A better bet to increase your fulfillment capacity is to use a fulfillment center. Consider operating an online store and selling goods on Amazon and eBay or a platform for online stores like Shopify. In that instance, a fulfillment center will take care of every step following a sale.
Continue reading to find out what a fulfillment center is, how it differs from a warehouse and the key benefits of using one rather than handling all the processing and sending yourself.
- 1 What is a fulfillment center?
- 2 How does a fulfillment center work?
- 3 What are the advantages of fulfillment centers?
- 3.1 Save cash
- 3.2 Handle and store your inventory
- 3.3 Allow the seller to concentrate more on other aspects of business
- 3.4 Fulfill eCommerce orders
- 3.5 Don’t need to have a warehouse
- 3.6 Distribute inventory
- 3.7 Leverage knowledge and expertise
- 3.8 Make the fulfillment process automated
- 3.9 Value added services
- 4 What distinguishes a fulfillment Center from a warehouse?
- 5 Why is a fulfillment center important for eCommerce brands?
- 6 Summary: It’s time to work with a Fulfillment Center
What is a fulfillment center?
A fulfillment center can be known as a third-party service provider that prepares and sends the goods that your customers ordered.
You are no longer required to pack, label, and ship each item individually since fulfillment centers take care of the logistics involved in getting an order to a customer’s doorstep.
You first must keep your product inventory well with the fulfillment provider in order to use a fulfillment center.
The fulfillment center is then notified when you get an order via your site, and it finds the ordered item, gets it ready for shipping, and coordinates with a shipping company to have it sent to your consumer.
Your e-commerce website continues to be the only point of contact from the customer’s standpoint.
How does a fulfillment center work?
Since there are so many things involved in warehouse management, minor details may be missed, leading to unanticipated issues and supply chain disruptions.
A fulfillment center serves as the central location for all logistics operations necessary to deliver a seller’s product to the customer. This process is often referred to as order fulfillment.
In fulfilling customer orders, inventory is easily stored in a 3PL fulfillment center. Inventory is selected from the shelves of the fulfillment center once a customer submits a transaction, packed, and then ready for shipment.
Such business-to-consumer (or B2C) orders are frequently delivered directly to a customer’s home. B2B orders, which sometimes involve sending a significant quantity of merchandise to bigger shops, can also be filled out by fulfillment centers.
When a seller hires a third-party logistics provider (or 3PL), the 3PL manages the procedures on the seller’s account. This can involve negotiating reduced shipping rates, handling high-volume demands, and frequently lowering fulfillment costs for other order fulfillment services. It can also entail storing, receiving, packaging, and shipping.
It can be simpler to control inventory, reduce time so the seller can concentrate on more crucial company duties, and even boost customer satisfaction whenever a seller decides to outsource fulfillment to a 3PL.
What are the advantages of fulfillment centers?
Numerous clients might be managed at once by fulfillment companies on a regular basis. They can negotiate much more favorably with their suppliers since they can pool all of their consumers together.
The fulfillment company can take advantage of the combined volume to receive substantial discounts on supplies, such as shipping boxes and packaging materials (or dunnage), which they can then pass along to the customers. Plus, the seller won’t have to spend money on running and staffing their own fulfillment facility.
Shipping can account for up to 70% of all fulfillment costs, making it the seller’s single highest outlay. Again, these savings are transferred to the sellers via bigger, more seasoned fulfillment companies that broker agreements with shipping carriers to obtain bulk discounts.
Handle and store your inventory
The inconvenience of operating a warehouse might cost more money and take more time than what it is worth if a seller is not a big company delivering thousands of things every day.
It can be far more effective to let a fulfillment center take care of these responsibilities. Once a retailer can no longer manage the flow of incoming orders and be able to send them out on schedule, that is a good sign that it could be time to use a fulfillment center.
Allow the seller to concentrate more on other aspects of business
Although receiving orders, choosing products, packaging boxes, and shipping are important aspects of a product company’s profit, these duties can also be readily handled by an expert 3PL.
Giving these responsibilities to a professional (3PL) frees up time for a developing online business to concentrate on core processes including customer support, marketing, as well as long-term planning.
