An essential part of the optimal functioning of any e-commerce businesses, fulfilment centres play an important part in enabling the outsourcing warehousing space and the shipping of products. The need to personally manage the inventory and how your stock is distributed is eliminated. The physical space needed for your goods is completely managed by the fulfilment centre. Merchants only need to ensure that their goods arrive safely at the fulfilment centre and from there on, your goods are distributed to the customers.
The importance of a fulfilment centre lies in its ability to simplify the entire process of inventory management. The merchant has then the time to manage all the other parts of the business, while the fulfilment centre ensures that the right goods get delivered to the right customers.
How does a fulfilment centre work?
At the very core of the fulfilment centre, there is the Order Fulfilment Process which deals with online orders and getting them to the doorsteps of the customers. E-commerce businesses employ the help of fulfilment centres that further process customers orders. From the moment a customer places an order to the delivery of the packed goods, a fulfilment centre will oversee the entire process.
Fulfilment centres are catering for both B2C (business to customer) and B2B (business to business) orders and they act on behalf of their clients throughout the whole process.
What’s the difference between a warehouse and a fulfilment centre?
A warehouse represents the physical location where goods in bulk can be stored for a period of time. Most of them offer services for other businesses that deal with wholesale or huge quantities.
A fulfilment centre, on the other hand, does more than just providing the space required for businesses to store their goods. A fulfilment centre is a warehouse run by a third-party logistics (3PL) provider where customers orders are processed and delivered. They exist in order to streamline the inventory management issues and ensure customers receive their orders on time. A fulfilment centre Is important to an e-commerce business as they can outsource warehousing and shipping and eliminate this from their premises and taskforce.
Fulfilment centres are also more complex in terms of their offering, as opposed to warehouses. Apart from storing the goods, fulfilment services will also include:
- Ensure they receive the stock from the manufacturer;
- Picking and packing products
- Labelling the right products
- Delivery and shipping
- Managing Returns
Why are fulfilment centres important
Fulfilment centres have a lot of benefits to business owners – from lowering your shipping costs, reducing your operating costs, extending your reach to improve your customer service, using technology to streamline order fulfilment allowing you to focus on selling, outsourcing this part of your business will show an instant improvement.
Inventory Management and Running out of Stock
One of the most common issues with merchants is ensuring that there is enough stock for the orders. When the number of orders is higher than the actual stock, customers won’t be able to receive their orders and the levels of dissatisfaction only go up. Distrust in brand ensues, customers will switch to a different competitor and they might even leave poor reviews as well. Here is where fulfilment centres can help. By overseeing the entire inventory management and orders, customers are more likely to receive their orders in a timely fashion and without experiencing any delays.
Shipping the wrong item
Misships are another issue that merchants experience and that’s when the wrong item has been delivered to the customer. Smaller e-commerce businesses are the ones that experience this more often and it’s a mistake that could cost them their reputation. As small business owners have to oversee most of the firm activities, shipping could get lost in translation.
Scale-up your business
A fulfilment centre will manage your inventory as well as the rest of the delivery and shipping part. This eliminates the need for further logistics planning between manufacturers and shipping companies. Even when introducing new products, you can outsource everything to the fulfilment centre while you take care of other parts of the business.
The Shipping Process
Apart from eliminating the misships issue, fulfilment centres are also in charge of ensuring the entire shipping process goes as planned. This includes contacting customers with their tracking number, handling returns and so on. With fulfilment centres, business owners usually manage to get a lower shipping cost and further offer customers free shipping. This is due to the fact that fulfilment centres usually ship a large number of orders at once and could arrange a better rate.
The main takeaway is that fulfilment centres are a great way to outsource all the inventory management and order processing to the experts. Living in a time where there are so many tasks from a 24/7 demand from consumers, meeting high customer service levels, managing the workforce, inventory management and international shipping processes, managing incorrect orders – A fulfilment centre concentrates its efforts on stock control management and shipping processes to meet the needs of the consumer. Outsourcing your order fulfilment services allows you to fully manage the rest of your business and scale it up.
If you need help with your fulfilment operations, our team has years of experience in supporting businesses with their internal processes.