Entering the global market is a serious stage in the company's development. E-commerce platforms allow, being present in a small city, to sell products in different countries of the world, which is amazing.
However, it is important not only to attract a customer or lead to purchase but also to deliver the order. This stage largely determines the purchase experience. Therefore, efficiency and accuracy are important. Not every company is capable of establishing a representative office in another country. Therefore, there are fulfillment centers that are ready to act as a branch of your company.
Previously, global companies needed to own their own warehouse. However, e-commerce is evolving. Today there are fulfillment centers that perform the functions of a branch and are cheaper than maintaining their own warehouse. This article is devoted to questions of advantages and features of choice.
The difference between an order fulfillment center and a warehouse
These terms are closely related to logistics issues. Therefore, they can sometimes be used interchangeably. However, a warehouse and an order fulfillment center are different things. The first is the optimal solution for the vast majority of small and medium-sized companies. The warehouse will allow such organizations to achieve their business goals, while at the same time reducing logistics costs.
However, for a global company, only space isn't enough. And renting several warehouses, in combination with hiring employees (couriers, logisticians, loaders), will require a colossal budget. In addition, specialists will be required to resolve legal issues. In particular, research on customs regulations/restrictions and payment of duties.
The fulfillment center solves similar problems. It becomes a centralized platform for order fulfillment and dispatch in a specific location. For example, in the selected country. In the context of global sales, an order fulfillment center is a significantly more profitable solution.
To avoid confusion, let's define the meaning of the above terms:
- A warehouse is a storage facility for stocks of products. This is a place where goods can be stored for an unlimited amount of time. The warehouse provides for a limited list of services: warehousing and storage. Assumes the presence of pallets, shelves, and containers for placing goods. It also provides for the presence of equipment that simplifies and accelerates the loading/unloading of products. The company can own a warehouse or rent it. For small companies, this option will be cheaper than cooperation with an order fulfillment center. First of all, because while sales volumes are small, the possibility of long-term storage of inventory is extremely important.
- Fulfillment centers. Also known as fulfillment centers. They are a place where a third party (logistics service provider) fulfills the orders of the company's customers. That is, it packs and delivers them. The company's customers can be end-users or retailers. The fulfillment centers are characterized by a large area. Thanks to this, large companies can store an enormous amount of inventory on their territory. This simplifies and reduces the cost of logistics. Cooperation with an order fulfillment center will cost a large company less than renting a similar warehouse area.
To summarize, we can say that the key difference between warehouses and fulfillment centers is the tasks they perform. The former keep inventories. Therefore, the management and organization of the delivery process remain the responsibility of the seller.
The task of the fulfillment center is to serve orders from e-commerce companies. For this, there are many functions. They open up tremendous opportunities for the company, allowing it to optimize the use of time, labor, and financial resources.
Benefits of fulfillment centers
3PLs provide a wide range of services, including receiving goods, collecting orders, and changing the package. Fulfillment centers also offer packaging boxes and create shipping labels. Handle the delivery of orders and manage returns on their own.
Fulfillment centers often cooperate with several sellers at once. They provide for a shorter period of storage of goods, therefore, they are maximally interested in the fast shipment of goods.
The fulfillment center can receive and send products several times a day. The company is able to guarantee its customers fast and timely delivery of orders. Often there is close communication on this issue. This allows you to plan your deadlines carefully.
Order fulfillment providers simultaneously cooperate with dozens of e-commerce companies. Therefore, they buy materials required for the provision of services (for example, boxes) in large quantities. They also organize many deliveries. Plus, assuming obligations for packaging, branding, and delivery of orders, they have their own staff of relevant specialists.
Order fulfillment centers get lower prices for consumables, packaging, and delivery services. They offer these tariffs to their customers. Therefore, you save on the above things. Plus, you eliminate the cost of wages for warehouse personnel.
As long as the company is small and the sales volumes are moderate, it is easy to control the remaining products. However, the more people buy from you, the more difficult it is to keep track of the balances. The task can be especially confusing for companies that are now only expanding their market of activity to a global one. Fulfillment centers offer clients the management of balances. Provide complex support of orders, including their receipt, preparation, and direct dispatch.
Of course, sales are important. Acceptance of orders, collection of commodity items, their packaging, and dispatch are essential components of the activities of e-commerce companies. However, you don't have to do it yourself.
A growing online business certainly needs to sell. However, you also need to think over a strategy for promoting in new markets, plan site content, advertising campaigns, and customer retention programs. Order fulfillment operators allow company owners to concentrate on higher priority tasks.
Adaptation to the specifics of e-commerce
It is no longer enough to have a product to meet customer needs. Excellent service must be provided. Delivery is one of the components.
Experienced fulfillment companies offer more than just packaging or shipping. The centers have technologies adapted to the specifics of the activities of online sellers. Provide integration of company efforts. Experienced fulfillment centers are able to connect to e-commerce platforms used by merchants. This solution greatly simplifies the expansion of the market of activity.
