On our blog, we tackle almost every eCommerce-related subject and question. Today, it won’t be any different, but in this article, we want to talk to you about what we do. We want to talk about fulfillment centers. What is a fulfillment center? Is it just a fancy name for a shipping warehouse? Why are these facilities so popular in the eCommerce industry? If you’ve been asking yourself these questions, you’re in for a treat because we are going to address these questions right here and now!
Let’s start with the beginning. If you run an eCommerce business, you have to do something with your inventory, right? Some eCommerce companies, especially at the beginning of their journey, use private houses/apartments to store offered products. However, as your online store grows, you have to store your inventory elsewhere because your house is no longer sufficient. At this point, many entrepreneurs decide to rent a warehouse. And again, this solution can be perfectly fine for some time!
Nonetheless, inevitably the time comes when you realize that running an eCommerce business is so much more than just storing inventory and selling products online. The whole logistics question can easily get time-consuming and complicated. After all, you have to:
- Manage your entire supply chain
- Cooperate with partners and contractors (i.e., courier companies)
- Pick and pack products before they are shipped
- Ship products via various courier companies and postal services
- Manage returns (which are more prevalent in the eCommerce sector than you’d think!) and complaints
When you ship about 100 parcels a month, it’s not that big a deal. But what happens when the number of shipped parcels grows to 1,000 and more? Things quickly get complicated. And this is where the fulfillment center comes into play and saves the day!
What is a fulfillment center?
Many people think that fulfillment centers are, in essence, just shipping warehouses. They assume their role is limited to storing your inventory and shipping orders on your behalf. Well… not exactly :-)
First of all, we ought to begin by explaining that fulfillment centers act as the third-party logistics (3PL) company. And what does a 3PL entity do?
In short, they take every single logistics-related process off your shoulders.
In just a moment, we are going to show you what does it look like in practice. In short, we can say that when you’re working with a decent fulfillment center, you can almost forget about logistics in your online store. Everything happens automatically, and you can focus on growing sales. Moreover, fulfillment centers are fully integrated with your eCommerce platform, so they have immediate insight into your orders and can start working on every new order without unnecessary delays.
How does a fulfillment center work?
That’s another vital question. Typically, a fulfillment center is a combination of storage facilities (usually, it’s simply a modern warehouse space) and a logistics center (which is the mastermind behind all this). In other words, a third-party logistics (3PL) company offers a comprehensive order fulfillment service. You can think of it as your outsourced fulfillment partner. Take a look at this infographic we made to show our clients what our daily work looks like:
In order to work flawlessly, a fulfillment center has to offer much more than just a shipping warehouse. Such a company has to have an advanced Warehouse Management System (and believe us, this software is pricey and difficult to implement!) and every logistics process fully figured out.
Just think about just the storage alone for a second. Imagine you run such a logistics center, and your warehouse works with ten or twenty clients. You have to somehow fit all these products in this one building, and you have to make it right. Otherwise, order mix-ups and inventory disorder will shortly come knocking at your door. Running a fulfillment center can be tricky. That’s why this niche requires a lot of logistics experience, top-of-the-line IT solutions, and thought-out procedures.
Functions of a fulfillment center
Now let’s analyze the functions of a fulfillment center. What does such a company do in real-life conditions? The role of a logistics center is quite broad, and it comprises:
- Helping you with all the necessary eCommerce integrations (with your platform or other eCommerce software, and also with the carriers’ systems)
- Providing necessary warehouse space that’s fully adjusted to your product’s needs
- Dealing with inventory management
- Managing and tracking orders placed in your online store
- Picking and packing products
- Dealing with shipping and delivery of your orders (which entails cooperating with carriers and tracking each parcel)
- Handling returns and complaints
Fulfillment centers vs. warehouses
Fulfillment centers and warehouses share much in common but we can draw a line between them.
