purchases in the future. This clearly indicates the direct correlation between the efficiency
of the order fulfillment process and the overall success of the e-commerce business.
Therefore, it is imperative for businesses to prioritize efficient order fulfillment if they
want to remain competitive in the market and achieve long-term success.
Numerous studies have looked into how e-commerce businesses handle orders,
providing valuable insights into new developments and challenges in this area. By
understanding these studies, businesses can improve their order-handling processes and
achieve greater success. After all, the efficiency of the order fulfillment process is directly
related to the overall success of an e-commerce business. Thus, promoting efficient
delivery and ensuring customer satisfaction is crucial for long-term prosperity.

In their publication titled "Order Fulfillment: The Hidden Key to e-Commerce

Success," Fred R. Ricker and Ravi Kalakota delve into the crucial role of order fulfillment
in the success of e-commerce ventures. The authors posit that effective fulfillment
strategies are of equal importance as having the right product, price, and place. The
publication covers various topics, including the e-supply chain, factors that contribute to
the success of e-commerce, e-fulfillment opportunities, consumer-direct fulfillment
logistics, and e-commerce fulfillment strategies. The authors employed historical analysis,
case studies, and industry observations as research methods, possibly incorporating
companies such as Amazon and Peapod. The paper concludes that innovative products
and efficient order fulfillment are both critical factors for e-commerce success. The
authors suggest several strategies to enhance e-commerce order fulfillment, including
competitive environment analysis, choosing the appropriate fulfillment strategy, business
process synchronization, and integrated application process design, all aimed at
improving efficiency and customer satisfaction.

Thong Dang's research on E-commerce and Order Fulfillment Operations in the

Vietnamese market highlights the increasing trend of online shopping among consumers
who are willing to spend significantly on virtual products. The study assesses the current
status of inventory management and last-mile delivery in the Vietnamese market, with an
aim to comprehend Vietnamese consumers' attitudes and opinions towards their e-
commerce experiences. The research questions primarily focus on the characteristics of
the Vietnamese e-commerce market, the process of order fulfillment, and the level of
customer satisfaction in the Vietnamese market. The study is limited to aspects such as
the order fulfillment process, inventory management, last-mile delivery in e-commerce,
evaluation of customer satisfaction from feedback and comments, focusing on B2C and
end customers, and only referring to physical goods. The study concludes that there is a
strict demand for on-time delivery, process tracking, employee attitude, and return
policies in the Vietnamese market. E-commerce companies such as Tiki, Lazada, and
Sendo have received favorable feedback for their delivery services. However, to cater to
changing customer needs, more comprehensive and customer-focused service solutions
are required.

In 2023, Pragyan Nanda and Srikanta Patnaik identified significant constraints

associated with an e-commerce fulfillment system, such as fulfillment cost, lead time for
fulfillment, and customer review scores, in their study "A multi-agent coalition-based
approach for order fulfillment in e-commerce." The researchers noted the intricate
relationship between lead time in order fulfillment and review rating scores, highlighting
the impact of timely delivery on customer satisfaction. Literature has proposed various
strategies to optimize the order fulfillment process, among which, the flexible execution
of order fulfillment is one. This strategy involves identifying the optimal set of sellers
based on factors such as fulfillment cost, execution time, and review scores from prior
orders. These reliable sellers constitute a Pareto-optimal set that can ensure productivity
and quality in the order fulfillment process while promising cost savings. Furthermore,
recent works have suggested the use of a multi-agent coalition-based framework for
generating the optimal set of sellers. This approach is based on data-driven analysis and
mathematical modeling, allowing for more precise and efficient order fulfillment. In
summary, literature on order fulfillment in e-commerce emphasizes the significance of
strategic planning and the use of modern, data-driven methods to improve the efficiency
of delivery and customer satisfaction.

3. E-Commerce Backgrounds
4.1. Definition & Types of EC (B2B, B2C)
4.1.1. Definition
 Electronic commerce (EC) refers to using the Internet and other networks
(e.g., intranets) to purchase, sell, transport, or trade data, goods, or services
(Turban, 2018)
 There are no correct ways to categorize EC business model. A common
classification of EC is by the type of the transactions and the transacting
members.
Categories of transactions in E-Commerce (Turban et al, 2018)

However, in this report, we will only focus on studying the two most popular EC
business models in the Vietnamese market: B2B and B2C.

