Purchasing, managing operations, inventorying, packing, and shipping has become much easier for online and multi-channel merchants now that there is an expanding class of service companies that allow them to outsource from almost all of these areas. For your e-commerce company to manage its product receiving and inventory operations, using fulfillment services is one of the best options. E-commerce fulfillment services take on the role of a warehouse, taking charge of the shipping operations, storing and organizing wares, checking in newly arrived products, and ultimately fulfilling orders so that each online customer on the receiving end gets professional service. These are just a few of the main reasons outsourcing order fulfillment is now becoming more and more popular amongst e-commerce companies.
In this guide, we’ll help you understand:
What Are Fulfillment Services?
To define fulfillment, we need to dig into the questions of "What is order fulfillment?" and "What does order fulfillment mean?", therefore, understand the basics of fulfillment services. A fulfillment service is usually a third-party logistics service that prepares and ships your e-commerce orders for you and manages your order fulfillment system on your behalf. Practicing from its fulfillment center, a third-party fulfillment service is usually ideal for businesses where owners don't want to deal with the cost of shipping, rent a warehouse, or have simply become unable to ship orders themselves. Acting as a command center for your company's order fulfillment needs, fulfillment centers aim to ease your shipping operations, offer you warehouse space for inventory storage, and uphold your ware.
What is order fulfillment?
Order fulfillment is the entire process from when a sale of a product is made all the way through the delivery of the product to the customer. This process covers steps such as receiving, processing, picking, packing, and shipping a product from an online e-commerce store to the end customer.
What is a fulfillment center?
This is the location where a 3PL provider fulfills the customer orders entailed for e-commerce retailers. A fulfillment center is in charge of delivering online orders to customers on time, therefore relieve business owners of the pressure of this challenging task. Fulfillment centers operate in order to help get online orders to the customer's doorstep, picking inventory, packing boxes, and labeling shipment all throughout the process.
What is a fulfillment warehouse?
Generally confused with the term "fulfillment center," a fulfillment warehouse is a stand-alone place where inventory is solely stored, whereas a fulfillment center has additional responsibilities such as picking, packing, labeling, and shipping. While a fulfillment center's main goal is to turn over inventory as fast as possible, a fulfillment warehouse is basically a building with the single purpose of holding inventory.
Why Using Fulfillment Services is Important for your Business
Turning to e-commerce fulfillment services is one of the best things you can do for your growing online business. Outsourcing this complete process takes the pressure and responsibility of this crucial task, giving you time to spend on other operations that will ultimately expand your business.
Using fulfillment services for startups is especially important since these services can significantly lower shipping costs. A popular marketing tool nowadays, free shipping is an advantageous edge you can hold in order to expand your customer base. Needless to say, the USPS, UPS, and FedEx do not ship orders free of charge. That is why it is important to opt for sophisticated fulfillment services solutions in order to keep shipping costs down, whether you choose to pass these costs on to the consumer or are absorbing freight and shipping costs all by yourself to provide free shipping options. Fulfillment service companies usually help lower the shipping tally, offering prices based on how far the shipment needs to travel. To gain a competitive edge, it is also a common practice to place inventory in several different regional warehouses at once.
Seasonal flexibility is another essential element to factor in when deciding on whether to use fulfillment services. With seasonal online shopping growing year by year, e-commerce companies often find that they require temporary workers to get through the rush and manage the chaos sprung upon them during holiday seasons. Outsourcing order fulfillment during these critical times can help retailers avoid these extra costs, such as hiring seasonal staff or investing in new capital equipment. Once the retailer makes sure that the product is in the fulfillment service's warehouse, the rest will be taken care of by the 3PL company entirely. Managing the surge during holiday sales is one of the strong suits of order fulfillment companies, offering maximum seasonal flexibility and smart cost delegation.
Fixed costs can be easily converted to variable costs using a hands-on order fulfillment system. When coping with an e-commerce business, you will have to go through the steps of receiving, housing, and accounting for your entire physical inventory. Instead of paying a fixed rate for rented or leased storage facilities, you can choose a fulfillment service that suits your business type and convert these fixed costs into variable ones, such as rent, heating, and cooling. These expenses will be going up or down depending on periodic sales.
