Written by Dion Tong, Dec 6, 2020
In this complex marketplace, managing the shipment processes can be challenging. It takes time, money, experience, and knowledge from receiving orders to shipping products to your customers or distributors.
No matter if you are a B2B, B2C, C2C, or C2B company that uses e-commerce, you have to work on fulfillment logistics. This concept might be new if you are thinking of starting an e-commerce company. Spend a few minutes to read on and get yourself acquainted with fulfillment services.
What is Fulfillment?
Before learning about fulfillment services, it is essential to understand what fulfillment is and how it works. Fulfillment is the process of preparing and shipping a customer’s order. There are different types of fulfillment, in which self-fulfillment, 3rd party fulfillment, and drop shipping are the three main types.
Self-Fulfillment
Self-fulfillment is when companies manufacture, collect, pack, and ship orders all by themselves. These companies have their own warehouse on-site, handle inventory, and deliver orders to customers directly. This model is ideal for companies with limited capital, small order volume, and those who would like to have complete control over the process.
Third-Party Fulfillment
3rd party fulfillment is when a business stores its goods in an assigned warehouse, in which the warehouse helps to receive, inspect, and process the orders. This type of fulfillment is suitable for companies that do not have abundant storage.
Drop Shipping
Drop shipping is when a third-party supplier manages manufacturing, picking, packing, and shipping businesses’ orders. The core difference between drop shipping and third-party fulfillment is that retailers using drop shippers do not have to manage any inventory. Companies using this model only need to handle transactions and bills from customers.
What are Fulfillment Services?
Fulfillment services is the concept of a third-party fulfillment warehouse or provider managing and distributing products to your customers. A fulfillment center does more than just store inventory and deliver goods. It has a large team for fulfilling orders of any volume.
When the scale of a company increases, in which there is a rise in sales as well as the need to focus on business strategy, outsourcing the fulfillment logistics process is one of the best ways to save time and human capital. However, there are increasing fulfillment services for startups, so do not miss out on this post even if you are new to e-commerce.
The Process of Fulfillment Services
Receiving Inventory
After companies purchase from a supplier, either a third-party warehouse will schedule a shipment to pick up the orders from your supplier or deliver the products to the warehouse. Companies will receive confirmation after the process is done.
Inspection and Examination
In order to ensure the quality and quantity are based on what you have ordered, warehouse staffs will check if the number of items, colors, and sizes are correct and make sure the products are not damaged.
Storing Inventory
This step is to organize and store the products. Items are either placed on a pallet or a shelf. Popular items are usually stored in accessible places while extra ones are in the back, depending on how the warehouse manages inventory.
Packaging
Staff members will pack items according to the instructions stated on the packing slip. For example, companies may require the warehouse to use bubble wrap or poly bags for a particular product. They will also make sure a correct label is matched with the right product. Once the steps are done, the staff will ship the products to customers, and the company will receive tracking information.
Processing Returns
Customers may ship back the goods to the company or the third-party warehouse. The product will be managed according to its condition. It can either be put back in the inventory or be discarded.
How Much Does Fulfillment Service Cost?
The price of fulfillment companies is flexible. It varies by the product types, storage sizes, order volumes, and destinations you ship to. However, you can always give your information to a fulfillment center and request quotations before deciding which option is best suited for your business.
How Can Fulfillment Services Benefit Your Business?
Fulfillment services bring a number of benefits to businesses. Here are some of the critical advantages that you may be interested in exploring.
Focus on Business Development
Managing a warehouse, tracking shipments, and receiving inventory are all time-consuming endeavors. It is fair to say that spending time on these is not always worthwhile. By outsourcing product fulfillment, you can fully utilize your time on developing business strategies or marketing efforts, since the company will operate everything for you. All you have to do is ensure that there is adequate inventory in the third-party fulfillment warehouse to satisfy the order demands.
Reduce Fixed Costs
When you need more space to accommodate the rise in order volumes as well as inventory, you can either sign a long-term lease for a warehouse or hire a fulfillment company. However, there is something you have to consider when renting warehouse space. You have to pay for a fixed rent regardless of the orders. Meanwhile, you would need to employ additional staff to manage the entire product fulfillment process. There are also other expenses, such as shipping equipment utilities, insurance, and overtime rates. Conversely, you can pay according to your volumes for outsourcing fulfillment logistics. That means if you choose to use order fulfillment services, you can save the fixed expenses needed for running the warehouse.
Adapt to Rapid or Temporary Growth
When companies execute a marketing campaign during seasonal sales, they will encounter rapid growth in order volumes. It is not very easy for a company to deal with a sudden increase in the number of shipments and orders all by itself. Yet, expert shipping fulfillment services companies are capable of adapting to the retailers’ needs with their large and skilled team with the necessary experience required to ensure a smooth process.