4.1.2. B2B and B2C business model:

a. Business-to-Consumer (B2C): This is the most common type of e-commerce,
where businesses sell products and services directly to individual consumers.
Examples include online retailers such as Amazon, eBay, and AliExpress.
 Characteristics of the B2C business model:
 Target customers are mainly end-consumers, people who buy products or services
for personal use or for their families.
 Transaction scale: B2C transactions are usually smaller in scale than B2B
transactions. The average value of a B2C order is also lower than B2B.
 Interaction level: The interaction level between businesses and customers in the
B2C model is higher than in B2B. Businesses need to focus on building their
brand, promoting their products, and providing good customer service to attract
and retain customers.
 Shipping: Businesses need an efficient shipping system to deliver products to their
customers.
b. Business-to-Business (B2B): This type of e-commerce involves businesses selling
products and services to other businesses. Examples include online markets for
wholesale goods, industrial supplies, and electronic components.
 Characteristics of the B2B business model:
 Customers: B2B customers are usually companies and organizations, rather than
end-consumers.Scale: B2B transactions are usually larger in scale than B2C
transactions. Orders often have higher value and may be related to long-term
contracts.
 Partnership relationships: B2B transactions often involve establishing strategic
partnership relationships between businesses.
 Professionalism: Businesses must demonstrate a high level of professionalism in
B2B transactions. The parties involved often require more detailed information
about products/services, production processes, product quality, and standards.
 Distribution: Products/services in the B2B model are usually distributed through
various distribution channels, including direct distribution from manufacturers to
customers or through distributors and agents.

4.2. Growth and Importance of EC (nói chung về tình hình phát triển và tầm
quan trọng của EC ở thị trường VN và trên thế giới/ ngắn gọn thui nha, không cần
dài đâu nhưng phải có nói về tình hình B2C. Lấy số liệu và hình ảnh minh hoạ
trong phần link tham khảo gắn bên dưới ) Có chi viết lại tiêu đề 2 mục giúp t lun
chớ t ghi tắt nên z thui á
4.2.1. On the World
 E-commerce is continuously developing worldwide. Every day, new e-
commerce markets are emerging while existing ones are achieving new
milestones.
 By 2023, there will be 2.64 billion online shoppers worldwide, accounting
for over 33% of the global population. The total global retail e-commerce
sales are $6.310 trillion.
 There are currently more than 26 million e-commerce websites and stores
worldwide.
 The three largest e-commerce economies are China, the United States, and
the United Kingdom. China is the world's largest e-commerce market, led
 by Alibaba Group's e-commerce subsidiaries - Taobao, Alibaba.com, and
Tmall. With an annual growth rate of 21%, China is also one of the fastest-
growing e-commerce markets. The United States is currently the second-
largest e-commerce market. Led by e-commerce giants Amazon and eBay,
the US sees healthy e-commerce growth in all sectors and is mostly a hub
for e-commerce trends. After China and the US, the third-largest e-
commerce market is the United Kingdom, with a 4.8% share of the retail e-
commerce market. Following the UK are Japan (3%) and South Korea
(2.5%).

4.2.2. In Viet Nam

https://vneconomy.vn/revenue-at-top-5-e-commerce-platforms-in-vietnam-up-53-
4-in-2023.htm
https://dangcongsan.vn/kinh-te/thuong-mai-dien-tu-viet-nam-tang-truong-vuot-
bac-653996.html
 Vietnam's internet economy is booming due to the rapid development of the
internet and smartphones. Information released at the Vietnam-Asia DX
Summit 2022 revealed that Vietnam's internet economy reached $21 billion
in 2021, accounting for 5% of the country's GDP and is projected to reach
$43 billion in 2025. According to Statista, the market and consumer data
provider, Vietnam has around 69 million smartphone users as of 2022, with
a penetration rate of 71% and is expected to have around 82 million users
by 2025. The high penetration of internet and smartphone users encourages
and supports the strong development of e-commerce.
 A comprehensive report on Vietnam's online retail market in 2023 and
forecast for 2024 by Metric shows that the revenue of the country's top 5 e-
commerce platforms - Shopee, Lazada, Tiki, TikTok Shop, and Sendo -
reached VND 232.13 trillion ($9.52 billion), marking a 53.4% increase from
2022.
 E-commerce in 2022 continues to be a bright spot in digital economic
development with a high growth rate (19.7%) and retail e-commerce (B2C)
sales reaching $16.4 billion, accounting for 7.5% of the country's total retail
goods and consumer services revenue.
  According to the comprehensive report on Vietnam's online retail market in
2023 and forecast for 2024 by Metric, Vietnam has the highest online
shopping growth rate in Southeast Asia.
 This shows that e-commerce is increasingly becoming an important
component of Vietnam's digital economy. Vietnam's e-commerce not only
develops rapidly and strongly but also sustainably. Along with that,
Vietnam's e-commerce market has also formed a system of secondary
service supply for the market, including e-commerce transaction support
technology platforms, marketing services, online marketing
communications, delivery services... The connection and sharing of these
service supply systems are increasingly helping to optimize the link
between manufacturers and consumers.
 The main driving force for this strong growth includes progressive
government policies, an increasingly middle-income class, and a rapidly
developing internet economy.

