What Is a Fulfillment Center & How it Can Help eCommerce

What Is a Fulfillment Center & How it Can Help eCommerce

Given that we’re in 2023, and our world is super digital, most businesses incorporate an element of eCommerce. Online shopping has become a bustling industry, and consumers have become widely accustomed to browsing and purchasing products from the comfort of their own homes. Behind every successful eCommerce venture is a complex grouping of logistics operations that make the shipping process seamless. As a business owner, working with a robust and reliable fulfillment center is essential to running a truly smooth and scalable operation.

Whether managing vast storage spaces, dealing with order processing, tracking inventory details or handling customer returns, there are a number of logistical challenges that fulfillment centers handle on behalf of businesses.

The importance of fulfillment centers in the eCommerce world cannot be overstated. These centers are committed to streamlining the entire logistics process – from receiving and storing inventory, to picking and packing products and ultimately shipping orders. By centralizing these key business operations and leaving it to experts in the space to handle, eCommerce business owners are able to focus on growing their companies.

In this article, we’re diving deep into the world of fulfillment centers. We’ll explore how they operate, the myriad benefits they offer, and the ways in which they can truly revolutionize your eCommerce business.

Understanding Warehouses and Fulfillment Centers

The Basic Functionality of a Warehouse [1]

Warehouses truly are the heart of the supply chain, serving as an essential cornerstone in the eCommerce space. Beyond being a physical structure that securely stores products, warehouses are the crucial link between manufacturers, suppliers and customers. Warehouses are where products are stored, managed and distributed for wholesale, business-to-business (B2B), and business-to-consumer (B2C) orders.

Particularly for businesses that operate on a larger scale and regularly obtain bulk quantities of products, having a warehouse to store inventory is critical. Warehouses are designed to accommodate various storage needs, with optimized shelving systems, racking solutions and the necessary technology to keep track of thousands of products. Well-run warehouses generally have inventory management systems that constantly survey the movement of products, allowing business owners to ensure they have adequate stock levels at all times.

The Role of a Fulfillment Center [2]

In its most basic form, a warehouse is simply a space to store goods. But in the context of a fulfillment center, it is the central hub where all operations are organized. A fulfillment center is much more than merely a warehouse.

Not only do fulfillment centers store inventory, but staff also facilitate order processing. Once an order from a customer is received, they pick and pack the product, then prepare it for shipping. At the end of the day, an eCommerce business can only be as successful as its fulfillment operations. If customers do not receive orders accurately – and in a timely manner – they will not be satisfied. That’s why it’s hugely important to enlist a reliable fulfillment center to address all your logistics needs.

The primary purpose of a fulfillment center is to streamline the entire supply chain process, ensuring that products move swiftly and accurately into customers’ hands. Fulfillment centers bridge the gap between manufacturers or suppliers and the end recipients, and they manage all logistics operations in between.

At a well-run fulfillment center, products are carefully cataloged and tracked in real-time. Staff use sophisticated inventory management platforms to reduce the risk of excess inventory or stockouts. For B2C orders, this means there will always be enough supply to meet customer demands. Similarly, for B2B orders, this system guarantees that industrial clients or wholesalers can access the products they need without waiting.

In addition to storing and shipping products, fulfillment centers maintain accuracy and quality control. They are experts at organization, and they are adept at providing dependable deliveries to clients and consumers. Working with a fulfillment center will exponentially increase customer satisfaction and brand loyalty.

Services Offered by Fulfillment Centers

Depending on the fulfillment center in question, there are a range of services available to business owners. The best fulfillment centers offer a comprehensive suite of services, each of which plays a major role in simplifying the logistics process. Most fulfillment centers provide the following key services:

Receiving inventory: Manufacturers and suppliers ship products directly to fulfillment centers to store. Staff then receive, inspect and catalog each piece of inventory.
Picking: Once an order has been placed, staff find the requested item in a warehouse, and get it ready to be packaged.
Packing: Warehouse staff securely package all products, ensuring they have accurately picked the right inventory. They use appropriate packaging materials to prevent damage during transport.
Labeling: After an order is securely packaged, staff will print an accurate label. Fulfillment centers pride themselves on ensuring packages are properly labeled, as this is essential for smooth and timely deliveries.
Shipping: Fulfillment centers leverage partnerships with shipping carriers to offer the most efficient delivery services. Staff track shipments in real-time, providing notifications to customers and businesses as a package is in transport.
Returns: Naturally, returns are an inevitable part of running an eCommerce business, and fulfillment centers are equipped to handle them seamlessly. Staff ensure the return items are processed, inspected and restocked in the warehouse.

