Warehousing. Picking. Packing. Shipping. Returns.
These are all things that a fulfillment services provider can do for your e-commerce business.
In its simplest form, order fulfillment is about preparing and delivering your customers’ orders.
If you’re a new or small merchant, you can handle the fulfillment process yourself. But you already have many moving parts to juggle.
Without a helping hand, you risk mishandling this all-too-critical process in your business, and your customer experience and profitability can suffer. That’s why we compiled this guide ― to help you understand better.
- Fulfillment services are third-party warehouses that assemble and ship your customers’ orders from their fulfillment centers.
- A fulfillment service offers several advantages, it saves you time and money, gets a whole team of experts to manage everything and allows you to deliver fast and affordable shipping, and has more buying power on packaging and shipping costs.
- Choosing a fulfillment services provider that fits the bill can be daunting, each company has a different business model, requirements, and benefits, choose according to its industry experience, price, location, services, customer support, technology, data and analytics, and scalability.
Table of Contents
What Are Fulfillment Services?
Fulfillment services are third-party warehouses that assemble and ship your customers’ orders from their fulfillment centers.
If you’ve grown beyond your existing warehouse or you can’t ship orders yourself manually anymore, it’s time to engage a fulfillment service provider.
A fulfillment service offers several advantages:
- It saves you time: You’ll have more time to manage and optimize things that have a greater impact on your bottom line.
- You get to work with a team of logistics experts: With an outsourced fulfillment services provider, you get a whole team of experts who manage everything and are there to help you along the way.
- It allows you to deliver fast and affordable shipping: Some fulfillment service providers have multiple centers across different geographic locations. This helps you provide fast deliveries and affordable shipping to different customers.
- It saves you money: Many fulfillment service providers offer flexible pricing that can adapt to your needs as you grow compared to committing to long-term rental contracts.
- You can benefit from their efficiencies: A fulfillment service has more buying power on packaging and shipping costs. You can leverage these efficiencies and gain new levels of agility.
What Are the Ways To Handle E-Commerce Order Fulfillment?
There are three main e-commerce fulfillment models:
- In-house or self-fulfillment
- Third-party fulfillment
The strategy you choose will depend on factors like your industry, business size, order volume, and budget.
Below is a breakdown of each of these models, and their associated pros and cons.
In-house or Self-fulfillment
With in-house or self-fulfillment, you’ll do everything yourself. If you have low order volumes and can handle packing a few orders every day, this model is worth considering.
However, some retailers, especially those without e-commerce warehouses, prefer to use in-house fulfillment over other models.
“I handle e-commerce order fulfillment by keeping our operations in-house. This allows us to complete the order without seeking help from a third party. When we initially began our operations, we dealt with orders in small quantities. But as time elapsed, we were able to scale our operations and incorporate more retail stores into our business. This allowed us to exercise our freedom with respect to sourcing and packaging the products. We now have a clearer understanding of our inventory stocks and hence can replenish them accordingly.” ― Denis Leskovets, CEO and product specialist, Office Consumer.
- Complete control over business operations and the customer experience
- Direct eyesight on your inventory
- Fewer direct costs, such as hiring logistics experts and staff
- More room to use customized packaging, promote brand identity, and cultivate an attractive brand image
- Less storage space
- Slow and time-consuming order processing
- Your business’s growth potential suffers because you spend less time acquiring new customers
Dropshipping is a hands-off model that doesn’t require you to keep any items in stock.
Customers place their orders, and the product manufacturer handles all the production, storage, shipping, and returns. Your part is to market your business and sell products.
Dropshipping frees up more time so you can optimize across your business and gives you an edge over your competitors.
- Low capital investment
- You can run your business from any location
- More time to test out different products and improve your bottom line
- No control over product quality or the customer experience
- Lower profit margins for your business
- It may be difficult to keep up with large order volumes, especially if customers order from different third parties
- The credit for your work goes to someone else, so it’s difficult to build your brand
- If the manufacturer is far from your location, it could mean expensive shipping, delays at customs, and slow or long transit times
Third-party logistics (3PLs) handle inventory storage and manage the entire order filling process, giving you more time to scale your business.
For example, Amazon offers several comprehensive management tools for Amazon sellers, such as Fulfillment by Amazon (FBA). Sellers whose products have Prime status send their wares directly to Amazon fulfillment centers for storage and fulfillment, after which they’re shipped out in Amazon Prime packaging.