4. Order Fulfillment Backgrounds ( Mẫn)

https://www.sendfromchina.com/NewsCenter/order-fulfillment-key-to-customer-
satisfaction.html#2._Why_E-
commerce_Order_Fulfillment_Matters_for_Customer_Satisfaction
https://www.shopify.com/blog/order-fulfillment
5.1. Definition of Order Fulfillment
According to Efraim Turban (2018), Order fulfillment is the process of receiving,
processing, and delivering an order to the customer. It includes activities such as receiving
the order, picking the items from inventory, packing the order, and shipping it to the
customer
The main objective of order fulfillment is to ensure that products are delivered to
customers accurately and in a timely manner, while keeping errors and costs to a
minimum. While this process can be done manually, most retailers prefer to use order
fulfillment software or third-party logistics (3PL) services such as FedEx, Boxme, or
GHN to automate and streamline the process.
Order fulfillment can take place in different areas, depending on the size and nature of the
business. For larger businesses, it typically happens in a warehouse and distribution
center, where workers pick and package products for shipping. On the other hand, brick
and mortar stores with online shops may choose to fulfill orders from their physical stores
or through a 3PL.

5.2. Order Fulfillment Process

In his book published in 2018, Turban showed us a typical EC fulfillment process and
elements. The process starts on the left, when an order is received, and after the order is
verified to be real, several activities take place, some of which can be done
simultaneously; others must be done in sequence.
These activities include the following steps:

1. Customer places an order and pays for it

2. Payment verification by the seller if needed
3. Check for in-stock availability. Notify buyer if and when available
4. Determine whether inventory should be replenished (and whether additional production
is required)
5. Locate the warehouse where each order can be handled. Transmit the order to a
warehouse (or fulfillment center)
6. Pick and pack order for shipment
7. Dispatch fulfilled orders to customer
8. Customer receives the goods
9. Sellers manage returns if needed

5.2.1. Process of Order Fulfillment in VN

In Vietnam, both e-commerce companies and traditional retailers are placing more
emphasis on establishing and standardizing their order fulfillment process. This is in
response to the growing demands of consumers for speedy, accurate, and optimal delivery
experiences. Additionally, the use of multimodal logistics services, smart warehousing,
and modern technological solutions are also notable trends in the order fulfillment process
in the Vietnamese market. Below is an outline of the order fulfillment process commonly
used by businesses in Vietnam.
 Step 1: Receiving
In order for a brand to start fulfilling orders, it needs to have inventory in stock.
This inventory is usually kept at a fulfillment center. If the brand is self-fulfilling,
it will be responsible for receiving and storing inventory from the supplier or
 manufacturer. However, if they are using third-party logistics (3PL) services, then
the 3PL providers will be responsible for receiving and storing the inventory.
These providers usually have their own processes for receiving and storing goods,
which involve receiving documentation from the seller. Once the inventory is
transported to the storage location, the goods are counted and inspected for quality.
Then, they are stored in designated locations such as shelves, bins, or pallets.

 Step 2: Inventory Management

Organizing inventory by category on the shelves is the second step to support the
goal of quick order fulfillment. The focus should be on creating a scientific SKU
(Stock Keeping Unit) system, which will provide a foundation for easier sorting,
picking, and packing.
It's similar to how goods are organized in a traditional retail store - if the inventory
is scientifically arranged, it's easy to see and quickly locate the specific product a
customer is requesting. On the other hand, if a lot of time is spent searching for
items during the picking stage, it can negatively impact the customer's decision to
purchase from that seller again in the future.

