What is a fulfilment centre?

A fulfilment centre is a third-party service provider that processes and ships products that your customers have purchased. eCommerce fulfilment handles the logistics required to get an online order to a customer’s doorstep, eliminating the need for you to package, address and deliver each order yourself.

To use a fulfilment centre, you must first store your product inventory with the fulfilment provider. Then, when you receive an order through your website, you notify the centre, which in turn locates the item ordered, prepares it for delivering and works with a delivery provider to have it delivered to your customer. From the customer’s perspective, the sole point of contact remains your ecommerce site.

A variety of companies offer these kinds of order fulfilment services. Some, like Fulfilment by Amazon services, are available only to sellers who manage their online shops through certain platforms. Others, like FedEx Fulfilment, are integrated with other logistics services, while Floship or James and James Fulfilment are offered by companies specialising in fulfilment operations for third-party ecommerce vendors.

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Fulfilment centres: advantages and disadvantages

For ecommerce merchants, fulfilment centres offer a range of advantages:

No physical infrastructureThey eliminate the need to maintain a physical location for housing and processing your orders. This will help your business cut considerable costs like rent, bills, staff, packaging materials and delivery fees.

Faster order processingFulfillment centres can deliver orders faster than most ecommerce sellers can on their own. They usually provide excellent logistics services that are more efficient and accurate.

Lower staffing costsYou do not need to hire and manage your own staff to handle orders, which in turn reduces concerns about paychecks and other payroll taxes.

Larger product selectionFulfillment centres make it more feasible for sellers to offer a larger selection of products than they could manage if they had to maintain inventories themselves.

Scalable operationsThey are usually capable of processing dozens, hundreds or even thousands of orders per day, helping sellers keep delivering flowing consistently.

More time for other workBy freeing brands from the work of handling orders, centres give companies more time to focus on strategic tasks. Without worrying about order processing, the main priorities will be around planning business growth, such as brand awareness and marketing strategy implementation.

However, fulfilment centres do come with some drawbacks:

CostSellers have to pay providers for their services, such as a flat fee to integrate your store with the fulfilment centre, along with fees for each order processed.

Lack of controlBrands have little control over how quickly a centre processes orders and cannot intervene in fulfilment operations when something goes wrong. This could cause customer relations issues, which sometimes leads to negative feedback and non-returning customers.

Delivering timeAlthough the fulfilment company may be able to process orders faster, the time it takes to deliver an item from a centre to the customer depends in large part on where the centre is located, potentially extending delivery timeframes. These factors need to be considered when picking a partner. .

Lack of customizationCenters typically do not allow sellers to customise orders or add special touches, like inserting a personalised thank-you note for each buyer.

Inventory replenishment delaysMost centres require the seller to keep track of inventory and replenish it as needed. This means orders could be delayed in the event a seller is unable to replace an out-of-stock product quickly.

How a fulfilment centre works

The first step in using a centre is to find the right fulfilment provider. Look for one with locations close to your customers and whose prices align with your budget.

You will then situate inventory in the fulfilment provider’s facilities and integrate your online shops with their systems, so the provider receives the necessary information from the seller when an order is placed. This process should be automatic - as it’s not ideal to trigger fulfilment requests manually each time a new order is completed on your website.

Other order processing activities remain the responsibility of the seller. For example, if customers receive the wrong order, the seller will need to contact the customer to address the issue. Payment must also be handled separately since payment processing is not a service most fulfilment providers offer.

Fulfilment centres vs. fulfilment warehouses

The term “warehouse fulfilment” is sometimes used interchangeably with “fulfilment centre.” This can lead to some confusion, because fulfilment centres differ from traditional warehouses.

• A traditional warehouse is a location where inventory can be stored for the long term and may not always be immediately accessible.
• Warehouses also offer only a storage solution, without providing the picking, labelling, packaging or delivering services that fulfilment centres offer.
• Warehouses are useful if you have excess inventory that requires storage until you are prepared to sell or seasonal products that sell only during certain times of the year.

In contrast to warehouses, fulfilment centres focus on storing inventory for relatively short periods of time, then packing and delivering to customers when orders are placed, a process known as dropshipping.

Unlock the secret to better fulfilment experiences

To get the most out of this process, ecommerce providers need flexibility and choice. The ecommerce platform they use must be able to integrate with any provider they choose to work with, without requiring manual effort on the part of the seller each time an item is sold on their website.

The best ecommerce platforms also make it easy to offer customers multiple fulfilment options, like delivering from a local store, facilitating in-store pickup or shifting fulfilment to a different location if the first option is unavailable. This flexibility is critical to ensure customers receive orders as quickly as possible, every time.

Fortunately, Adobe Commerce supports all these fulfilment options, integrates with the most popular fulfilment providers and provides essential tools for order and inventory management.

Learn more by scheduling a demo today.

Now that you have gained extensive knowledge about fulfilment centres, you’ll need to decide whether using such a service will benefit your business. For example, if you have limited storage space or staff but many orders to process, sending stock to a facility like this can definitely save you a few worries.

If your business provides customised products or is reliant on personal touches sent with every order, fulfilment services may however not be an option for you.

For further help, check out our guide on how to grow your ecommerce business.

FAQs

What are the types of fulfilments?

There are 4 types of order fulfilment:

1. In-house fulfilment - the company’s employees process the customer orders.
2. Outsourced fulfilment - the fulfilment centre handles storing, packing and delivery.
3. Hybrid fulfilment - a mixture of the above fulfilment options is used.
4. Dropshipping - similar to outsourcing, without the need to manage stock.

What is a fulfilment fee?

The fulfilment fee is the cost related to inventory receiving and storage, alongside processing customers’ orders, from picking, packing, to delivery and returns. The amount varies, depending on the kind of products a business sells and its fulfilment method.

What is the best fulfilment service?

There are many fulfilment centres available on the market, each with their own features. Some of the best fulfilment providers out there include ShipBoB, Rakuten Super Logistics, FreightPros and Fulfilment by Amazon. Make sure the company you choose to fulfil your orders aligns with your business requirements.