Fulfill eCommerce orders
It is essential that sellers partner with a fulfillment business with experience who has the equipment and operational know-how to handle their merchants’ online fulfillment as an increasing number of customer purchasing habits move from physical shops to online channels.
A seller’s online platform must be connected, and operational procedures must be in place to fulfill hundreds, if not thousands, of online orders daily.
With the expanding demands of the sellers’ e-commerce businesses, these fulfillment companies can grow swiftly. Because of seasonality and many promotions across the year, eCommerce firms can experience significant revenue surges in a short amount of time.
Without compromising on service or quality, fulfillment companies should have sufficient space and flexible labor to meet the demands of the sellers.
Don’t need to have a warehouse
You understand the feeling of having an overwhelming inventory if your business has a popular product and is expanding quickly to satisfy customer demand. It’s a great problem to still have, but coming up with answers can be really difficult.
When you opt to outsource to an order fulfillment business, the third-party logistics provider (or 3PL) can keep the whole of your inventory for you instead of requiring you to accept deliveries, manage the goods, organize, and organize everything.
This frees up more room for possible daily operations. It may also be an affordable way to improve your bottom line.
The third-party logistics provider (3PL) will assist you in managing the flow of inventory from the manufacturer to their fulfillment centers; they will notify you whenever the inventory levels fall below a particular limit as well as order more stock to be shipped to their fulfillment centers, lowering your fulfillment costs.
Checking out where their fulfillment centers are and whether they are close to the bulk of your clients is one of the most important considerations when selecting a 3PL.
The quicker your goods are delivered to your consumer and the less cash you’ll spend on shipping, the better.
Customers of today anticipate ease and speed while shopping online. Clients will receive their orders as promptly as possible if you keep your product in close proximity to most of your customers (or adjacent to big metro areas that may swiftly reach high numbers of customers).
Leverage knowledge and expertise
For any seller, managing logistics may be annoying and difficult. On top of the various company operations that must be addressed, it adds another layer. The intricate procedures and all of the moving pieces can be handled with ease and effectiveness by a 3PL fulfillment center.
Fulfillment firms have long handled responsibilities including order processing, inventory control, packing, and shipping. They have the greatest technology and connections to deliver goods fast and affordably to customers (or businesses). In the long term, it is very cost-effective for the seller to outsource fulfillment and logistics to a skilled 3PL.
Make the fulfillment process automated
Modern 3PL fulfillment businesses run their operations using cutting-edge technologies. This makes it possible to capture and record each step of the fulfillment process in real time.
Every customer order placed in an online store is automatically routed from the shopping cart to a fulfillment facility where it is picked up, packaged, and shipped. Additionally, once the order has been dispatched, the buyer and the seller can both receive tracking information to make sure everything went as planned.
A 3PL is able to monitor and gather information about a seller’s inventory throughout the year thanks to logistics management software. This data can be useful for growth benchmarking or company forecasting.
A 3PL frequently possesses the technological infrastructure needed to provide its digital tools to merchants.
Value added services
While picking, packing, and shipping orders are a seller’s main concern when working with a fulfillment center, sellers can also use their fulfillment partner for many other related matters, often known as value-added services.
Value-added services such as assembly, kitting and returns management are among them (or reverse logistics). Being able to quickly adjust to market changes and consumer needs is made possible by offering these services at your disposal.
What distinguishes a fulfillment Center from a warehouse?
When it comes to logistics and supply chain management, the phrases “fulfillment center” and “warehouse” (also known as a 3PL or a distribution center) are frequently used interchangeably; however, each term can have a different meaning depending on the context.
Both are, at their simplest basic level, sizable structures that have the capacity to keep inventory for any type of company that sells physical goods, whether through a brick-and-mortar store or an online store.
Notwithstanding this similarity, there may be significant differences in the services offered and how they are used.
So, how does a fulfillment center operate in contrast to a warehouse business? Although they may be visually similar, they differ in a number of ways in terms of how they work as well as what they are intended for.
Storage options: long-term vs. short-term
While a 3PL’s fulfillment center includes warehousing, which involves keeping a merchant’s stock in its designated places, the main objective of a fulfillment center is to turn inventory over swiftly.