 Step 3: Order Picking

When orders are placed on an online platform, it's crucial to ensure the inventory
management system is quickly updated so that accurate order picking can be
carried out in an optimized timeframe. Some Fulfillment service providers utilize
robots for both picking and packing to ensure error-free and fast execution.

 Step 4: Packaging and Labeling

Safe and secure packaging is a major factor in determining customer satisfaction,
second only to delivery time. Proper box selection and sufficient protective
wrapping are mandatory at this stage. If you are handling the order fulfillment
process yourself, you must ensure you always have an adequate supply of all
required packaging materials such as bubble wrap, correctly sized cardboard boxes,
air cushions, tape, etc. This step directly impacts the customer's returns process.
 Step 5: Shipping
One of the most important step in this process is delivering the package to the
customer through a courier. This step is crucial because it is the point where the
customer receives the product. Any delay or damage can lead to a negative
customer experience, reducing satisfaction and resulting in lost business. Studies
indicate that stores offering a broader range of shipping carriers tend to have higher
conversion rates than those using only one shipping provider.

 Step 6: Processing Returns

Handling customer returns is an important aspect of e-commerce businesses.
Although returns are not desirable, brands need to have a plan in place to handle
them smoothly. The returned products can be brought back as inventory or
disposed of if they are damaged. To handle returns efficiently, businesses need to
decide if they will allow in-store returns or require returns to be made through the
shipping carrier. They also need to establish an appropriate returns policy, such as
7 days or 2 weeks, and determine if they can absorb the shipping costs for returns.
Order fulfillment should not be considered complete after successful delivery, but
should be viewed as a process that includes handling returns. A professional order
fulfillment business or department should approach the entire process in this way.

5.2.2. Process of Order Fulfillment in other countries

5.3. Order Fulfillment Method

5.3.1. Merchant fulfillment
  Most effective for: Small e-commerce businesses with low sales revenue.
 Merchant fulfillment occurs when a business completes the order fulfillment
process in-house, also known as in-house fulfillment. It is one of the most
popular options, with nearly 90% of all retail orders having at least one
store involved in the fulfillment process.
 Advantages:
 There are no fulfillment fees, only shipping costs.
 Full control over the unboxing experience as the business will package the
order. (Many third-party companies do not encourage custom packaging.)
 Disadvantages:
 It is a time-consuming task and does not necessarily need to be completed
by skilled workers.
 Shipping costs can become expensive as the third-party supplier discounts
cannot be utilized.
 Human errors are common as businesses may not have warehouse
technology to select and pack customer orders.

5.3.2. Dropshipping
  Most effective for: Entrepreneurs starting a business with a limited budget.
 Dropshipping is a fulfillment model in which the entire process is easily
executed. Businesses can select, package, and ship inventory to customers
without directly touching or seeing the inventory.
 Advantages:
 No budget needed. No need to buy inventory and pay storage fees to keep
items in stock.
 Inventory management is easily done as items are purchased when
customers pay.
 Frees up time to work on other areas of the business, such as marketing.
 Disadvantages:
+ The unboxing experience cannot be controlled.
+ Delivery delays are common as service providers performing dropshipping often
fulfill thousands of orders per day.
+ It is challenging to find good, reliable dropshipping service providers.

5.3.2. Third-party fulfillment

 Most effective for: E-commerce businesses that are growing with increasing
daily sales volume.
 Third-party fulfillment companies, also known as third-party logistics
providers, will handle the entire order fulfillment process for the business.
The service's responsibility is to find inventory in the warehouse, print
packing slips, and ship the item to the customer - all without the business's
involvement.
 Advantages:
 Reduces the workload of the business so they can focus on more strategic
tasks.
 No need to hire seasonal fulfillment workers during busy times.
 Order fulfillment is faster as many companies use automation technology
and warehouse storage to select, package, and ship faster.
 Stores inventory locally by reserving items in the warehouse closest to the
customer.
 Disadvantages:
 Additional costs.
 Many third-party companies do not encourage custom packaging, making it
difficult to customize the unboxing experience.
 Customer service issues.
5.4. Importance of Effective Order Fulfillment
 Affordability: Working with an outsourced order processing service
provider to select, package, and ship orders can reduce a business's shipping
and operating costs.
 Improved customer service: A business must ensure that customer orders
are fulfilled accurately, with the ordered products and within a consistent
time frame. Failure in either of these aspects will lead to poor customer
experience and ultimately have a negative impact on the business.
 Scalability: Having a rational process will save time and allow the business
to focus more on development and expansion, especially if the business
outsourced or automated order fulfillment.

