With online sales increasing exponentially, eCommerce companies are searching for solutions to send orders quickly to their customers. That said, what is a fulfillment center and how can it boost supply chain capabilities?
Customers — whether they are commercial businesses or individual shoppers — have turned to the convenience of eCommerce stores to comparison-shop product prices and make purchases that align to their needs. With the influx of orders, eCommerce companies are turning to fulfillment centers as an important step in the supply chain to get products to customers.
These centers, typically called third-party logistics (3PLs) providers, offer outsourced solutions that focus on order filling and shipping management. Fulfillment centers differ from warehouses as inventory is stored for shorter time periods to cut down on storage costs.
Instead, products that are in demand and will experience high turnover rates are stored at the facility as the 3PL will pick, pack, and ship the items directly to customers. These providers work with a wide range of industries as an add-on service to the company’s regular supply chain and warehouse capabilities to provide enhanced order fulfillment services.
Third-Party Fulfillment Center Services and Resources
The best fulfillment centers will work with eCommerce companies and retailers to analyze all order filling, packing, and logistical requirements. Then, the 3PL will strategize its capabilities to align with the eCommerce company’s supply chain. eCommerce fulfillment centers will have differing services from one another based on the products they will handle, fulfillment center pricing, and the shipping networks with which they have partnered to deliver products.
Typically, services that are provided by fulfillment centers include receiving products, storing inventory, picking and packing orders, sending shipments, and managing customer returns.
The process starts with receiving the inventory from merchants. The inventory may come directly from the manufacturer, the eCommerce company, or its warehouse operations. Next, the inventory is stocked and managed by workers while waiting for orders to be placed.
Once a customer places an order with the eCommerce company, the order is sent to the fulfillment center. Workers will begin picking inventory from shelves and packing the products based on the orders. Then they will place shipping labels on boxes.
The fulfillment center will now contact shipping carriers to deliver the products to the customers. The 3PL has established partnerships with air, rail, and truck carriers, and has negotiated the best shipping prices to save on costs throughout the logistical process. The shipment is passed to the carrier for delivery.
If the customer is unsatisfied with the order, the fulfillment center will also manage product returns and exchanges. The fulfillment center will plan for the shipping carrier to retrieve the order that will return to the fulfillment center, will update inventory records, and will ship a new product that may be part of the exchange process.
Benefits of Using a Fulfillment Center
An eCommerce fulfillment center offers a fast and convenient way for businesses to hold and ship products for customer orders. This outsourced solution can help mitigate overhead costs as the 3PL will have the staff and technology on hand to pick and pack orders. Due to the location of the fulfillment centers near customers, this provider has streamlined order fulfillment options as you may be able to offer faster delivery methods to customers.
Another important benefit is that smaller eCommerce shops do not have to invest in the warehouses and staff to house inventory. If you are new to eCommerce supply chains, you can tap into the expertise that the 3PL provides while taking advantage of its shipping carrier networks.
In addition, many fulfillment centers use automated processes to handle order fulfillment, tracking shipments, and managing returns. There is always documentation and a paper trail regarding the order’s movement through the supply chain. This advantage allows for greater visibility and accountability if any problem arises with order fulfillment.
The 3PL’s technology also allows for integrations with many online third-party eCommerce applications, marketplaces, and platforms. This integration allows fulfillment centers to automatically receive the order when it is placed by the customer so the order fulfillment process can begin immediately.
Industries That Rely on Fulfillment Centers
All types of industries work with fulfillment centers to get their products efficiently to customers including retailers, food companies, pharmaceuticals, chemical plants, and industrial operations. Fulfillment centers will offer services to business-to-consumer (B2C) companies, business-to-business corporations (B2B), and consumer-to-consumer operations (C2C).
Fulfillment centers will work with eCommerce businesses that sell new products, as well as with companies that are selling refurbished and used items. Products can range in sizes from small toys and electronics to heavy machinery and industrial equipment. Relying on the fulfillment centers can allow these industries to fully leverage the fulfillment center’s logistical capabilities.
Fulfillment Services From WSI
As more customers turn to online stores as part of their shopping habits, eCommerce businesses will need to evaluate their current supply chain processes and determine how to better leverage their order fulfillment capabilities. Fulfillment centers may be the cost-effective approach to get products to consumers in a fast and reliable method while cutting down on overhead, storage, and transportation costs.
Here at WSI, we offer specialized fulfillment services to B2C and B2B industries. Our 3PL capabilities can transform your existing supply chain into a robust system. Contact WSI today to discuss what we can do for your eCommerce operations.