What Is A Fulfillment Center & Why Is It Important?

Reading time:  3 min 50s 

Lots of ecommerce businesses may struggle to fulfill customer orders in a way that guarantees the best possible experience. Fulfillment centers, however, help to take this burden off your shoulder and complete the order process. Anyone in the ecommerce retail sector will understand the critical importance of a smooth order fulfillment process.

This guide has been compiled to help you understand what a fulfillment center is and why it is of great importance to your ecommerce business.

Fulfillment center definition: what is a fulfillment center?

“Fulfillment centers are a physical space/location/center that receives, processes and fulfills orders from ecommerce retailers”

Just like the name implies, these centers help ecommerce businesses fulfill orders. More customers than ever are taking to the internet to search and purchase products online. For the ecommerce retailer, this is a great opportunity to market to a global customer base. An effective fulfillment center will be able to help ecommerce businesses scale globally.

But there are challenges that come with online shopping, as well.

  • Customers still want the best possible experience.
  • Delayed shipments or orders that are taking too long to process can cost you many of your customers.
  • You can’t afford to limit yourself with the limited space in your warehouse.
  • Having a central spot where all orders are processed will almost always spell disaster.

So, how do you ensure that customer orders are fulfilled as fast as possible without wasting time? How can you minimize your delivery times and streamline your entire order fulfillment process? Well, this is only possible by having fulfillment centers in your key shipping hubs, spaced out so you can fulfill orders more efficiently.

 

How a fulfillment center works

To help you get the perfect picture of what a fulfillment center is all about, let’s consider what the typical order fulfillment process looks like for the average small ecommerce business.

  • This starts with the customer placing an order online.
  • Once ordered, you get the product from your inventory, label it, package it, and then hand it over to a shipping carrier who will then deliver to the customer.

If you’re managing your inventory by yourself, you may find yourself spending more time than normal on picking, packaging, and handing out orders to carriers for delivery. There’s a risk of errors and mistakes that grow with how successful you get and the more orders you receive.

These mistakes may bring about a high backlog of back-order items.

Considering your customers want their products delivered fast and hassle-free, you run the risk of souring their experiences with the little but costly mistakes you make while picking and shipping out orders.

 

So, what if you decide to use a 3PL order fulfillment center?

In this case, order details are immediately forwarded to the fulfillment center as soon as the customer places their order. Since the fulfillment center already has your inventory in storage, they’ll immediately pick the ordered item(s), label, package, and hand them over to the carrier.

It’s a very similar process if you assess it critically.

The only difference is that this takes the burden of picking, packing, labeling, and shipping products off your shoulder. It also eliminates the risks of errors and therefore makes the order fulfillment much faster and more efficient.

 

Why your ecommerce business needs a fulfillment center

It doesn’t matter whether you’re running a small or mid-sized ecommerce business. There’s a lot to gain when you leave order fulfillment to a credible, experience, and reliable fulfillment center.

Fulfillment centers bring more value to your order fulfillment process.

They’ll help make order fulfillment more efficient, fast, and cost-effective. And this is critical since your success will be dependent on the experience of your customers. Some of the many benefits of an order fulfillment center are listed below;

 

Avoid inventory management challenges

Warehousing and inventory management pose big risks to the average ecommerce retailer.

  • Do you really have to take on the challenges that come with managing a physical space?
  • Can you put up with all of those inventory and warehousing issues as your order volume increases?
  • Does it make sense to spend the bulk of your time packing boxes and running to the post office every other day?

Of course not, only if you own a brick and mortar retail outlet.

The more your business becomes successful, the more your order volume will be. As soon as you start finding it hard or challenging to keep up with your order volume, you definitely need a fulfillment center to help you take warehousing, inventory management, and order fulfillment off your shoulders.

 

Cost-effective and efficient order fulfillment

With a fulfillment center, order fulfillment will become far more efficient and cost-effective.

Picking out items, labeling and packing the products, and the other processes involved in a typical order fulfillment process leaves too much room for errors and mistakes, on the part of the retailer.

A fulfillment center, however, possesses the resources and capability to handle all of the complexities of ecommerce logistics. These agencies are experts at what they do and there’s a whole lot of experience and volume, to your advantage. Fulfillment centers enjoy strategic location advantage and can help you negotiate lower shipping rates. They have the capacity and capability and will help you make order fulfillment a much more pleasing experience for your customers.

 

Warehousing and order fulfillment automation

To meet the ever-growing demands of customers today, ecommerce businesses need to automate their operations. They need to work with automated solutions for warehousing, inventory management and order fulfillment operations.

Modern fulfillment centers leverage technology to automate all of these processes. An example is the ease at which ecommerce businesses can always check out the status of their inventory without a need for their physical presence. This is because all the details associated with the fulfillment processes are documented in real-time. Amazon has proven this and has helped millions of ecommerce businesses grow. Why can’t a normal small ecommerce retailer do this?

 

Fulfillment solutions like ZhenHub, for instance, have built-in integration for a number of ecommerce platforms. This integration automatically pulls all the order information from various ecommerce platforms like Shopify, Woocommerce, Amazon etc. The order information is automatically sent to the nearest fulfillment center where they are picked out, labeled, packed, and shipped.

After shipping, tracking details are automatically pushed to the ecommerce store and made available to the customer for maximum visibility.

 

Difference between a warehouse and fulfillment center

A warehouse and a fulfillment center seem very similar but they are still very different.

Both of these two physical spaces are used to hold inventory for businesses but they serve different purposes. While the warehouse is mainly used to store products for certain periods of time, a fulfillment center does this, and much more.

Along with storing your inventory, a fulfillment center will also help you complete customer orders.  As soon as orders are placed on your ecommerce store, they are sent to your fulfillment center where the inventory is picked, packed, labeled, and shipped out for delivery.

By using a fulfillment center, you’re outsourcing your order fulfillment process.

This helps to take so many burdens off your shoulder so that you’re able to increase your capacity to fulfill customer orders more efficiently. A warehouse, on the other hand only stores your inventory for an extended period.

 

Bottom Line

If you delegate your order fulfillment needs to a reliable agency like ZhenHub, you’ll be able to away with storing, packaging, shipping, returns, and many of the other challenges that you would face with managing your own inventory. This may appear so simple but once you try it out, you’ll never want to go back to the old process again.

You’ll be able to free up time so you can focus on growing your business. This also helps to improve the efficiency of your order fulfillment process so you can meet or even exceed customer expectations. ZhenHub offers top-notch software, shipping, warehousing, order fulfillment, and inventory management services. You may want to consider us for your warehousing, inventory management or order fulfillment needs for your ecommerce business.

If you need assistance with reducing logistics costs, you can reach out to our specialists – hello(a)zhenhub.com or submit an enquiry here.