5.5. Role of Order Fulfillment in Customer Satisfaction

 First impression: The fulfillment process is often the first interaction that
customers have with a business. A smooth and hassle-free delivery
experience can create a positive attitude towards the customer relationship.
 Issue with delivery speed: In an age where same-day or next-day delivery is
becoming the norm, completing orders quickly is not just an added value
but also an expectation. Fast delivery times can significantly enhance
customer satisfaction and affect repeat purchases.
 Accuracy builds trust: Fulfilling orders correctly shows that a business is
reliable and pays attention to every detail. Accuracy in order processing and
delivery builds trust and necessary customer loyalty for a long-term
customer relationship.
 Quality of packaging: The way a product is packaged can greatly affect
customers' perception of its value and the company's care for its product.
Well-packaged items arriving in good condition reflect positively on the
brand.
 Return process: A simple and customer-friendly return process can reduce
anxiety when purchasing online. By ensuring an easy return experience, a
business can increase customer trust and loyalty.
 Real-time tracking and communication: Providing the ability to track orders
in real-time and providing clear communication about the delivery status of
customers can enhance transparency and reduce concerns about their orders.
  Personalized experience: Adjusting the fulfillment process, such as
customizing notes, inserts, or packaging, can create a unique unboxing
experience that enhances customer satisfaction and encourages word-of-
mouth marketing.

5.6. Challenges in Order Fulfillment

5.6.1 Inaccurate order information
 For more than a third of businesses, the biggest logistical challenge posed by the
pandemic is the pressure to fulfill more orders, faster, and at lower cost. Therefore,
there must be clear records of the product delivery process and other aspects.
Otherwise, there will be a switch between databases and everything will quickly
become chaotic, causing further confusion for consumers and making their entire
experience negative.
5.6.2 Supply chain issues
 The global supply chain is in chaos. From labor shortages to political instability,
43% of brands are changing their shipping strategies to mitigate the impact of
global transportation delays.
 Customer expectations are increasing in the opposite direction. E-commerce giants
like Amazon have paved the way for same-day or one-day shipping. But when
businesses are dealing with an imbalanced supply chain, they can hardly fulfill that
promise.
 Local warehousing can be very helpful in shortening delivery times that are
already delayed. Just make sure to always be transparent when your business is
unable to fulfill its promise.
5.6.3 Seasonal and events fluctuations
 Certain products will become more popular at specific times of the year.
Inconsistency in shipping volumes makes order fulfillment difficult.
 This is when businesses need to outsource fulfillment. Experienced providers can
meet seasonal demands and often hire temporary labor during peak selling seasons,
minimizing the impact on order fulfillment time.
5.6.4 International shipping
 Thanks to e-commerce, customers can order anything from anywhere. However,
international shipping does not affect customer shipping expectations. Businesses
are responsible for selecting, packaging, and delivering orders to customers as
quickly as possible.
  Local warehousing will help alleviate this issue. By reserving inventory at an
international warehouse closest to the customer and automatically routing orders
there, goods will be cleared through customs.

5. Case study about Order Fulfillment

5.1 Case Study: FBA - Successful Story of Amazon
a. Overview:
Amazon is the largest online retail company in the United States. It started as an online
bookstore, but now has expanded into many other product categories. Amazon has
independent sales websites in various countries, such as the United States, the United
Kingdom, Ireland, France, Canada, Germany, Italy, Spain, the Netherlands, Australia,
Brazil, Japan, China, India, Mexico, and Vietnam (through the Amazon Global Selling
program). Additionally, it is one of the pioneering e-commerce companies that uses
fulfillment services.