- Speeds up your fulfillment process
- Frees up time to focus on growing your business
- Comes with a team of logistics experts and support staff
- Offers better technology to automate parts of your fulfillment process
- Provides supply chain insights to improve supply chain optimization and make better business decisions
- Many 3PLs have multiple locations so you can offer affordable shipping to a diverse customer base
- It can be expensive
- Less control over stock and packing orders
- Unsuitable for businesses with unpredictable or low order volumes
What To Look for in a Fulfillment Services Provider
- Industry experience
- Customer support
- Data and analytics
Choosing a fulfillment services provider that fits the bill can be daunting. Each company has a different business model, requirements, and benefits.
To help you decide, here are the primary factors to consider when selecting the best fulfillment services provider for your business.
Each fulfillment services provider has a unique focus.
Look for a company that has the experience you need, especially for your industry. Find out whether they’re already working with businesses like yours, can fulfill orders accurately and on time, and offer strategic advice or guidance.
Entrusting your needs to just any provider might leave your clients frustrated and affect your profitability and growth.
Price or cost goes hand-in-hand with quality.
The provider should provide valuable fulfillment services to your business and customers without compromising on the quality of the last mile process to your customers.
Also, check the recurrent subscription fees, per-transaction fees, and any additional hidden costs to assess their implication on the total bill.
With same-day order delivery expected to reach $9.73 billion by 2024, choose a fulfillment services provider with proximity to your customers’ location as this will shorten the time between ordering and receipt.
Shipping is a delicate process. So, you need a fulfillment services provider that can handle multiple items with utmost care, in a timely and efficient manner.
“My business deals with making steel board and batten sidings and shipping them nationwide. We first ship a sample of the customer’s chosen item and also promise to assist them. The timely and efficient fulfillment of these orders is critical because they either break or make the trust of customers.” ― Ryan Reed-Baum, founder and CEO, TruLog Siding
If the provider offers extras like branding, packaging, and returns management, it’s a plus because you’ll offer a better experience and delight your customers. The result: they’ll want to buy from you frequently.
Anticipate your customers’ problems and find a fulfillment services provider that offers timely and regular support when your clients need it.
Be keen on how the provider you’re considering deals with customer support, their communication channels, and how they respond to client-related emergencies.
“It is critical for service providers to ensure that our customers have a smooth ordering and receiving experience. We expect our service providers to be available at all times to take orders from customers and assist them with pricing and other matters. The packing should be done carefully to not ruin the sidings ordered by the customers, and the delivery should be made on time.” ― Reed-Baum
Research on how different fulfillment services providers use technology to support their routine processes.
Look out for features like warehouse inventory control systems, inventory management software, data reporting, inbound or outbound freight management, mobile phone integration for order tracking, voice tasking, and more.
Data and Analytics
You need to offer speedy deliveries, keep logistics costs down, and stay ahead of customers’ demands.
Look for a fulfillment services provider that offers customer data, end-to-end package tracking, and real-time analytics tracking so you can:
- Improve your supply chain optimization
- Make informed business decisions
- Gain a competitive edge
- Provide better customer experience
Whether you’re a startup or small business, you need a fulfillment partner that can support your growth journey over the long haul and remain flexible to the industry’s changing scope. That includes integration with your system to meet routine customer needs.
If the provider can’t scale up in line with your future growth needs, they’re not worth your investment.
The Top 3 Fulfillment Providers
You have a great product. But it won’t mean much if you can’t get it to your customers safely and on time.
If you’re not sure where to start with your search for a fulfillment partner, we recommend the following providers.
ShipBob is a logistics company that fulfills e-commerce orders for direct-to-consumer (DTC) brands.
The company offers a range of reliable services, including integration with your online store, packaging customization, inventory storage, a two-day shipping network, batch fulfillment, 99.95% fulfillment accuracy rate, and 24/7 customer support.
Plus, ShipBob has warehouses in the United States, United Kingdom, Canada, and Australia.
ShipWire is a cloud-based fulfillment services provider that lets you power an international fulfillment network with a single point of integration for global reach.
The company also offers accessible retail integrations so you can sell via multiple retail channels. Plus, it leverages technology so you can manage dropshipping through multiple vendors.
A dashboard is available from where you can manage your work orders and order flow, visualize transactions, and automate reporting for accurate data analysis.
If you sell high-ticket items, heavy products, oversized goods, or items that require customization or light assembly before shipping, RedStag is worth considering.
The fulfillment services company offers market-leading order accuracy, dedicated customer support, zero-shrink guarantees, and payouts for errors, including damaged or lost items.
Despite its limited distribution capabilities, RedStag can achieve two-day ground shipping to most parts of the U.S. The company also provides robust special services for small businesses with low order requirements, low storage fees, high-level warehousing security, and affordable prices for hard-to-ship items.
What Should You Do Next?
Before you settle on a fulfillment partner, do your due diligence:
- Determine your business fulfillment needs
- Compare fulfillment services providers
- Pick the fulfillment partner that best fits all your business needs and hand over the entire fulfillment process to them