A Beginner’s Guide to Fulfillment Warehouse and Logistics

The final leg of any e-commerce sales is inventory management, shipping, and delivery. All of this put together decides how successful your e-commerce sales would be and if you would get repeat customers. There is a lot of backend work being done to complete each online sale and all of this happens beyond the scene without the knowledge of the customer.

The idea is to provide a seamless customer journey and accomplish sales. This complete supply chain will include storing the inventory, managing stocks, order processing, packing, picking items, shipping, tracking orders, item delivery and multiple other smaller tasks.

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While doing all of this and managing so many tasks, something that is very important is the speed of delivery. For instance, Amazon Prime offers delivery within 2-days and this is impossible without proper fulfillment management.

A basic cycle of fulfillment warehouse would be as highlighted below:cycle of fulfillment warehouse

Courtesy: Quora

53% of shoppers believe that speed of delivery influences their online shopping, while 25% of shoppers end up cancelling their orders owing to slow delivery speed. Clearly, fulfillment plays a key role in increasing your online sales and hence is one of the factors to be looked upon, especially if you are new to the e-commerce business.

Further to this, let us take a glance at what exactly is classified as warehouse fulfillment.

What is a fulfillment warehouse?

Before you start with the fulfillment warehouse, you need to manage inventory. Warehouse fulfillment can be done in two ways

  1. In-house – This means you manage inventory as well as deal with the complete warehouse fulfillment cycle
  2. Outsource fulfillment – This means you depend on third-party logistics to complete your warehouse fulfillment. In such cases, you would have to provide the third-party vendor with your inventory tracking details.

Fulfillment warehouse is also sometimes referred to as a fulfillment center and is different from a simple warehouse. A warehouse is a place where all the inventory is managed and stored. Click To Tweet However, the term fulfillment warehouse is more elaborate and contains multiple other things.

In short, fulfillment deals with meeting customer expectations and working over a delivery deadline. A fulfillment center will be responsible for a seamless product fulfillment experience. There are certain well-structured tasks that a fulfillment center or fulfillment warehouse would accomplish. A fulfillment center allows store owners to outsource warehouse management and shipping.

Benefits of using a fulfillment center are:

  1. The complete fulfillment process is outsourced and let’s store owners to focus more on business over fulfillment. It allows store owners to focus on the bigger picture.
  2. Less physical space required by store owners since fulfillment is dealt with, by the fulfillment center
  3. Can save time and provide speedy product delivery
  4. Lets you save on shipping cost and provide customers with free shipping and delivery
  5. Automates and simplifies fulfillment

Using a fulfillment center, the owner only needs to send the required inventory or preload the warehouse with the products. The rest of the process is handled by the fulfillment center. Most medium to large e-commerce businesses chooses to depend on fulfillment centers to ship customer orders.

Understanding the Fulfillment process

The fulfillment process is one of the most complex parts of the e-commerce business. There are several things that need to be considered when we speak about fulfillment.

The fulfillment process is as highlighted below:

1.Inventory–As you start your online business, the first thing that would be required is enough in-stock inventory. If the inventory is being handled in house, then you would require enough staff support to track and manage inventory.

In case if you are dependent on a third-party fulfillment center, then the inventory needs to be sent to them before handling orders. This way the third-party fulfillment agency can ensure faster accomplishment for fulfillment.

2. Storage– You would need a single or multiple warehouse based on your business needs. This will be a place where the inventory is managed and stored. The storage place must be quickly accessible and available to ensure quick shipping to customers.

Along with accessibility, the warehouse should also be secure enough to keep all inventory safe.

3. Order Processing– This is one of the most time-consuming processes in fulfillment. Once the customer has placed an order, the next step is to process the order based on inventory. Pick the desired product, pack it and ship it to the delivery address.

As part of order processing, you would need to update the inventory management and produce the required customer invoices. The invoice should include tax computation, and other details based on the geographical region.

Packaging includes using more effective packaging techniques such as bubble wraps, air-fill etc. to ensure the product remains intact. Packaging plays a key role since poor packaging can damage the product owing to climatic conditions such as rains or can break the product. In such cases, the customer would end up returning the product. More the returns, the more you would lose business as well as market credibility.

Since there are so many impacting factors, and hence order processing is such an important part of the fulfillment process.

4. Shipping–The next step after processing the order is to ship the product based on the delivery address. This includes adding the correct customer address so that the delivery is accurate. Next from the fulfillment center, you would require a local post or any courier service to send the packaged product to the customer address.

Based on the shipping, you would be able to track the shipping information which needs to be regularly updated with the customer.

5. Returns– The sale does not end with shipping. There are scenarios where a customer may choose to return the product. Again, over here you would need to rely on courier services to pick up the product from the customer destination.

The product can either be returned to the fulfillment center or directly to the store owner’s location. Based on the return category you can either restock the product into the existing inventory or discard it in case it is defective.

What is the difference Between Fulfillment and Distribution?

Using fulfillment center eases out several tasks and you can help customers save shipping costs more effectively. Click To TweetSuch fulfillment centers are placed at strategic locations that ensure quick delivery and provides sufficient warehouse storage.

With fulfillment centers, you need to have trust in the third-party logistics services and constantly co-ordinate with the fulfillment center. A fulfillment center will typically contain several products from multiple store owners. This means that there are chances of having damage to your product and this might very well go unacknowledged.

Due to these reasons, while fulfillment centers ease out a lot of tasks, related to online product delivery, extra care should be taken to ensure a smooth delivery. As an online store owner, you would require to also co-ordinate to understand inventory management in case you do not want your products to be hoarded in the warehouse.