According to Stock Analysis data as of January 8, 2024, Amazon has a market

capitalization or net worth of $1.53 trillion, which increased by around 83.09% in just one
year, ranking it as the top e-commerce company in the world. Over the past decade,
Amazon's revenue has generally seen steady growth. Amazon's global revenue comes
from business models such as online stores, physical stores, third-party seller services,
Amazon Web Services, subscription services, and other services.
In reality, the most important factors driving users to shop on the Amazon e-commerce
platform are low prices, low shipping costs, and high-quality customer service. Amazon's
Fulfillment by Amazon (FBA) model has addressed all of these issues, maximizing
customer satisfaction while also meeting the huge order volume.

b. Amazon’s Order Fulfillment Process:

FBA is a service provided by Amazon to help sellers with storage, packaging, and
shipping. By using this program, sellers can reduce their workload and have more
flexibility in their sales activities. They can send their merchandise to Amazon's
Fulfillment Centers (FCs) where the items are stored until they are sold. When a customer
places an order, Amazon's employees prepare, package, and ship the product, provide
customer service, and handle any returns if needed. Amazon's Fulfillment Center network
includes multiple warehouses located worldwide, which allows Amazon to deliver goods
to customers quickly. This business model helps Amazon meet the storage and shipping
needs of sellers while providing customers with a fast and reliable delivery service.

 Step 1: The seller prepares and sends the product to Amazon

After successfully registering for FBA through the Amazon Seller Central account, the
seller can create an Amazon FBA shipment to send the inventory to the fulfillment
centers.

 Step 2: Amazon stores the products

Amazon will be responsible for storing the inventory and packaging the products when
customers place orders. The staff at Amazon's fulfillment centers have 5 basic tasks: open
the packaging and inspect the products brought by the seller; move the products into the
warehouse and record their locations in the system; pick the products from the recorded
locations to assemble individual orders; sort, pack the orders and ship them out when
orders are placed. There is a system that records the location of the products, which maps
out the route for the staff to retrieve the items, communicates with the central computer,
and tracks the delivery progress.

 Step 3: Customers place orders

The products will be listed on the Amazon website along with other sellers' products. If
customers have a need and your products meet their requirements, they will place an order
and make the payment. The customer's order notification will be sent to the seller and
Amazon.
  Step 4: Amazon receives the order and sends a confirmation
When an order is placed at the seller's store, Amazon will directly package and ship the
product to the customer. Meanwhile, the customer will receive an order confirmation
from Amazon. After the order has been processed for shipping, the customer will receive
information about the package and tracking details such as the product, payment, and
shipping progress.

 Step 5: Amazon delivers the order to the customer

After completing the product packaging, Amazon will proceed to deliver the order to the
customer. In the event the customer wants to return the product, Amazon will also handle
this on behalf of the seller. Amazon will advise and assist the customer in resolving any
inquiries.

However, like any other order fulfillment model, Fulfilled By Amazon also has its
advantages and disadvantages.

Advantages Disadvantages

 Utilizing Amazon's customer service  Costs may be higher

 Helps expand the business scale of the  Requires continual inventory
enterprise management
 Effective cost savings  Higher number of returned orders
 Helps the seller have additional storage
space

c. Achievements of Fulfillment by Amazon (FBA) model

Amazon's FBA service has experienced a substantial growth spurt over the years. As of
2022, more than 2 million active sellers worldwide were utilizing FBA, compared to
merely 1 million in 2018. Notably, over 60% of the physical gross merchandise volume
sold on Amazon's marketplace was fulfilled through the FBA program. In terms of
profitability, studies have demonstrated that FBA sellers experience 30-50% higher
profits compared to sellers managing their fulfillment. Furthermore, FBA sellers are
eligible for Amazon's fast shipping options like Prime 1-day and 2-day delivery, which
helps drive higher sales conversions. In 2022, Amazon provided FBA sellers with over
800 million cubic feet of storage space across its fulfillment network. Customers report
higher satisfaction rates for items fulfilled by Amazon, with 80% of FBA orders receiving
a 5-star review compared to 70% for non-FBA orders. In addition, Over 500,000 sellers
exported their products globally through the FBA Export program. It's estimated that over
50% of the total gross merchandise volume on Amazon's marketplace comes from third-
party sellers, many of whom utilize the FBA program.

