In 2019, the global eCommerce market was valued at $9.09 trillion, with an anticipated growth rate of not quite 15% over the coming decade.1 These numbers only cemented what many retailers have long known to be true: online shopping isn’t just the future but the present for retail operations worldwide. Now more than ever, consumers shop from home—and want their products delivered ASAP.
But for many businesses, managing complex ordering, inventory control, and shipping strategies simply isn’t feasible. This is especially true of smaller retailers that lack the space to store inventory or the workforce to process, package, and ship orders at a rate that boosts profits. In those cases, businesses rely on fulfillment centers to get online orders to customers.
What is a fulfillment center? Essentially, fulfillment centers are the capeless superheroes of distressed retailers everywhere. Here’s how they save the day.
What Fulfillment Centers Do
Warehouse, distribution center, fulfillment center–all of these might sound the same to you, but they’re not. But what exactly are fulfillment centers and what do they do? A vital link between retailers and the customers they serve, fulfillment centers play an essential role within eCommerce. They are third-party companies that process orders and ship them to customers on behalf of businesses. In the simplest of terms, order fulfillment centers handle the three most important physical aspects of eCommerce, which are:
- Processing orders and packaging products
- Creating and attaching address labels
- Shipping products to customers
What does fulfillment operation or fulfillment service look like?
The exact methods by which these tasks are accomplished can vary from fulfillment center to fulfillment center. That said, most will typically follow a standard fulfillment process that includes the following aspects:
- Inventory storage – An important function of fulfillment centers is storing products for retailers. As third-party services, most fulfillment centers service several businesses at once, so managing and controlling various inventories must be done strategically.
- eCommerce communication – Fulfillment centers rely on the latest technology to receive customer orders. When a customer purchases a product online, the order is transmitted to the fulfillment center responsible for storing inventory.
- Product picking and packing – When the fulfillment center receives the customer order, they use picking tools to locate it in the inventory and package it for shipping. This process includes furnishing and attaching an address label.
- Product shipping – Once the product has been packaged and labeled, the fulfillment center ships it directly to the customer.
How Do Fulfillment Centers Help Businesses?
eCommerce is one of the world’s largest business markets. Globally, the market is estimated to be valued at over five trillion dollars in 2022, making up a projected 21% of all retail sales. In the United States, it’s close to being valued at $875 billion in 2022.2
Considering the breadth and scope of the market, it’s no wonder that so many eCommerce retailers turn to third-party fulfillment centers to get their products to consumers. Partnering with a fulfillment center offers a range of time-saving, money-saving, and business-optimizing benefits for retailers. When outsourcing an eCommerce fulfillment service, these benefits include: 3
- No real estate – A fulfillment center acts as a business’s storage warehouse, packaging center, and shipping location all in one. This alleviates the need for retailers to physically store inventory themselves. Understandably, this is a tremendous advantage to businesses that have limited space or don’t have brick-and-mortar stores at all.
- Expedited order processing – Fulfillment centers make it possible for retailers to process customer orders and ship products quickly. Additionally, businesses don’t have to interrupt their other responsibilities to perform these tasks, which further optimizes operations.
- Reduces staffing costs – Using a fulfillment center effectively outsources your order processing and shipping needs, which reduces your need to employ workers who perform those tasks.
- Larger inventory – For many businesses, space is limited, which, in turn, limits the array of products you can offer your customers. Fulfillment centers are often large complexes that allow businesses to stock significantly more inventory than they could alone.
- Scalability – An individual business will quickly hit a wall regarding the number of orders they can successfully and accurately process daily. But an efficient fulfillment center can process hundreds to thousands of orders in very little time.
In short, fulfillment centers allow businesses to streamline their operations, increase their rate of business, and better serve their customers.
Shipware: Modern Shipping Solutions For Every Business
There are clearly many benefits to outsourcing fulfillment services. With eCommerce projected to increasingly claim more of the global retail market in the coming years, it’s more important than ever for businesses to be innovative about every aspect of how they do business online. From off-site inventory management to order processing and shipping, there’s a lot to consider.
The experienced and knowledgeable experts at Shipware can help your business streamline your volume parcel and LTL shipping procedures. We carefully audit your current functions and consult with you about how to improve your processes and optimize your shipping—and save money in the process.
Modern shippers need intelligent, innovative distribution solutions powered by logical, proven strategies. For eCommerce businesses everywhere, Shipware is that solution. Find out more today.