Your fulfillment center is an integral part of your supply chain management as an ecommerce business. It helps you handle inventory management, order processing, and delivering ecommerce orders to your customers.
But as your business grows, you may need to expand your fulfillment operations. A task that often takes longer – and more resources – than you’d expect. Indeed, it can be an overwhelming job, with so much to account for when choosing a fulfillment center that meets your needs.
To help you kickstart the process, we put together this blog to outline the 7 deciding factors that will help you choose a fulfillment center. Before we dive into these factors, though, let’s avoid confusion and first take a quick look at what the difference is between a fulfillment center and a warehouse.
What’s the Difference Between a Fulfillment Center and a Warehouse?
A warehouse is a building used to store large volumes of inventory for extended periods until it is needed. Warehouse spaces also tend to be fairly low-activity buildings, only moving items in and out as needed.
On the other hand, fulfillment centers work to pick, pack, and ship out all of the orders that come in from your ecommerce business. Also known as a third-party logistics (3PL) provider, a fulfillment center is a much busier place with a lot of activity. The fulfillment center stores inventory like a warehouse does but also provides the logistics to send orders out to customers.
Products only remain in a fulfillment center for a short period of time before they are shipped out. They are also equipped with tools for processing orders, managing inventory, returns management, labeling and packaging, and more.
You can enjoy many benefits by outsourcing to a fulfillment center, and it’s important to keep that in mind as you look to find the right fulfillment partner for your business. These include:
- Extends Your Reach. Working with a fulfillment service provider helps you extend your reach and grow your business. With professional help from a fulfillment center, you can fill orders faster, ship quicker, and reduce the strain on your in-house resources. This allows you to increase your customer base and deliver better customer experiences, all while spending more time on marketing and sales to reach new audiences.
- Maximizes Cost and Time Efficiency. If your focus is on getting your goods out of the door yourself, this can lead to major delays and issues. It’s not a good use of your time and can be very expensive, as you need to hire more people to handle shipping and distribution and meet your fulfillment needs. You can spend your time on better initiatives like managing your organization and creating growth strategies. This helps you save money and improve your facility’s efficiency.
- Allows for Faster Shipping. In today’s modern world of ecommerce shopping, customers expect fast shipping. Companies like Amazon that offer next-day or same-day shipping are making the need for fast deliveries even stronger. In fact, 61% of consumers today expect free next-day shipping. A fulfillment center allows you to outsource your shipping and fulfillment services and leverage bulk shipping and packaging costs. This leads to faster shipping and quicker fulfillment when your finished goods ship to customers. You can also make sure that retailers have your products in stock quickly, so shelves don’t sit empty.
- Improves Customer Experience. Another important benefit granted by a fulfillment center is a better customer experience. Customer success depends on being able to meet and exceed expectations. When you can deliver a better fulfillment process, you can provide your customers with fast shipping, great products, and easy returns processing or exchanges if there is an issue with the delivery. A fulfillment warehouse will ensure that your order processing is optimized to the highest level so your customer satisfaction levels will rise.
- Gives Access to Professional Expertise. Running an ecommerce business, particularly as a small business owner or a startup, means you’re busy with many different things and wearing many different hats. The same is true of most online businesses. Therefore, it’s helpful to have professionals and experts to help you work through supply chain issues and deliver fulfillment solutions. The professional expertise you get from working with a distribution center can help you focus on other tasks while letting the pros work on the logistics end.
7 Things To Consider When Choosing a Fulfillment Center
Now let’s explore the factors you need to consider as you work on picking a fulfillment center that will meet your needs and provide the support your ecommerce business needs.
1) Scalability
No matter what size your business is, you want to be able to grow. Your fulfillment center needs to be able to grow with you. If it can’t, then you’ll end up falling behind on order fulfillment, stagnating your growth, or needing to find and implement a new partner in a short period of time. Examine the capabilities of your fulfillment partner and ensure that they offer the flexibility needed to grow with you as you get more orders. If they can’t meet the standards you require, you should look for a new partner that can scale with you.
2) Order Cutoff Times
As an online business, you understand how important it is to provide great customer experiences and timely shipments. However, fulfillment centers and distribution centers are staffed by people, not robots. As a result, these facilities need to operate on schedules that fit human employees’ needs. You want to make sure that your fulfillment center can ship products quickly, but understand it may take longer than Amazon’s trillion-dollar round-the-clock setup.
Ask about order cutoff times to see when orders placed online will be shipped out and processed through the center. Know the process of when products are picked, packed, shipped, and delivered. This helps you understand the flow of the fulfillment process and know when customers will get their orders and the delivery times you can offer on your online store.
3) Zone Shipping
Another important part of picking a fulfillment partner is looking at shipping zones. Ask yourself where it makes the most sense to have your fulfillment center location. Look at real-time sales volume data and forecasting to see which areas will perform better with shipping and where most of your shipments will go. Freight carriers classify shipping lanes into eight zones, so you want to get your fulfillment center in the right zone for your business.
You can perform other tests and gather analytics on pre-sales, competitive analysis, and market research to learn more about which zones are relevant to your business. Make sure you look at zones critically when picking a partner and look at sales performance across different zip codes.
4) Shipping Costs
Many different factors impact shipping rates, including the pick and pack process, number of units, weight, carrier rates, and collateral. There is complexity in every shipment, and you need to understand it to calculate the shipping fee accurately. Every touchpoint in the fulfillment center will be charged, so you should consider the different options that fulfillment centers offer for shipping costs.
Some fulfillment centers will have buying power with carriers but will charge an additional surcharge fee to use them. Other centers will bundle these costs into a single package for pick and packing, shipping, and storage. Make sure you clarify with the center what type of shipping cost model they use and make sure it will work for what you need in a partner. Don’t be suprised by the hidden costs in fulfillment centers. These can quickly add up and greatly influence your margins.
5) Customer Support Services
You want to ensure that any fulfillment partner you work with has a strong customer support team behind them. When a problem arises, you want to know that you can immediately address the issue and work with the fulfillment center to get the support you and your customers need. Take a close look at the communication channels and support options a potential fulfillment center has available and how they plan to address emergencies.
6) Transparency and Visibility
As with all partnerships, you need transparency and visibility to build a winning logistics strategy. You want to be able to track the orders as they are in progress and see what is happening with each fulfillment order. Your customers also want to know the status of their orders so they aren’t stuck waiting by the mailbox. Transparency is also important so businesses know what to promise customers. If the fulfillment center can’t fill orders at the expected rate, you need to know that so you can communicate it to customers.
7) Fulfillment Software Capabilities and Integrations
One of the most important factors to consider when finding a fulfillment partner is to look at what type of software the fulfillment company uses and the integrations they offer into other technology tools. As an ecommerce business, you already understand the importance of having the right digital tools, and you want to make sure the fulfillment center won’t disrupt the process.
Examine the integration options closely to ensure that their systems will integrate into your logistics tools and vendor management systems. This will help you communicate clearly with customers and ensure all orders are tracked. SKUs are restocked when needed, and you are prepared for shifts in inventory. As an ecommerce company, this is an essential step to giving better order fulfillment services to your customers.
Take Control of Your Production Process With Anvyl
Selecting and scaling shipping operations must be top of mind for any growing company. If you want to expand your fulfillment operations and exceed customer demand with streamlined logistics, Anvyl can help — learn more here.