5.2. Case Study in Viet Nam: 2-Hour Delivery: Tiki's "Key" to Conquering
Vietnam's E-commerce Market?
a. Company Background:
Established in 2010 with the initial goal of building an online English book sales
platform, Tiki has, over the course of 8 years of operation, established itself as one
of the largest e-commerce platforms in Vietnam. Tiki offers over 25 product
categories and 300,000 items listed on its website. With nearly 30 million monthly
visits and over 50,000 orders placed per day, Tiki has grown to become a major
player in Vietnam's e-commerce landscape

b. The story of success behind a Vietnamese startup:

The success of TIKI is highly attributed to the optimization of its logistics operations. The
company has been successful in fulfilling orders and delivering goods by optimizing
warehouse operations and storage capacity.
TIKI's warehouse in Tan Binh district, covering an area of 5000 sq.m., is the company's
most optimized warehouse to date, with a 90% occupancy rate. The products are stored in
an organized manner with the refrigeration and electronics product groups placed near the
exit and separated from other items. The warehouse has at least 80 shelves over 2m tall
arranged in parallel, with just enough space between the shelves for two people to walk
and retrieve items. The goods are stored in different sizes, and different colored markers
are used to distinguish them.
According to the Head of the Warehouse Department at Tiki, the current storage capacity
of the warehouse is around 1.5 million products. If needed, it can be increased to 2.2
million products. Tiki has also built a warehouse management system that optimizes the
order-picking routes without interruptions. The aisles extend up to 36m long, and the
storage shelves are arranged in a completely random and chaotic manner, containing a
wide range of items. As a result, Tiki's staff can pick up more than 5 items within a
minute during peak periods.
The software system is the most important component of Tiki's warehouse management
system. It allows Tiki's staff to arrange the chaotic inventory and creates the most
optimized picking route. Even if a single storage tray contains books, outdoor gear, and
swimming goggles, the system will reorganize them for the most optimized picking route.

c. Developing warehouse management models suitable for the existing services

Currently, Tiki is using 2 main models in its warehouse management operations for two
different Tiki service offerings - the economy shipping and the 2-hour delivery:
 For the economy shipping service, Tiki uses the Tiki On Demand Fulfillment
(ODF) operational model:
o With this model, the goods are stored in the seller's warehouse. When an
order is placed, Tiki will process the order, transport and deliver the goods,
and handle any returned items or exchange/return/warranty requests, but
will not provide storage or inventory management services for the seller.
There are two forms of shipping cooperation: Tiki will pick up the goods
from the seller's warehouse, or the seller will bring the goods to Tiki's
warehouse.
o The order fulfillment process through Tiki's warehouse:
 Step 1: The customer places an order on the tiki.vn website, and a
delivery slip corresponding to the order is created awaiting
confirmation.
 Step 2: The seller confirms the order on the system and prepares the
goods.
 Step 3: Tiki collects the goods from the seller's warehouse or the
seller brings the goods to Tiki's warehouse.
 Step 4: Tiki transports the goods and collects payment from the
customer through Tiki's warehouse.
 Step 5: Tiki settles payment to the seller in the nearest statement
period.
 For the Tiki Now - Delivery within 2 hours model, Tiki uses the Fulfillment by
Tiki (FBT) model:
o In this model, the goods will be consigned by the seller to Tiki's warehouse
before selling. When an order is placed, Tiki will be responsible for storage,
order picking, packaging, and delivery to the customer, as well as receiving
any returned goods from the customer. The seller is only allowed to sell
items that have physical inventory stored in Tiki's warehouse.
o The operation process of the consignment model:
 Step 1: The seller sends the goods to Tiki's warehouse.
 Step 2: After the customer places an order on the website, Tiki
receives and processes the order at their warehouse.
 Step 3: Tiki delivers the goods to the customer: If the delivery is
successful, Tiki will collect the payment. If the delivery is
unsuccessful: Tiki will increase the inventory for further sale or
return the goods and compensate if the goods are damaged.
 Step 4: Tiki completes the order, makes the payment, and issues the
invoice periodically to the seller

d. Outsourcing to a 3rd party delivery service

To enable 2-hour delivery, the traditional delivery model has been changed to a
"point-to-point" model. In this model, the delivery provider will pick up the item
from the location closest to the customer and deliver it directly to them. The
delivery time is reduced by eliminating intermediate steps and transport distances.
To implement this, it is not enough to rely solely on the delivery capabilities of e-
commerce companies, but requires close cooperation with delivery service
providers. In the case of Tiki, the company has partnered with Ninja Van - a
Singaporean company, for the following reasons:
 Ninja Van has over 1,000 drivers, operates in 63 provinces and cities, and offers a
variety of delivery service packages to meet all customer needs.
 Ninja Van uses proprietary technology algorithms to manage and optimize their
system. Their delivery module allows merchants to access a dedicated management
system to perform tasks like placing orders, order management, delivery route
monitoring, and even scheduling their own pickups.
  Ninja Van provides a cash-on-delivery (COD) solution across all 63 provinces
nationwide.
Conclusion:
All of the above has helped Tiki achieve faster delivery times compared to other e-
commerce platforms in the market, with an average 1.5 day nationwide delivery and even
a 2-hour 'express' TikiNow delivery service, along with an enviable return rate of only
0.8%. Tiki's success serves as a model that other e-commerce companies can learn from
and use to upgrade their systems to better meet the diverse needs of customers

