What is a fulfillment center?
The terms warehouse and fulfillment center (or distribution center) are often used interchangeably but can have very different connotations. Both are large buildings that hold inventory for businesses that sell goods; however, the use cases and services provided are often quite different. Let’s break down each option to a better idea of the best eCommerce shipping solution for your business.
Fulfillment center
A fulfillment center is a physical location from which a third-party logistics provider (also known as a fulfillment provider) fulfills customer orders for eCommerce retailers. A fulfillment center exists to get online orders to customers quickly and relieve eCommerce companies of managing this crucial-yet-challenging process.
Warehouse
A warehouse is usually a place where inventory is just stored, while a fulfillment warehouse has many other jobs besides storage.
What are the differences between fulfillment centers and warehousing?
Long-term or short-term storage
A fulfillment center is designed for short-term storage usage. The main goal of a fulfillment center is to increase the turnover rate of inventory.
Ideally, inventory shouldn’t store in a fulfillment center for more than 30 days, or merchants may pay high warehousing storage fees for a low inventory turning rate. However, eCommerce sellers should preplan for inventory replenish flow. To avoid a backorder situation, make sure the fulfillment center always has enough stock to prioritize fulfill your online orders.
The role of warehousing is to store products. And the warehousing is designed for B2B.
Operations
A fulfillment center operation includes product receiving, product storage, online order integration, item pick, item pack, item labeling, shipping item, managing returns, and inventory control.
Warehousing’s main action occurs when inventory is coming in, added, or transferred out. It has limited operations.
Shipping solution
A fulfillment center has relationships with different shipping carriers. A fulfillment center has a variety of shipping solutions for countries and regions to meet different shipping budgets. Also, a fulfillment center needs to meet the same-day order fulfillment, and shipping carriers can pick up shipments daily.
However, warehousing is another world for shipping solutions. First, warehousing may doesn’t have a relationship or limited shipping carriers to choose from, and then you need to schedule the delivery and pickup time with the warehousing. Once your shipping carriers miss the time, you need to reschedule the time.
How does a fulfillment center work?
Inventory receipts
Once you have settled an agreement with eComhub, you can arrange to ship bulk inventory to our fulfillment center. When receiving inventory, fulfillment centers typically rely on barcodes, including UPC, GCID, EAN, and ISBN codes, to distinguish between various products. The fulfillment center will also tag the product’s location in the storage facility to easily find and package the product when your customer orders.
Online order integration
eComhub can integrate with major eCommerce platforms to immediately receive the order information from your customer’s purchase.
eComhub also has other communication methods such as single-order reporting or uploading multiple orders in CSV format.
items picking, packing, and orders shipping
When the order detail arrives at eComhub system, the items need to be located and collected. Once gathered, eComhub associates will pack the products into proper packaging material. Then stick the shipping labels, the orders are ready to handle by shipping providers.
Managing inventory
eComhub will provide a daily inventory report to you by the end of the daily order operation. And the information allows you to manage your inventory. The eComhub system is helpful to track daily, weekly, and monthly sales data and estimate when inventory levels will need to replenish.
Should I use a fulfillment center to fulfill my online orders?
Benefits of using a fulfillment center
Leave it to the experts
Order fulfillment needs labor and a complex machine to finish the job. If you fulfill your online orders by yourself, more money and time need to involve. Why don’t you focus on your online store operation and promotion? Leave the tough job to experts.
Shipping
Inbound and outbound shipping is not easy to handle. A fulfillment center hires logistic experts to optimize your transit time. Also, they negotiate shipping costs with 3PLs to have a discount shipping rate.
Decreasing your storage fees
A fulfillment center ideally offers 30 days free storage space. If your inventory turnover rate is less than 30 days which means you have free storage space. And you only need to consider the fulfillment and shipping cost. To increase your profit margin.
There are so many fulfillment centers. Which one should I use?
This question is kind of tricky. To answer the questions, we need to consider the factors below
What kind of product are you selling?
Where are your suppliers’ locations?
Suppose you sell items with large weight or units, like home furniture, oven, and garden machinery. You may use the fulfillment center in your marketing countries.
If you sell 3C, beauty devices, textiles, and fashion accessories, you may use the fulfillment centers close to or in your supplier’s countries because these products have more solutions to ship. If the fulfillment center is close to your suppliers, you easily control your inventory. And it is fast to replenish your stock.