When the time is right, switching from manual order fulfilment to using a fulfilment centre can be a huge benefit to your e-commerce business. By making the switch you can potentially save time and money whilst giving your customers a better experience.
Although the term was coined in the 90s, fulfilment centres have now sprung up on a global basis to help with growing demand from e-commerce businesses. If your business is flourishing, outsourcing this area could free up resources to allow your business to grow further and at scale.
What is a fulfilment centre?
Fulfilment centres will store your goods in their warehouse and fulfil orders on your behalf. They will merge your software with theirs so your customer’s orders will require no management by you. When the order is created the fulfilment centre will pack and create your shipment according to your instructions and ship it via one of their approved carriers. The same process occurs if you are conducting business through Amazon Marketplace using one of their fulfilment centres.
They use top-end inventory management and payment technology. Their staff are trained specifically to do dispatch and they will ensure the end-product reaches the customer in the manner you choose. You are buying a slice of their experience and specialisation, all while likely cutting costs and gaining back valuable time.
How do they charge?
Fulfilment centre fees vary but they will usually charge a flat fee for storage, dependent on how many boxes/pallets you will be storing. You will also pay an agreed upon fee per item dispatched. If you have numerous product lines the prices will fluctuate due to packing differences, the weight of the package etc.
How fulfilment centres will benefit your business
Let’s begin with the big one – time. While you may have begun your e-commerce business alone, it doesn’t take long to discover that as your business grows it becomes impossible to do everything yourself. You may have taken on additional staff as profits allow, and outsourcing can be a more cost-effective option to help you grow further. Plus, outsourcing has the added benefit of flexibility without the hassles of training temporary staff. If you find you or your staff are too busy dealing with dispatch when you should be working on growing the business, then it’s time you took a step back from the dispatch process.
Fulfilment centres work through an economy of scale. The costs associated with your shipping process will likely fall dramatically per item when you start to outsource. Storage will be considerably cheaper than renting your own warehouse, the staff will be more efficient and fulfilment centres are able to get a discounted rate on delivery costs.
If you dream of working from a remote location, outsourcing areas of your business that don’t require your input will help you achieve this.
How fulfilment centres will benefit your customers
You can take your e-commerce business global and therefore reach customers internationally. If you partner with a large fulfilment company, they will have warehouses throughout the world and as such will already have the logistics to deliver wherever a customer would like.
E-commerce is an increasingly busy market. With more and more businesses springing up each year it can become hard to stand out from the crowd. Fulfilment centres will ensure a level of professionalism that will elevate you above competitors who don’t use them. Your fulfilment will always be sleek, on time and error-free. Many fulfilment centres will even deal with returns support and exchanges providing customers with exactly the level of support they need.
Fulfilment centres can also allow you to offer options you can’t fulfil on your own such as click and collect, same day delivery and reservations.
The other side of the coin
The number one reason to not use a fulfilment centre is if your e-commerce business is just too small. A fledgling business may have very few orders by week and as such may not meet the minimum order amount of a fulfilment centre. If this is the case, you are also unlikely to be holding a great deal of stock so you may be able to skip storage costs altogether and keep the goods in a home office.
Additionally, there is the psychological issue of being able to step back from a piece of your business. E-commerce is a business that has very little actual customer interaction, and as such, it can feel a little disconnected. By relinquishing control of the dispatch, you are handing off one of the few ways you can add a personal touch to the experience.
Growth comes in many forms
There are many ways to grow your e-commerce business including cutting costs, upping the quality, expanding your reach and creating higher customer satisfaction are all tried and tested methods, but by outsourcing your fulfilment to a dedicated centre, you will likely hit all of these to some degree.