At the center of every fulfillment operation — the process
of storing, picking, packing, and shipping products — is
none other than your inventory. While it may be the source
of your revenue, it’s also a source of huge risk for your
online store. It’s your biggest investment — you spend a
bunch on inventory to sell, and the longer it sits on the
shelves, the longer your cash is tied up in it.
Why not just get rid of all that? That’s the essence of
just-in-time (JIT) fulfillment, a model that’s closely
The gist of it is simple: an e-retailer packs and ships an order
to the customer, but doesn’t pick it — they do not store any of
the inventory they’re selling. When a customer makes an order,
the e-retailer instead immediately purchases the product from
their supplier, never before.
No inventory is involved with JIT. A merchant only purchases
product when an order for it is made, which they then fulfill on
their own. And because you’re still shipping the product, you
have a bit of control that yields some positives.
Shipping orders yourself via JIT means no relying on a
third-party — like a logistics provider or dropshipper — that
might put quality control at risk. You or your employees are
shipping the product; you control how an order’s shipped and
don’t need to worry about another service messing it up.
That control gives you the power to brand, something that
fulfillment models like
outsourced fulfillment and
dropshipping don’t guarantee.
Choose to brand your orders as you please with custom-branded
materials — package the order in logo-emblazoned boxes or add
thank you notes to shipments. It’s all in your power.
As a growing amount of consumers head online to buy, returns are
becoming a bigger and bigger pain point for e-retailers. Control
over shipping reduces many of the complications related to
If you were working with an
outsourced fulfillment model — a
model that involves paying a third party to store and ship
orders — an unwanted product would be sent back to them instead
of you since they’re the ones storing and shipping the product,
complicating the returns process.
As an e-retailer, direct communication with the customer is
ideal, and JIT offers it. Feedback on returns is crucial to
judging your operation; learning about why the return occurred
provides you with valuable insight on what went wrong in your
Perhaps the consumer misunderstood one of your product
descriptions. Or maybe a single digit in their address was
incorrect and the shipping carrier misdelivered it. Either way,
it’s an opportunity to improve that may have fallen through the
cracks if a third party existed between you and the customer.
Another major perk to JIT is product experimentation. Purchasing
and storing inventory is a big investment — you’re buying up
product, betting that you’ll be able to sell it eventually for
more money. With JIT, you don’t need to worry about that.
Because you’re purchasing product only when an order is made,
your inventory is non-existent, making it much easier to test
new products from other suppliers. It’s only a matter of adding
them to your catalog, marketing them, and seeing if they perform
There’s a reason JIT isn’t too common, though. It’s operational
overload. A fulfillment workflow that works like clockwork is
ideal, but it’s difficult to achieve through JIT because buying
product becomes yet another step in the fulfillment process
that’s extremely reliant on your suppliers.
Lack of Control
Your relationship with suppliers is important in any fulfillment
model, but it’s critical with JIT. When it comes to your
product, it’s just-in-time, not in advance. The assumption here
is that your vendors are available upon demand — they’ll always
have a supply of products to meet your demand in a reliable
time. You’re relying entirely upon them to quickly sell and ship
you the product that you’ll then send to the customer.
And because you’re waiting to receive product before you can
actually ship it to customers, delivery time — a factor that’s
hugely influential on a consumer’s decision to purchase — tends
to be longer. That can become a major deterrent to making online
sales, and it’s caused by your reliance on the supplier.
To make matters worse, suppliers are most likely selling product
to other businesses that might be purchasing larger quantities
of product at a time. That potentially threatens your access to
product when you’re in need of it, and the supplier definitely
cares far more about their business than yours.
All of this goes to show that your supply-side relationship is
important. You must find a supplier that fits your needs. Here
are some questions to keep in mind as you pick them:
Are there multiple ways to reach this vendor? Are they
communicative and easy to contact?
Does this vendor ship orders quickly and reliably? Can I
count on them to deliver on time?
Are they transparent with their product volume, so I can
prepare for them being unable to meet my demand?
Is a Service Level Agreement (contract of service
expectations between two parties) negotiable?
Vetting suppliers also means giving their websites, pricing,
reviews, even their facilities a look if possiblep.
The JIT fulfillment model is straightforward enough, but its key
difference from other models is the fact that product is
purchased later in the process, not at the start. Here’s how it
Find yourself some suppliers carrying products you want
to sell. Check them and vet them.
Make a sale
Because you’re a branding and online marketing genius,
an order is placed on your website.
Now you must purchase the products in that order and
have them shipped your way.
Fulfill the order
Once they’ve arrived, take those products, package them
for the order, and ship it off to the customer.