What is a Fulfillment Center?

One of the keys to operating a successful eCommerce store is the ability to outsource certain key components of essential operations, specifically warehousing and shipping. When eCommerce shop owners no longer have to keep inventory in their garage or pay for a brick-and-mortar location, everything, including making money, becomes easier. For this reason, fulfillment centers are one of the main solutions successful online store owners take advantage of. By offering physical space, as well as shipping capabilities, fulfillment centers have transformed the way online stores operate.

Fulfillment centers work by allowing sellers to send in merchandise to be stored. And, when orders come in, the fulfillment center also takes care of shipping, delivering products directly to consumers without the store owner ever needing to label and ship a single package themselves. By streamlining much of the online shopping experience, fulfillment centers have dramatically improved customer service experiences, allowing eCommerce stores of all shapes and sizes to compete with some of the biggest retailers in the world.

Specifically, fulfillment centers eliminate many of the most detrimental inventory management problems, completely eliminating overselling and “stockout” situations, which can lead to lost revenue and a negative customer experience. By outsourcing storage and fulfillment, fulfillment centers provide better control over the inventory so that store owners have significantly less to worry about.

Typically, fulfillment centers operate in one of two ways. The first method is requiring the seller to ship products to them after they receive and review them. This ensures that the right products are being sent and allows the seller to check quality and other variants themselves. The second method allows manufacturers to ship directly to the fulfillment center, speeding up the process and eliminating one more to-do for shop owners. Although faster, this choice can be problematic if there is something wrong with a specific product and it isn’t caught by the store owner themselves. Owners that choose to go the second route often are re-selling or private labeling a product, which eliminates some of the variables that could make this process riskier.


Additional Benefits of Fulfillment Centers for eCommerce Store Owners

  • Most fulfillment centers handle shipping as well as returns, which allows for even more hands-off, stress-free selling.
  • Because of the volume of products they ship, fulfillment centers can typically get better shipping rates, which can both lower the cost of shipping for a product and/or increase revenue.
  • Fulfillment centers provide tracking numbers to sellers who can then share the information with customers in order to improve the overall buying experience.

Of course, not all fulfillment centers provide the same services — and some require minimum amounts of products stored in warehouse in order to work with them. To make sure you find the right fit for your eCommerce business, be sure to do your research before choosing a fulfillment center (or believing you won’t be able to find one that can meet your needs).

If you use an eCommerce software to operate your store (which you almost definitely do), you’ll also want to ensure that the fulfillment center you choose can easily integrate with it so that all orders and processing are streamlined.

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