Each of these central services comprise the core of what makes a fulfillment center so useful to eCommerce business owners. Without these services taken care of by fulfillment center staff, most eCommerce companies would struggle to operate a successful shipping operation – which is a core tenet of most businesses these days.

The Business Benefits of Using Fulfillment Centers

Economies of Scale and Shipping Discounts [3]

Believe it or not, partnering with a fulfillment center has cost-saving perks that can significantly bolster your bottom line. Fulfillment centers help businesses save money in two key ways: economies of scale, and negotiated shipping discounts.

Economies of scale: Fulfillment centers act as a one-stop shop for all your fulfillment needs, in that they can consolidate the warehousing and distribution process, and streamline all logistics-related matters. As your company grows and your fulfillment needs expand, the cost of logistics decreases. For instance, as the volume of orders and inventory increases, the price per unit of storage, handling and shipping declines. Fulfillment centers enable economies of scale in the following ways:

● Shared infrastructure and staff: Given that fulfillment centers often have several clients, all warehouse space, equipment and personnel are shared amongst businesses. As such, companies can avoid the fixed costs of setting up and maintaining their own warehouses, which can be especially exorbitant for small businesses. Plus, fulfillment center staff are trained to efficiently manage various logistics tasks, which leads to higher productivity and lessened labor costs per order.

● Bulk purchasing: To accomodate a number of concurrent clients, fulfillment centers are well stocked with supplies and packaging materials. This reduces the per-unit cost for each business utilizing the fulfillment center’s services.

Shipping discounts: In addition to economies of scale, fulfillment centers often maintain established partnerships with shipping carriers due to large order volumes. This allows fulfillment centers to negotiate lower shipping rates, which are subsequently passed on to their clients. Along with cheaper rates, fulfillment centers often also have access to premium shipping services (including expedited or same-day delivery), as well as preferred partnerships. Shipping carriers typically offer fulfillment centers exclusive deals on specialized services.

Operational Efficiency and Business Focus [4]

In tandem with economies of scale and reduced rates, working with a fulfillment center can considerably increase your company’s operational efficiency and business focus. Recruiting a fulfillment center to assist with your logistics needs will allow you to considerably reduce overhead costs and also allow you to tap into your potential scalability.

The advantages associated with fulfillment centers can empower businesses to focus on their products, growth, and customer satisfaction, rather than spending tons of time grappling with the complexities of warehouse management and distribution. Outsourcing fulfillment to a specialized center means company leaders can redirect their attention toward their core competencies, thereby bolstering the foundation of their business. Managing fulfillment in-house can be a major time suck, and it can also be difficult to get the job done efficiently, effectively and accurately. Outsourcing operations to a fulfillment center will ensure that logistics are done correctly, which will not only satisfy customers, but it will also free up time for business leaders to focus on boosting sales.

Managing Sales Spikes and Improving Fulfillment Services

When it comes to fulfillment, there are many nuances that can be challenging to navigate, comprehend and prepare for.[5] Unlike in-house logistics teams, fulfillment centers are well-equipped to handle sales spikes and other obstacles that inevitably come along in eCommerce, due – in large part – to their inherent scalability, technology-driven systems and specialized expertise.

Fulfillment centers are fundamentally designed to deal with mass fluctuations in order volume, whether they’re the result of seasonal peaks, flash sales or promotional events. Fulfillment centers are always prepared. They have the infrastructure in place to plan for spur-of-the-moment shifts, and they are able to meet sudden increases in demand.

At professional fulfillment centers, there are robust order processing systems in place that allow for quick turnaround times and optimized organization. Plus, fulfillment centers employ experienced workers who are well accustomed to working under pressure and fulfilling high volume order influxes.

The Strategic Advantages of Fulfillment Centers

Distributed Inventory and Reduced Shipping Costs [6]

Depending on where your central customer base is situated, it might be a good idea to outsource logistics to multiple different fulfillment centers. Having distributed inventory across multiple centers – which is often referred to as multi-warehouse or distributed warehousing – can help reduce shipping costs and delivery times.