Enjoy Additional Services
Many fulfillment companies provide additional shipping or product fulfillment services, organize ocean freight, provide shrink wrapping, put together products by their kitting team, and show real-time inventory viewing, to name a few. You can save both time and money since these services are affordable and are provided by a professional team. However, it is important to note that every fulfillment company offers different value-added services. You may need to explore what kind of services best fit your needs.
Things You Should Consider When Choosing the Right Fulfillment Services Provider
To select the perfect fulfillment company for your business, there are four things you should think about.
Location
You may want to choose a service provider close to your supplier or manufacturer, especially for companies that sell raw and cold food since it is necessary to keep the food fresh and in good condition. Meanwhile, it is vital to select a third-party warehouse that is able to ship products to all the destinations that your company covers and is close to a location with the largest customer base. In this way, you can shorten the shipping time and save costs.
Branding
Some fulfillment companies do not provide custom packaging while companies that do have this service offer it differently. The packaging is something used to communicate brand image. Brand image substantially affects your business since customers choose products according to the image of the brand in a scenario when products are highly indistinguishable in terms of their functional performance and price. Therefore, you might want to seek product fulfillment service companies that will use your packages or create personalized gifts and include thank you cards.
Balance Between Quality and Price
Businesses have the responsibility to examine each target fulfillment center, especially the costs and shipping fulfillment services they provide. Of course, you want to find a service provider that offers low prices so you can significantly save costs. Yet, you should make a checklist of what you expect and the services that you need. You would like to make sure that they are up to your standards by providing excellent customer support, are efficient, and ship on time.
Scalability
It is essential to know if the fulfillment company can accommodate your business plan. You might plan to launch a new product line or expand your SKUs next month, which means there will be a rise in order volumes. The size and quantity of your orders matter since you are going to find the company that satisfies your needs and is able to adapt to your short-term promotions or plans. You would like to find a professional team to take care of the fulfillment logistics if you have more than a hundred orders a day. Moreover, there is a need to examine the facilities and shipping carriers they use. Are they enough to process product fulfillment, or are they what you expect? Note that the scale of fulfillment companies for large retailers is different from those for small retailers. A business should always choose a service provider that fits itself instead of the most popular ones.
What Should You Pay Attention to When it Comes to Fulfillment Services?
If you are in the process of finding a fulfillment service, do not miss out on the following key points.
Compliance Requirements
A fulfillment compliance should be prepared before selecting a service provider. Satisfactory compliance would specify how you want your partner to ship or handle your orders and inventory. These requirements or guidelines need to focus on aspects such as packaging, shipment, facilities, and labeling. You might require storing of particular inventory on a specific pallet, so including a packing list and return form in each package is essential. Bear in mind that hastily written compliance requirements can possibly bring collaboration to an halt.
Communication
Choosing shipping fulfillment services is like choosing a partner. You might encounter a lot of issues when working with your service provider. Therefore, communication is crucial in developing a successful business collaboration. Ensure that you are conveying all your requirements, and they completely understand your expectations. Select several channels for communication that work the best for both of you. It can be through phone calls, messages, or emails, to mention just a few.
Responsiveness
Often, customers or even the retailer has issues regarding the products. I bet you would want a fulfillment company that can quickly address your problem and respond to your questions whenever you have any. Remember to pay attention to the company’s responsiveness towards difficulties and whether they can come up with solutions quickly.
Fulfillment Services for Startups
Many of you might think that self-fulfillment is advantageous for startup companies since they can fully control the processes when they are uncertain about the market size, quantity of goods, entity, etc.
However, startups can also benefit from order fulfillment services. Suppose you have a startup and hire a fulfillment company. In that case, you can always be prepared for growth in your business since the company can help you with inventory, order management, and customer services.
There are a number of providers offering fulfillment services for startups as well as small e-commerce businesses. These providers work with companies with small order volumes—for example, Amazon FBA, e-fulfillment services, Red stag, and Freight Pros.
To find the perfect product fulfillment services you should carry out market research and plan out your cost carefully since you might not have a budget as large as a that of a bigger retailer. Some companies offer free storage or free shipping for the first month of cooperation. Feel free to start contacting them and try the services out.
Good Luck with Finding Your Fulfillment Partner
It is never easy to begin a new business endeavor. Take it slow and make sure you plan everything out before reaching out to potential partners. Ensure all the criteria is met when choosing the right fit for your business and whether that company offers what you need. Never make any hurried decision and be sure to ask whatever questions are necessary to make an informed decision.
Comments are closed.
4 Comments