If you are a growing business owner, then using e-commerce platforms is especially beneficial. For example, Shopify. It allows you to create an online store quickly. Moreover, it is not necessary to use the aforementioned platform.
Connecting an order fulfillment center to your business's e-commerce web development agency will allow you to control stocks with an accuracy of one unit. It is also possible to give advance notice of the end of stocks or an impending increase in demand.
How to choose a fulfillment warehouse
Determining this information can be difficult. However, the task is quite simple. You can find out in which area the largest number of customers is by analyzing previous deliveries. If the company begins to expand and is not yet able to determine the places of concentration of buyers, then use other information. For example, a state, region, or even a country. The latter is relevant for companies that seek to provide global representation.
By choosing an order fulfillment center close to your customers, you can reduce shipping costs and speed up delivery. This will improve the quality of service and reduce costs. The latter is especially valuable as 24,7% of professionals cite shipping costs as the biggest challenge for B2C e-commerce companies.
Timing matters. Therefore, it is important to take them into account when choosing an order fulfillment warehouse. Give preference to a company that can guarantee that the terms are respected. Having all kinds of rules is a good sign. For example, when a company says, "Same day delivery will require placing an order before lunchtime."
The terms and conditions can be frustrating. However, the presence of clear rules regarding delivery indicates a systematic approach to the task. The fulfillment center understands what needs to be done to deliver the order. He also initially knows how long it takes to complete each stage of work.
This is good, even with enlarged terms. For example, when an order fulfillment center guarantees delivery in two days, not one. With transportation time guarantees, you can manage customer expectations. Just list specific terms on the site. In fact, it is only after reading this message that the buyer will form expectations regarding delivery times. For a positive experience, it is precisely the observance of the sounded terms that are important.
Also, in terms of timing, the products that the company sells matter. Niche or high-value items may take longer to arrive. First, if the product is narrowly focused, then a few alternative options are available to buyers. Secondly, the characteristics of the product are of paramount importance here. If they satisfy the customer, then the person will agree to wait a little longer for the order to arrive.
Order fulfillment centers cooperate with many companies. Therefore, they perform a huge number of deliveries. This circumstance allows them to receive more favorable tariffs for the services of transport companies. Therefore, when choosing an order fulfillment company, ask whether it offers discounts for customers, and which ones.
You can make the terms of free shipping more flexible for buyers through cooperation with several 3PLs. One company may be offering favorable rates for UPS. The second is cheap delivery by FedEx. With high volumes of sales, this strategy will be a great solution to improve the customer experience.
The packaging represents the first tangible proof of the services of an e-commerce company. It is important for the collaboration experience. Therefore, proper packing of orders must be taken care of.
Not every fulfillment center offers additional services related to the design of the appearance of parcels. However, experienced companies provide for them. Therefore, this moment should be clarified before starting cooperation. Many fulfillment centers not only collect and place orders but also offer companies the creation of individual packaging. It is even possible to apply branding elements.
This task determines the company's ability to provide users with information about the current range. Plus, inventory management can optimize your budget.
By tracking sales, a company can ensure that the right amount of products are in the right place. Especially if you analyze the seasonality of demand. For example, Christmas tree toys are popular in November and December. However, accumulating large stocks in April is pointless.
This remark is also relevant because fulfillment centers store goods for a short time. On average, the storage period is about 30 days. The excessive stock of goods is an additional cost. To exclude this will allow competent inventory management.
Immediately think about how well you are able to control the balances given the resources available. For example, is there a specialist with the appropriate qualifications in the company? If not, then everything is fine. This task can be performed by an order fulfillment center. It is enough to ask whether inventory management is included in the list of services of a particular company, and what it implies.
Consider more than just tariffs
Above we wrote about many services that can be offered by order fulfillment companies. However, not every company has them. Therefore, the need for some kind of service is an excellent guideline that will help you choose the right-center. The main thing is to be guided by the needs of the company.
When making your final decision, consider not only the cost of the fulfillment center services. Pay attention to the bonuses that are offered. For example, reduced shipping rates. How much money will it save? Is there a possibility that the sales of the company will increase due to such discounts? For example, thanks to the simplified terms of free shipping.
Also, pay attention to other services offered. The creation of individual packaging for each order will have a tremendously positive impact on the company's image. You will become more recognizable. It will be easier for customers to identify your ad on other channels. Also, an attractively packaged order has a beneficial effect on company loyalty.
Comparing the rates of order fulfillment companies is correct. Consider more than just prices, however. The opportunities, discounts, and potential that cooperation with an order fulfillment center opens up for your business are extremely important. Be sure to consider them.
ConclusionAn E-commerce on a global scale is not only a wide coverage but also colossal distances over which orders must be delivered. And you need to do it quickly and well. After all, delivery is the most important service in online shopping.
To achieve this, at the same time reducing the cost of delivery and packaging, fulfillment centers help. Especially if you choose a company that suits your business needs. We have described above how to do this. Follow them, and the company's global activity will be measured not only by the number of countries but also by positive customer reviews.