Contrary to this, the distribution center does exactly the same process as the fulfillment center, but differently. Unlike the fulfillment center, the distribution center might not have too many locations. However, the store owner directly is involved in the delivery and shipping of products.

This ensures better control of inventory and manages product damage well. Using distribution center store owners can have direct interaction with customers. Distribution centers treat the products as their own products and provide accurate tracking.

However, distribution centers are more expensive and have limited storage space. Since these are more process-oriented and have limited locations, using the distribution center can take more time for product delivery.

Both fulfillment centers, as well as a distribution center, have some benefits and downsides. While starting your business, you should thoroughly weigh these pros and cons, before choosing any approach for fulfillment.

Best Order Fulfillment Services & Companies of 2020

Below we have listed out a few of the best order fulfillment service providers. This can help you search better for a logistic partner.

FreightPros

FreightPros

FreightPros has affordable pricing and is a suitable option for small businesses. They handle issues and the complete process for an online store. Its simple to get started and request a quote with their amazing customer service. To add on, FreightPros also has a good customer review.

FedEx Fulfillment

FedEx Fulfillment

FedEx is a complete online fulfillment package and is suitable for a medium as well as small businesses. They have transparent services and has good customer support. FedEx also provides expert consultation for logistics to newer businesses. They have a form that you need to fill to get started.

ShipBob

ShipBobShipBob is one of the top-performing logistics solutions and provides good e-commerce integration across diverse platforms. It offers good shipping speed and is affordable. ShipBob processes returns for free. Their inventory and order management along with advanced reporting features are one of the key aspects.

WhiteBox

 Whitebox

Whitebox is a suitable option for startups. They have an initial setup fee and charge a small portion of the fee on total sale. Whitebox services also include quality assurance, product description optimization, product photography along with fulfillment services. Lets new online stores to improve SEO, optimize listings and provides forecast.

RedStagFulfillment RedStag fulfillment

RedStag is yet another popular fulfillment company and provides end to end services. It provides more accurate and specialized services. RedStag is more expensive than its counterparts. This has good order management and customer support. One of the key focus of RedStag is its enhanced security features.

Along with the above companies, there are few others that are also popular and are good options for fulfillment. Some of these are:

  1. RedHawk Global
  2. Ship-a-lot
  3. Rakuten
  4. Amazon Fulfillment
  5. GoShippo
  6. ShipMonk

While choosing a third-party logistics company, there are few parameters that you need to check. This includes:

  1. Pricing – Setup fee, per product delivery charges, etc. help you understand better if the fulfillment service is affordable in the long run.
  2. Location-Based on your business, the fulfillment service provider should be widespread in the area. This helps in a quicker delivery.
  3. Customer Support – Choose a logistics company that has good customer support.
  4. Brand Awareness – The fulfillment company should be aware of your brand and be well informed about a few customer-centric strategies
  5. Inventory, Order Management – The fulfillment company you choose should have automated and technology-driven order management system
  6. Security – This is one of the important aspects while choosing a third-party fulfillment provider. Your products should be placed securely and damage-proof.
  7. ReliabilityReliability seems to be one of the main factors while choosing a third-party fulfillment service provider. You can check customer reviews and speak to their customer support to get a better perspective of the services.
  8. Integration–E-commerce integration across different e-commerce building platforms is also something that needs to be considered.
  9. Shipping SpeedShipping speed is important in case you want to increase your customer base. While choosing any fulfillment provider, you would need to check if the shipping speed is in sync with your company strategy. To add on, also consider if the third-party vendor can accommodate priority shipping for certain premium customers
  10. Tracking–Every product that gets shipped needs to be tracked and regular updates need to be sent to the customer. The fulfillment partner should be capable of handling tracking.
  11. Reporting – This is yet another important parameter where the online store merchant should be provided with inventory management, in-stock reports.
  12. StorageThe fulfillment provider should have enough storage space to manage your inventory based on your business.

Warehouse order fulfillment tips & strategies

While choosing your strategy for warehouse order fulfillment, there are multiple ways you can do this. This can be classified as –

  1. In-house fulfillment–This means you do not depend on any third party for logistics. This is usually a strategy that most startup businesses follow. In-house fulfillment lets you save money; however,it can be time-consuming as the number of orders increase. Also, you would need enough space to store all inventory and track orders. You completely control inventory management and everything related to your business.
  2. Third-Party services–Here you would hand over the complete order fulfillment to a fulfillment company. This is a strategy used by most e-commerce businesses. The merchant does not have to worry about space, inventory management, shipping, and delivery. While there are several benefits, this does have some downsides as well.
  3. Drop Shipping–Drop Shipping includes the merchant and the manufacturer. In such cases, the merchant only takes the order and forwards the request to a manufacturer. The manufacturer, in turn, will work on order fulfillment. The main downside here is that the merchant will not have much control over the brand and there will be an increased dependency on the manufacturer. Drop Shipping is affordable, faster and quick to start.

The strategy you choose for fulfillment will depend on your business size, storage capacity, sales volume, location of the business, choice of technology, brand strategy.

Conclusion

Warehouse fulfillment and order management play a key role in deciding the success of the business. Click To TweetNot only is this crucial but is also complex. Luckily there are third-party logistics that are available to integrate and perform complete fulfillment. Alternatively, in case you have the required infrastructure and require complete control then you can be self-reliant with in-house strategy, where you maintain the fulfillment warehouse.

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