The goal with distributed warehousing is to ship the products from a starting point that is geographically closer to the customer – which not only reduces the cost of shipping a parcel, but it also lessens the transit time. Depending on the business model, shipping shorter distances from multiple different warehouses could be the most cost-effective way to manage your company’s logistics.

Not to mention, having inventory dispersed across several locations enables eCommerce companies to attract even more prospective consumers. Distributed warehousing allows businesses to tap into new customer bases without having to contend with high shipping costs or lengthy delivery times.

The Value-Added Services Offered by Fulfillment Centers [7]

Based on the aforementioned information, you should have a solid understanding of some of the core services offered by fulfillment centers. That being said, there are a slew of additional services beyond basic warehousing and shipping that you can take advantage of, too. These services can further enhance your business operations by streamlining processes and improving the customer experience. Here are some logistics secondary services that really pack a punch:

Kitting: Simply put, kitting involves assembling several products or components into a single package prior to shipping. This service is especially coveted by businesses that offer promotional packages, bundles or subscription boxes. Kitting is highly convenient for customers, and it allows businesses to leverage cross-selling and upselling strategies.
Assembly: Depending on the nature of the products you are selling, you might consider assembly services – which involves fulfillment centers putting together complex products that are composed of multiple parts. Fulfillment center staff will ensure that products are properly assembled, and that the items are consistently presentable.
Returns management: Returns are a fundamental part of running an eCommerce business, but they can definitely be burdensome to deal with. Having a fulfillment center be in charge of returns lightens the load considerably, as they can streamline the process to make it simpler for both customers and businesses alike. Outsourcing return management is also more cost-effective, as it requires extensive administrative support in order for it to be done accurately and efficiently.
Extra services: Depending on the fulfillment center in question, there are often a number of additional services that clients can take advantage of, such as custom labeling, gift wrapping, quality control checks and product personalization. Be sure to investigate all that a fulfillment center has to offer before selecting the right one for your business.

Stalco Fulfillment Centers

At Stalco, we pride ourselves on being a full-service fulfillment and logistics company with a suite of unique services that satisfy our clients and help them scale their businesses. When it comes to logistics, we believe there is no one-size-fits-all solution, which is why we offer an array of customizable services, ranging from picking and packing, kitting, inventory management, systems integration and order tracking, as well as returns processing.

Given our close relationships with Canadian shipping services, we guarantee our clients the lowest freight rates in North America, and we offer same-day shipments from Canada to the U.S. on all orders received by 9:00 a.m. EST. We are experts in duty elimination, helping our clients save up to 40% on product costs using our free Duty Drawback service. Plus, our warehouse is a Health Canada Site Licensed facility for storage, shipping and labeling. Our staff are well-versed in all regulations, protocols and procedures, and we have a wide variety of Health Canada licensed products.

Check out some of our case studies, which showcase how Stalco has managed to help various eCommerce businesses flourish and expand.

Conclusion

As evidenced by the information outlined above, it’s clear that there are countless benefits of outsourcing logistics to a trusted fulfillment center. In the eCommerce[8] world, fulfillment centers have emerged as a crucial force for driving growth, enhancing customer retention and optimizing organization. Modern fulfillment centers, including Stalco, go far beyond traditional warehousing and shipping services, offering a slew of customizable operations to clients of varying sizes.

A package’s journey from order placement to doorstep delivery is highly complex, and it requires immense organization and coordination. Fulfillment centers are uniquely skilled at seamlessly orchestrating the whole process, and they ensure each step along the way is executed effectively and efficiently.

Fulfillment centers are able to bridge geographical gaps, strategically distributing products to consumers and allowing businesses to expand consumer bases to new regions. Additionally, fulfillment centers have mastered the art of hassle-free returns and operational efficiency, both of which are hallmarks of a successful, scalable venture. Outsourcing to a fulfillment company will automatically endow your business with reduced overhead costs, optimized inventory management, and the ability to scale operations without taking on excessive risk.

By letting an external party handle everything from warehousing to order processing, inventory management to shipping, eCommerce company owners can focus on what they do best: innovate, ideate, market and build consumer relationships. In the end, using a fulfillment center will help you achieve a better and more sustainable business.