Fulfillment explained
Order fulfillment or product fulfillment, is the process where by a person or company fulfills their obligations to send a person an item or product that the person has ordered, purchased, or requested.
Standard fulfillment company services
Storage and warehousing
A fulfillment company will store items until an order for the item comes in.
Stock Control
A fulfillment company will typically maintain and publish stock reports for incoming and shipped goods.
Pick and pack services
Pick and Pack is the process of selecting items currently being stored by the fulfillment company to prepare for shipping. Items are then packed and despatched.
Shipping
It is rare for a fulfillment company to provide its own courier services due to the size of courier companies. In most cases, the shipping is outsourced to courier or delivery companies. However, often fulfillment companies are able to provide larger shipping discounts than smaller retailers may be able to negotiate on their own merit. This is because fulfillment service providers ship a high volume of orders every day.
Advantages of outsourcing to a fulfillment house or company
Facilities
For younger products in early stages of development, the producer may not have adequate storage facilities or the funds to commit to them. Fulfillment companies will typically have thousands of available square footage for storage. Storage fees are usually charged per linier foot, per pallet or dimensional storage fees based on the volume of space your items would occupy.
Shipping costs
Unless a producer is shipping thousands of items per month, the producer will not get the beneficial “bulk” shipping rates available to many fulfillment companies.
Shipping materials costs
Similar in concept to the savings associated with shipping costs, shipping materials bought in bulk are purchased at more favorable rates. When compared to the cost of purchasing supplies for shipping through retail outlets, savings can amount to 50%.
Fulfillment costs
Fulfillment companies typically charge fees per order and per item shipped. Additional fee will be charged for the following:
Receive merchandise, receive orders via mail order, process credit cards, provide client specific reports, update customer database for returns, issue customer credits, restock undamaged return merchandise, answer customer service phone calls
Storage
Firms looking to outsource their fulfillment may be able to receive bundled pricing, whereby all fulfillment activities are bundled into a set price per order fulfilled, often this is associated with orders that are consistently the same number of items, and the same weight. Alternatively, many third party fulfillment companies will provide simple per order, and per item fee structures. In these ways, companies electing to outsource fulfillment services can more accurately forecast their costs.
E–Commerce
Fulfillment houses develop intelligent e–Commerce systems to help manage the many elements within the business. The e‐commerce system is adaptable and is able to integrate into clients ordering system – or even host the ordering system themselves. They also enable integration into their respective couriers system – to enable the fulfillment houses clients live information upon package deliveries.
