Fulfilling online orders and ensuring they get to their intended destination quickly and efficiently is a complicated process—likely even more so than the average consumer realizes.
In fact, the average package purchased via an eCommerce retailer is handled 20 times before it arrives at a customer’s doorstep. Packages sold in retail stores are only handed an average of five times, or 25 percent as much as eCommerce packages.
eCommerce is tricky. And it can be costly. The average cost to fulfill an online order ends up being 70 percent of the average order value once you figure in the costs of labor, overhead, order splits, returns, and other expenses. That doesn’t leave much revenue for the retailer.
One way that many online retailers are streamlining their fulfillment process and making their operations more profitable is by working with a fulfillment center.
But to an outsider, the exact duties and responsibilities of a fulfillment center may seem a little bit mysterious, or they may not realize the intense work that fulfillment centers take on, functioning as an integral part of an online retailer’s operation throughout the entire supply chain.
So, what happens at a fulfillment center? Here’s what you need to know.
About Fulfillment Centers
What does a fulfillment center do? Fulfillment refers to when a third-party logistics (3PL) provider fulfills orders for an eCommerce brand or online retailer. This includes every stage of fulfillment including:
- Warehousing
- Shipping
- Inventory management
- And more
By working with a fulfillment center, online retailers can focus on their core competencies like product selection and development, marketing, and more, while their 3PL partner handles getting orders to their intended destination efficiently. In this way, the 3PL becomes part of the retailer’s team.
A fulfillment center is a lot like a well-oiled machine to store, pack, and ship goods for retailers quickly and methodically. How does it work?
First, the eCommerce brand sends their products directly to the fulfillment center, which fully stocks their warehouse with the retailer’s products and packaging. They ensure that all the goods are ready to package and ship when an order is placed. These 3PL fulfillment centers also provide inventory management services.
Next, once an online customer places an order from the online retailer’s website, the order is automatically sent to the fulfillment center through an all-in-one integrated platform that functions seamlessly as part of the eCommerce brand’s website.
Once the fulfillment partner receives the order, the fulfillment center gets to work, pulling inventory from the warehouse for each order, packaging it, and shipping it to the customer. The final step is that the fulfillment center partners with a shipping company to ensure quick delivery to the customer.
Some fulfillment centers also handle other duties like customer service and returns, working as part of the online retailer’s own team at every stage of the supply chain. They can also handle:
- Receiving inventory
- Assembling items and kits
- Generating pick lists
- Alerting the retailer when to re-order product
The Difference Between Fulfillment Centers and Distribution Centers
The terms distribution center and fulfillment center are often used interchangeably, but their services couldn’t be more different from one another. Here’s how to recognize the differences between the two:
Fulfillment Centers
Fulfillment centers are often part of a 3PL operation, and handle the storing, packaging, and shipping of a company’s product, usually that’s sent directly to the consumer or to a business using a business-to-business (B2B) sales model, or a combination of the two.
A fulfillment center warehouse stores all the products from a website that should be individually picked and packaged and sent to the consumer. Fulfillment centers are an essential part of a company’s supply chain, working to ensure that a consumer receives their order in the fastest, most efficient way possible.
Distribution Centers
Distribution centers are facilities that receive, store, and ship products based on orders. They ship goods directly to retailers or wholesalers, or sometimes to consumers directly. Typically, these products are shipped in bulk, sometimes on pallets. The main role of a distribution center is to store and ship products in bulk.
The main difference? Fulfillment centers’ main duties are to pick, pack, and ship products directly to consumers. They are typically outfitted with a sophisticated internal infrastructure and state-of-the-art equipment to sort and pick products, assemble boxes, and more. In a distribution center, they may only have the equipment to stack pallets, but not much else.
The Benefits of Working with a Fulfillment Center
Why are retailers passing off fulfillment duties to 3PLs? There are quite a few perks to letting professional fulfillment experts take on the task of managing orders. Here are a few reasons eCommerce brands are choosing 3PL fulfillment centers:
- It’s far easier to scale operations up and down with demand without a disruption in operations or delay in shipping.
- Online retailers save money by only paying for the warehouse space they need, no more or less.
- eCommerce brands can use their industry connections to ship smarter, faster, and more affordably.
But these aren’t the only reasons. Some fulfillment centers and 3PLs come stacked with all kinds of robust technology. This includes seamless processes like marketplace integrations and all sorts of automations within its inventory management software, including:
- Establishing and automating inventory reorder points
- Data visualization and dashboards
- Customer care reporting
- Order channel attribution
- Customer journey insights
- Generating picking lists
- Managing returns
Plus? Modern fulfillment providers like OceanX don’t limit their technology to in-the-moment operations. With the right fulfillment partner, eCommerce brands get access to all kinds of powerful analytics like inventory forecasting that can help understand customer buying habits. These kinds of insights might not be available a la carte for smaller online retailers, but fulfillment centers are making it happen.
Between this kind of cutting-edge technology and equipment designed to make the picking and packing process a fast one, fulfillment centers get orders ready to ship at breakneck speed, getting goods sent out to customers faster than ever.
Why is this so important? A negative, or slower-than-expected shipping experience could mean lost repeat business. RetailWire shared that 72.7 percent of consumers are unlikely to order from an online retailer again if they have a poor delivery experience.
OceanX: A Modern Fulfillment Partner for the Beauty and Wellness World
OceanX doesn’t just specialize in fulfillment, we specialize in modern fulfillment. This means that our brand partners get a technology-driven fulfillment-as-a-service solution that delivers unbeatable fulfillment operations and real-time business intelligence, plus personalized customer care. With options for kitting, subscriptions, and even custom packaging, we’ll become more than just a supply chain assistant, we’ll become a true part of your brand.
Our modern order fulfillment is designed to scale with you so you can provide a world-class customer experience and a stronger brand identity. Are you ready to discover more? Contact us today!
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