Typically, merchandise shouldn’t remain at a fulfillment center for longer than a month, as doing so could force the merchant to incur exorbitant warehousing costs. Nevertheless, in order to guarantee that there is always enough merchandise on hand before shipping, retailers need actively send more goods to their fulfillment facilities.
A warehouse’s function is to store merchandise, but a fulfillment center’s function is to effectively meet the shipping expectations of customers. This is achieved by retailers storing products close to their customers’ locations in fulfillment centers to cut down on shipment costs, transit times, and shipping areas.
A fulfillment center is a far more sophisticated operation than a warehouse because it is constantly in motion as opposed to more static or idle warehouses. In a fulfillment center, a 3PL offers a range of order fulfillment services, such as:
- receiving stock.
- putting together choose lists and selecting things.
- assembling and kitting goods.
- packing box.
- adding shipping labels.
- sending out orders.
- controlling return.
When it comes to operational activity in a warehouse, adding or removing inventory is the key event. There aren’t many other services available.
Big retailers function on a comparable level; Amazon warehouses and fulfillment centers view them more as delivery points and sortation hubs. While employees process both small and large orders and then arrange them for shipment with Amazon Delivery or maybe a third-party provider like USPS, packages are moving along a conveyor belt.
Pickup frequency by shipping companies
A fulfillment company may have connections with a wide range of shipping companies. A fulfillment center employs shipping carriers to grab goods at least daily because it processes direct-to-consumer orders immediately as they are submitted. This guarantees that orders will be shipped to customers as promised and on schedule.
Shipping carriers may also be required to pick up client orders for any confirmed same-day or maybe next-day shipping choices selected by customers at specific times each day, based on the exact offerings a fulfillment firm provides.
There will be prescheduled pickups for domestic and foreign cargo from other carriers and businesses.
Orders must be placed by certain dates and hours according to retail fulfillment companies. Customer orders, for instance, are processed in the fulfillment center and shipped on the same day if received by afternoon local time.
On the other hand, since it is more affordable to ship freight and have boxes bundled together on a pallet rather than having separate shipping labels, a warehouse will normally need planned, less regular pickups.
Retailers should allow for a prolonged turnaround time from preparation to pickup because freight firms strive to combine goods from various pickup sites for PTL as well as LTL freight shipments, which might delay pickup or delivery time.
Why is a fulfillment center important for eCommerce brands?
An online store needs a fulfillment service for a number of reasons. A fulfillment center primarily enables brands to outsource their supply chain management tasks.
As a result, there is more time and money available to concentrate on other business growth initiatives, such as promotion, finance, and project management.
Additionally, fulfillment centers and services give firms the adaptability to meet the needs of various sales seasons and a strong network that lowers delivery costs.
A fulfillment center is a crucial component of inventory management since it enables the use of a standardized procedure as well as integrated monitoring systems.
It is inevitable that a brand will investigate fulfillment facilities and particular fulfillment solutions as it develops in order to further improve organization and workflow effectiveness.
Uphold effective inventory management
It’s critical to be aware of how much inventory is currently on hand and being sold. Actions are prompted by this, including replenishment order scheduling. Additionally, it stops businesses from sending buyers out-of-stock messages and aids in maintaining a precise sales forecast.
Put a pick, pack, and ship process in place.
When selling through numerous channels, an omnichannel fulfillment strategy is crucial because all stores and marketplaces are integrated onto a single platform.
When shipping single orders to customers, large sales to merchants, or kitting & bundling, this method is efficient in every circumstance.
To assure accuracy and encourage on-time arrival, every order is inspected with such a shipping document before it is taped up and arranged for pickup.
Summary: It’s time to work with a Fulfillment Center
A fulfillment center partnership makes financial and logistical value as an e-commerce company expands. Once your sales volume is steadily increasing month after month, you may expand your company even more by streamlining the process and collaborating with a logistics partner.
In addition, a fulfillment center’s knowledge and built-in procedures can manage seasonal or trending sales spikes without hurting the business.
When customers’ satisfaction starts to suffer and it seems as though there is always insufficient time, it’s probably better to pick professionals to handle your company’s logistics.
As a company owner, delegating fulfillment to a group that is experienced in the procedure frees up your time to concentrate on other tasks.
To guarantee that you properly optimize the process, it’s crucial to be picky about the fulfillment center with which you work.