When eCommerce brands are looking for ways to streamline their businesses, they are often looking to save time and money. By finding solutions for everyday problems they face, eCommerce store owners can find more time to focus on the aspects of their business that they love. They can reduce their stress and improve their customer satisfaction.
When an eCommerce business is looking for a solution to packing and shipping their products for their customers, fulfillment centers can provide a scalable solution to order fulfillment needs. Order fulfillment can take significant time for businesses of all sizes, but by partnering with a fulfillment center, they can use that time for other essential business tasks. Learn about what fulfillment centers do and how they can help simplify your business, so you can focus on what’s most important to you.
What Does a Fulfillment Center Do?
At its core, a fulfillment center fills orders. It receives the orders from an eCommerce store and packages and ships them to customers. Many businesses do not have the staff or time to package and ship every single order. For others, space to store products before they are purchased and shipped out is the challenge. For both of these scenarios, a fulfillment center can provide a solution to the fulfillment process needs of many businesses.
Sellers deliver their product inventory to fulfillment centers where it is staged, organized, and stored until an order is placed on the seller’s website. Once an order is placed, the fulfillment center packs it up and ships it off to the customer. Fulfillment centers make storage, shipping, and inventory management easier for most eCommerce stores.
What Is the Difference Between Warehouse and Fulfillment Center?
After reading about how a fulfillment center stores products until they are sold, many people wonder how they differ from a warehouse. It is a common question, and the terms are often used interchangeably. However, they have very different functions and purposes. For some businesses, one may make more sense than the other. While they can look similar in that they are both large buildings that store inventory, their uses and benefits vary.
With a warehouse, you get a large building that stores goods for an extended period of time. These goods are often things a business does not need access to very often, like seasonal products or merchandise or even old documents or paperwork. Here are some of the reasons to use a warehouse:
- Warehouses free up space in the store or other areas for current or seasonally relevant products.
- Warehouses allow businesses to have access to the products or documents when they need them.
- Large businesses might have their own warehouse, but smaller ones might rent space in a warehouse for additional storage.
With a fulfillment center, the building not only stores inventory but warehouse workers will work on order fulfillment services as well. Products are stored for a much shorter time than in a warehouse. The ultimate goal is that a fulfillment center fulfills customer orders and as many as possible in the shortest amount of time. The two key benefits of fulfillment centers are:
- Fulfillment centers get the product out the door as quickly as possible once a customer places an order.
- Fulfillment centers move products out the door within a month or so.
4 Main Differences Between Warehouses and Fulfillment Centers
Timeline: In a warehouse, items can sit for extended periods of time as storage. In a fulfillment center, products should move out the door very quickly, getting replaced by new inventory.
Facility: From the outside, warehouse space and a fulfillment center may look the same. However, once you get inside, they probably look very different. A warehouse is just for storage, while a fulfillment center packages and ships orders out. Therefore, the way the facility is set up and organized should vary.
Clients: When looking at the facility’s customer, warehouses tend to have an “internal only” customer, meaning that the company renting space from the warehouse is the customer. However, a fulfillment center serves internal and external customers placing orders and purchasing from the store using the fulfillment center’s space and services.
Technology: A warehouse might have less technology than a fulfillment center. A fulfillment center most likely has inventory management, order processing, robotics, and other types of technology to help make the workflow seamless as they process and prepare orders for shipment.
What Makes a Great Fulfillment Center?
Each eCommerce business has unique requirements for its fulfillment needs. There are three main things an online business owner should look at when searching for the right fulfillment center for their business. A great fulfillment center should include:
- Quick shipping and delivery times
- Operational excellence backed by years of experience and client services/support
- Reliable problem-solving processes
Fulfillment centers should get the order out the door and to the customer in as short of time as possible. Your customer’s order should match what they receive, meaning that everything in an order is pulled correctly. There should also be a pain-free way for customers to make a return if needed.
You want to find a fulfillment center that makes your life easier, not more difficult. So it’s imperative to work with a fulfillment center that is skilled in problem-solving and finding solutions.