Let’s start with warehouses, which are basically a place to store inventory. Typically, the same merchant that produced the inventory manages the warehouse and is reponsible for shipping items out when they are ordered, either by an end customer or some distributor or retailer.
The warehouse and the inventory it holds belong to the same business, and that business may or may not use it for order fulfillment. Warehouses have one primary role — to store goods until they are needed elsewhere.
Then there are fulfillment centers, which play two roles almost equally - storing inventory and order fulfillment. Inventory is usually stored for just a short time, with enough on hand to meet orders and more coming in on a regular basis. But fulfillment centers are focused on comprehensive logistics services much more than warehouses are.
Fulfillment centers have detailed processes in place for every step, including picking & packing items, preparing them for shipment via couriers and even handling returns and processing them back into inventory when possible.
Types of fulfillment centers
Generally speaking, fulfillment is a comprehensive solution, and a decent logistics center should be able to help you with every logistics process you deal with in your eCommerce company. However, some companies are strictly focused on specific sectors and product types.
We can indicate four major subtypes of fulfillment centers:
- Apparel fulfillment companies (they work almost exclusively with apparel and clothing brands)
- eCommerce fulfillment companies (they are focused on providing service for online stores)
- Literature fulfillment centers (they store and ship books and magazines. Frequently, these companies also offer advanced printing services)
- Food products fulfillment companies (they work with FMCG brands and have warehouses fully adjusted for storing food products such as temperature-controlled storage facilities, for instance)
Cooperation with a company with a fulfillment center (with Omnipack!)
What does working with us mean to you? First of all, with us, you can grow. Our service is 100% scalable, and it doesn’t really matter whether you ship 1,000 or 10,000 products a month. We can handle large volumes with ease! But there’s more:
- Turn fixed costs into variable costs (with us, there are no hidden fees, you pay just for the service and storage space)
- You can quickly implement new ideas (for instance, a new way of packing products, we are flexible, and our automated solutions are designed to adapt as quickly as possible)
- You have full control over the process (with us, you have access to our WMS system that allows you to verify our work at any given moment)
- Your operations are supported by people who have sent millions of parcels (logistics is what we’re good at, and that’s what we’ve been doing for years!)
Now, we want to tell you a bit more about our warehouses.
Our fulfillment centers
Currently, we have two fulfillment centers:
- The first one is located in Nadarzyn (near Warsaw).
- In H2 2020, we opened a second warehouse in Gorzów Wielkopolski (right at the Polish-Germany border). This warehouse is our gateway to Germany and other Western European markets.
Both our warehouses are equipped with top-notch infrastructure, including intelligent warehouse automation solutions. An advanced Warehouse Management System called Logifact helps us maintain Amazon-grade service and keep everything that happens in our warehouses under constant control. And thanks to the close proximity to Germany, we can offer the express-delivery standard for this entire country (and other DACH countries as well!).
Would you like to see our warehouses in action? We’ve made a short video that shows what it’s all about and how we get things done at Omnipack:
You now know everything about fulfillment centers!
We will gladly answer all your questions and guide you through the entire process. Work with us and forget about logistics!
What is a fulfilment center?
A fulfillment center is the facility used by logistics operators to store inventory, prepare it for shipment and transfer it to a courier service. A fulfillment center may support a single brand or product or have multiple clients at the same time.
How to choose the best fulfillment center?
There are many factors involved but the location of their warehousing facilities, partnerships with shipping agents, technologies used in the warehouse, picking accuracy rate and range of additional services offered, like processing returns, are among the things you want to check before selecting a fulfillment partner.
How much does it cost to use a fulfilment center?
Costs will vary according to the type and quantity of product stored and shipped. Whatever the cost, it is almost always better, financially speaking, to work with a logistics partner than to plan, build, staff and manage your own facilities.
What tasks are performed in the fulfillment center?
Goods can be received from manufacturers or distributors, processed into inventory, stored securely, picked and packaged when ordered and then turned over to a shipping agent for delivery.