6. Strategies for Efficient Order Fulfillment

https://vietful.vn/top-6-phuong-phap-giup-nang-cao-hieu-suat-lay-hang
https://www.brandsvietnam.com/congdong/topic/333289-Toi-uu-quy-trinh-thuc-hien-
don-hang-Order-Fulfillment-thong-qua-7-buoc-don-gian
https://tapchinganhang.gov.vn/kinh-nghiem-trien-khai-mo-hinh-hoan-tat-don-hang-tai-
cac-tap-doan-thuong-mai-dien-tu-da-quoc-gia-khu.htm

a. Optimizing the efficiency of picking in the warehouse

 Applying the Zone Picking Method:
Zone picking involves dividing the warehouse into distinct areas, each of which is
assigned to specific pickers. This method reduces picker travel time and congestion.
According to the Warehouse Education and Research Council (WERC), zone picking can
lead to a 20-50% reduction in travel time compared to traditional methods. By minimizing
unnecessary travel, zone picking improves efficiency and order processing capability.
 Applying Technology:
Using technology such as barcode scanners, order management systems (OMS), and
warehouse management systems (WMS) can significantly improve picking efficiency.
These technologies provide real-time data, reduce manual errors, and allow for faster
order processing.
 Batch and Wave Picking:
Batch picking involves simultaneously picking multiple orders, while wave picking
focuses on separating the picking and sorting processes. These methods leverage the
concept of movement efficiency. A study by the Journal of Manufacturing Systems found
that travel time can be reduced by 30-50% with batch picking. Combining similar orders
and then sorting them last optimizes picker travel and increases efficiency.
 Optimizing Warehouse Layout:
Planning the layout and picking based on location within the warehouse can have a
significant impact on picking efficiency. Grouping frequently picked items near the
packing area and using high-demand storage locations improves picker accessibility and
reduces travel time.
b. Organizing Shipping and Logistics:
This approach can shorten delivery times and save costs effectively. However, we should
also plan for backup transportation strategies in case of unforeseen circumstances or
unexpected carrier price increases.
c. Maximizing the Potential of Information Technology, integrating intelligent
solutions and automation to minimize risks and errors.
Applying advanced scientific technology to the supply chain from inventory management,
transportation, to customer care through the use of artificial intelligence and automation
marketing tools. Through digital applications, goods are delivered quickly and accurately;
timely customer service is provided to answer inquiries, thereby increasing the number of
new and loyal customers.

7. Conclusions ( Hân)
8. References

Trà My: Ecommerce Background:

1. EC Background on the world:
The Largest E-Commerce Markets in the World - business.com
Ecommerce Statistics 2024 - Everything You Need To Know
Global: e-commerce revenue by region 2023 | Statista

2. EC Background in VN:
BÁO CÁO THƯƠNG MẠI ĐIỆN TỬ VIỆT NAM 2023.pdf
Vietnam - eCommerce
Revenue at top 5 e-commerce platforms in Vietnam up 53.4% in 2023
 Thesis Topic: E-commerce and Order Fulfillment Operations towards
customer satisfaction in the Vietnamese market

Mẫn: Order Fulfillment Backgrounds

1. Definition of Order Fulfillment
2. Order Fulfillment Method
3. Importance of Effective Order Fulfillment
4. Challenges in Order Fulfillment
https://www.sendfromchina.com/NewsCenter/order-fulfillment-key-to-customer-
satisfaction.html#2._Why_E-
commerce_Order_Fulfillment_Matters_for_Customer_Satisfaction
https://www.shopify.com/blog/order-fulfillment
5. Role of Order Fulfillment in Customer Satisfaction:

https://www.sendfromchina.com/NewsCenter/order-fulfillment-key-to-customer-
satisfaction.html#2._Why_E-
commerce_Order_Fulfillment_Matters_for_Customer_Satisfaction
uki