5 E-Commerce Fulfillment Mistakes Canadian Retailers Keep Making

E-commerce now represents a significant and growing share of Canadian retail sales. Yet many established retailers still approach online fulfillment as an afterthought—bolting it onto existing distribution infrastructure and wondering why costs are high, accuracy is low, and customers are unhappy. Having designed and launched dedicated e-commerce fulfillment operations for major Canadian retailers, I see the same mistakes repeated across the industry.

Mistake 1: Trying to Fulfill E-Commerce Orders from a Store-Replenishment DC

Retail distribution centres designed to replenish stores and distribution centres designed to fulfill individual consumer orders are fundamentally different operations. Store replenishment moves cases and pallets. E-commerce fulfillment moves individual items. The pick profiles, packing requirements, shipping methods, and labour models are completely different.

When retailers try to run both operations from the same facility without dedicated zones, equipment, and processes, neither operation performs well. E-commerce orders compete with store replenishment for labour and system bandwidth, and the result is missed SLAs on both sides.

The fix: Either carve out a dedicated e-commerce zone within your existing DC with its own processes and staffing, or build a purpose-designed fulfillment facility. The right answer depends on your volume, growth trajectory, and geographic coverage requirements.

Mistake 2: Underestimating Returns

In brick-and-mortar retail, return rates typically run 5–8%. In e-commerce, depending on the category, return rates of 20–35% are common. Many Canadian retailers launching e-commerce operations budget for the lower number and get the higher one.

Returns aren't just a logistics challenge—they're a profitability challenge. Every return involves shipping costs, inspection, repackaging, restocking, and often markdown. If your fulfillment operation doesn't have a streamlined, efficient reverse logistics process, returns will erode your margins faster than new orders build them.

The fix: Design your returns process before you launch, not after. Include dedicated receiving, inspection, and restocking workflows. Invest in technology that speeds up return processing and gets saleable inventory back into available stock quickly.

Mistake 3: Ignoring the True Cost of Last-Mile Delivery

Last-mile delivery is the single most expensive leg of the e-commerce supply chain, often representing 40–50% of total fulfillment cost. Canadian retailers face the added challenge of serving a geographically dispersed population, with significant portions of demand in areas that major carriers consider remote or extended delivery zones.

Too many retailers set shipping rates based on competitive positioning ("free shipping over $50") without fully understanding their actual cost-to-serve across different regions and order profiles. The result is a growing e-commerce business that's unprofitable on a per-order basis.

The fix: Build a detailed cost-to-serve model that accounts for carrier rates by zone, package dimensions, accessorial charges, and delivery speed. Use this model to inform your shipping strategy, minimum order thresholds, and product assortment decisions for online. Multi-carrier strategies that match the right carrier to each shipment profile consistently outperform single-carrier deals.

Mistake 4: Choosing a WMS That Can't Handle E-Commerce Complexity

A warehouse management system that works perfectly for case-pick store replenishment may be completely inadequate for e-commerce fulfillment. E-commerce WMS requirements include real-time inventory visibility across channels, wave-less or continuous picking, multi-carrier shipping integration, kitting and bundling support, and customer-specific packing requirements.

I've worked with retailers who invested heavily in a WMS for their store distribution network, then tried to extend it to e-commerce and spent more on customizations than the original implementation cost. The system technically worked but was slow, fragile, and expensive to maintain.

The fix: Evaluate your WMS requirements for e-commerce specifically, even if you plan to run it on the same platform as your store replenishment operations. If your current WMS can't support the required functionality without heavy customization, consider a purpose-built e-commerce fulfillment module or a separate system with integration to your inventory management layer.

Mistake 5: Scaling Before the Foundation Is Solid

The pressure to grow e-commerce revenue quickly leads many retailers to scale their fulfillment operations before the core processes are stable. They add shifts, open new facilities, or expand product assortments online before they've solved the fundamental accuracy, speed, and cost problems in their existing operation.

Scaling a broken process just creates a bigger broken process. The operational debt compounds, and fixing it becomes exponentially more expensive and disruptive.

The fix: Get your fulfillment fundamentals right at current volume before scaling. Measure order accuracy, cost per order, units per labour hour, and on-time shipping rates. Set targets, achieve them consistently, then scale. The time invested in building a solid foundation pays dividends as volume grows.

The Opportunity

Canadian retailers who get e-commerce fulfillment right have a significant competitive advantage. The market is growing, customer expectations are rising, and many competitors are still struggling with the basics. A well-designed, efficiently run fulfillment operation becomes a strategic asset that's hard for competitors to replicate quickly.

But it requires treating fulfillment as a core competency worthy of serious investment in design, technology, and talent—not as an operational afterthought.