Questions To Ask When Looking for a Fulfillment Center
When looking to find the right fulfillment center, you need to keep your unique needs in mind. Here are the main things to look for and questions to ask when seeking out an order fulfillment provider for your eCommerce store.
Where are they located? If most of your customers are located on the West Coast, then you may want to utilize multiple fulfillment centers that are closer to your customers. This will help with shipping costs and times.
What shipping options do they have? Many fulfillment centers have specific shipping options. Find out what shipping carriers they work with and what shipping methods they support. If shipping to customers outside of the US, ensure the fulfillment center can accommodate shipping to those specific countries and provide options for reliable international shipping. If you have international needs or specific needs for a certain carrier, then look for fulfillment centers with these choices.
Can they integrate with your eCommerce store? If you are on Shopify, WooCommerce, or Magento, you should see if the fulfillment center can connect with or integrate with your store. This will make it much easier for you if you know this information going in.
What are the fees? Some fulfillment centers have initiation fees or other fees throughout the year. Be sure to understand what is provided and the costs for your business.
How much inventory can they hold? Your agreement with a fulfillment center will probably include a cap on total items or even individual SKUs that are included in storing inventory. The more products you have, the more space it will take up. Find a fulfillment center that meets your unique product needs.
Do they offer additional services? Some fulfillment centers offer customization and other services. Even if you don’t currently have a need for anything extra, knowing what is available in case you need it in the future can be helpful for your business.
How do they handle returns? It’s inevitable with online shopping that there will be some returns of your items. There are a range of reasons a customer might want to return an item, so knowing how the fulfillment center handles returns can make it even easier for you.
Can they accommodate order modification? Sometimes a customer needs to modify an order once it’s been placed. Some fulfillment centers will have timelines or processes in place for order modification. If your fulfillment center doesn’t offer modifications, this is something you should communicate on your website, so your customers know in advance.
How can you communicate with them? If there is a problem with inventory, orders, or shipping, you need to know about it. An order fulfillment center should have a way to regularly communicate with businesses. You should also be able to ask questions and get a response in a timely manner. Learning about their communication methods is vital for any business relationship.
Do they have long-term contracts? Knowing what’s involved in the contract you sign is important. If you are unable to change inventory amounts, shipping options, etc., then it may not be as flexible as you need it to be.
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Benefits of Fulfillment Centers for Order Fulfillment
Fulfillment centers are designed to help businesses process, package, and ship orders out in a very timely manner. These services help eCommerce retailers improve their business and increase their level of customer service while giving them more time for production and product development. Here are some of the key benefits that many businesses find when partnering with a 3PL for order fulfillment:
- Personnel: eCommerce businesses won’t need to employ order fulfillment staff because the fulfillment center handles those workers. There can be fewer people on payroll because the time to pack and ship orders are operated by a different company. The employees you do have can work on other important tasks while the fulfillment center works on filling orders for your customers.
- Shipping: Most fulfillment centers have a variety of shipping options with exclusive contracts with different carriers, including international options. This can give your customers even more options for shipping, but it can also allow your business to expand to different areas like north into Canada or across the ocean into Europe.
- Efficiency: Investing in technology to make order fulfillment efficient can be costly for businesses. But with a fulfillment center, order fulfillment is their primary task, and they invest that time and money to make it efficient. With systems, processes, and technologies in place, fulfilling orders can be quick and easy, making it beneficial to both your company and your customers.
- Inventory management: It’s important to know exactly how many items and what color or size you have in stock. This is key to ensuring that you don’t oversell items on your website and have to send that email to a customer that an item they purchased is no longer in stock. One of the technologies that a fulfillment center has is usually inventory management, which can keep a more accurate account of what’s in stock, in real-time.
The benefits of order fulfillment can help eCommerce stores provide higher levels of customer service and order accuracy. By partnering with the right fulfillment center, you and your team can spend time on other parts of the business. Rakuten Super Logistics provides quick, accurate order fulfillment for eCommerce businesses of all sizes. Contact us today to learn more and get a quote to see how we can help.
Rakuten Super Logistics, now ShipNetwork, is a leading eCommerce order fulfillment company that provides the scalability, flexibility, and cost savings retailers demand.
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