When you have a passion for a particular product and want to do nothing else but to concentrate on selling it, getting caught up in boring operations such as stacking boxes and packing products can often overshadow your passion and make you second guess your business decisions. Handing over the complete order fulfillment process to a professional third party will allow you to focus on what you really need to, which is creating, expanding, and enjoying your newfound business.
Advantages of Using Fulfillment Services
The obvious benefits of using fulfillment services include dodging long-term lease expenses, working with a team of experts, optimizing your time, and have an overall more agile business, especially on the delivery front. To name a few, here are the advantages of using fulfillment services in the USA to help your e-commerce business:
You can lower your shipping costs.
The average cost of fulfillment services across the country provided by giant 3PL companies is nothing compared to the fixed costs you are obliged to pay when tackling the fulfillment issue on your own. Most of the order fulfillment providers have expanded all over the country, as well as overseas. You can take advantage of bulk delivery discounts and benefit from a solid foundation that offers much lower shipping rates. It is estimated that you can save up to 15% to 35% off your shipping rates by opting for an order fulfillment provider and handing your delivery procedures to them.
You can expand your customer base and go global.
Extending your reach is much easier and more comfortable with the assurance of having a third-party order fulfillment provider by your side. With the right order fulfillment provider suited for your business, you can take your business to the next level, be it receiving an order from another state or shipping your ware to another country.
You can reduce your operation costs.
Just as with shipping costs, fulfillment services help you save on operation costs as well, entailing you to pay only for what you use. Generally charging a flat storage fee for warehoused products initially, the customer is only charged for picked, packed, and shipped orders going forwards. The best part of this variable accounting is that the seasonal increase or decrease in sales does not affect your base cost.
You can enhance your customer service.
No matter what you are selling, a reliable and trustworthy customer service support system is and will always be an essential part of your business. Related directly to the delivery process, exchanges, returns, and refunds are a major part of the customer service context. Most of the fulfillment services provide 24/7 customer service as well, being that they are the primary unit in charge of end-to-end customer delivery. Order fulfillment services can also help business owners cater to the ever-changing customer needs and expectations. Recent data shows that almost half of online shoppers claim that same-day delivery is tempting enough for them to shop from a certain retailer. The same research also shows that 63% of online customers demand guaranteed delivery dates, giving companies with same-day delivery options the lead over their competitors.
You can benefit from the latest technology when streamlining order fulfillment.
Order fulfillment companies integrate their systems with your e-commerce store, benefiting from the latest technology to do so. In order to process and ship your products, top fulfillment services offer you a streamlined order process, including inventory management, security, carrier selection, item tracking, shipping, and payment options.
What to Look for When Choosing a Fulfillment Service Provider
When choosing a fulfillment service provider, it is important to hire an e-commerce fulfillment service company that meets your needs and is professional enough to fit in with your span of work. Choosing a company with similar industry experience will be a wise option, considering there are multiple order fulfillment software options that function differently. Each fulfillment company has a unique focus, and it is your job as an e-commerce business owner to settle on the right fit.
Experience with a similar client base is another factor you have to consider when choosing a fulfillment service provider. Not only does this entail for the company to process your order accurately, but it also helps the company provide strategic advice and assistance throughout all of the order fulfillment process steps and guide you towards a robust and continued partnership. A company with sufficient experience in fulfilling e-commerce deliveries should always be one of your priorities when choosing your ultimate provider.
While price is undeniably important, it should not be the only and most important factor when deciding on a fulfillment provider. It is crucial to remember that finding a company that is the best fit for your fulfillment needs will benefit you in the long run, presenting you with happy customers, therefore, less customer service costs overall.
Using the latest technology, having an easy and understandable integration system, benefiting from up-to-date data and analytics are also other common elements you should be looking for when choosing an order fulfillment service.
Having mastered the significance and benefits of outsourcing your order fulfillment procedures, now may the best time to conduct a little research and making the best choice for you and your business. Don't forget that e-commerce fulfillment services have a lot to offer to retailers of any size, helping you manage your inventory more efficiently and cost-effectively. To learn more about fulfillment services, schedule demo.
Scale up B2C fulfillment operations with an integrated digital warehouse and fulfillment system
Written by Erhan Musaoglu
Erhan Musaoglu is the CEO and Co-Founder of Logiwa.