What is a Fulfillment Center? The Heart of E-Commerce Success

A fulfillment center is the heart of e-commerce. It is where all the magic happens: the storing of inventory, order processing, and coordinating shipping of products to customers' doorsteps as quickly and efficiently as possible. Without that, your business would be unable to match up to the demand for fast deliveries and the seamless customer experiences expected by today's shoppers.

What is a fulfillment center, and how do they work? We take a closer look at this in the blog.

What is a Fulfillment Center?

A fulfillment center is a place where products are kept and their orders managed, i.e., delivering important logics by which something is sold to a customer. When we talk about fulfillment centers, it is called amongst the critical parts as they perform work essential in handling logistics between stock management and product picking, packing, and shipping.

In simpler terms, a fulfillment center acts as the intermediary between a business and its customers, ensuring that when you click “buy” on an online store, your product gets to your door on time.

Let’s Take a Look at How Fulfillment Centers Work.

Fulfillment centers quickly and accurately handle high volumes of orders. Here is how they operate:

Inventory Storage

In the fulfillment center, products are stored. Depending on the fulfillment service, that might include specialized storage systems such as shelves, bins, or pallet racks, which provide easy product access.
Order Processing

The fulfillment center is alerted whenever a customer places an order online. The order data is sent directly to the fulfillment team, who will then locate and pick the items from the shelves.
Picking

The fulfillment centers use various means such as paper picking, barcode scanning, and automated systems for order picking. This way, the picking process goes faster and accurately.
Packing

While picking the items, it is taken care of the packing so that they do not get damaged in transit. The fulfillment center is responsible for adequately packaging the item and putting the right labels and shipping instructions on it.
Shipping

Once the item is packed, it will be delivered to a shipping carrier like Velocity Express or FedEx, or it could be delivered by a third-party logistics provider to the customer’s address. Some of the fulfillment centers even provide same-day ship and expedited delivery options depending on the fulfillment service.
Returns Processing

Apart from order fulfillment, there are some fulfillment centers that also cater to returns. If a customer does not find a product satisfactory, he or she can choose to have it returned to the fulfillment center, where it would be inspected upon return and restocked if necessary.

Now, Let’s Dive Into the Different Types of Fulfillment Centers

There are different types of fulfillment centers, and you can choose one based on your specific needs:

Third-Party Fulfillment Centers (3PL)

Companies that offer warehousing and logistics services provide to businesses. The owner is free to concentrate on other operations as the third-party fulfillment provider oversees everything from storage to shipping. Some examples would be ShipBob, Fulfillment by Amazon (FBA), ShipMonk, and Velocity Express.
In-House Fulfillment Centers

Some businesses prefer to run their own fulfillment, meaning they operate their own warehouses, hire their own people, and run the order fulfillment process entirely in-house. Although this makes one in control, it comes at a great expense and is challenging from a logistical point of view.
Dropshipping Fulfillment Centers

Dropshipping refers to a method of selling where the retailer does not keep the goods in stock. After an order is received from a customer, the retailer purchases the said product from a third-party supplier to ship directly to the customer. Dropshipping fulfillment centers focus on this type of order processing, allowing sellers to avoid holding inventory.
Amazon Fulfillment Centers

Amazon has an extensive network of fulfillment centers, providing services not only to its marketplace sellers but also to businesses willing to take advantage of Amazon's expertise in logistics. Sellers can store their products in Amazon's warehouses, and the company handles everything from storage to shipping.
Shipping

Once the item is packed, it will be delivered to a shipping carrier like Velocity Express or FedEx, or it could be delivered by a third-party logistics provider to the customer’s address. Some of the fulfillment centers even provide same-day ship and expedited delivery options depending on the fulfillment service.
Returns Processing

Apart from order fulfillment, there are some fulfillment centers that also cater to returns. If a customer does not find a product satisfactory, he or she can choose to have it returned to the fulfillment center, where it would be inspected upon return and restocked if necessary.

Wondering How Fulfillment Centers Can Help? Here Are the Benefits

Scalability

Fulfillment centers ensure that the business can scale its activities with minimum investment in warehousing and logistics infrastructure. The fulfillment center can adjust its capacity according to increased demand as the business grows.
Cost Efficiency

By handling the service in-house, investment is required for storage space, employees, and technology. Hence, the business would rather outsource for fulfillment services to a third party and save on the overhead costs.
Faster Delivery Times

Typically, fulfillment centers have packing and shipping systems so that your business can now provide quick shipping options and delivery times such as same-day or two-day delivery to your customers.
Improved Customer Experience

Fulfillment centers can help a business offer a better experience to its customers through the smooth and effective order processing, accurate inventory management, and shipping. Satisfied customers are more inclined to make repeat purchases and share their positive experiences with others.
Global Reach

Various fulfillment centers have multiple locations in the country and around the world. Allowing your business to expand your reach and serve customers in different regions without the need to set up additional warehouses.

So, Here’s a Quick Recap

Ultimately, fulfillment centers assist in optimizing e-commerce processes and benefit customers. Outsourcing storage, packing and shipping, appropriate time delivery, and fewer operational headaches are all taken care of by trusted partners (3PL) like Velocity Express. This allows businesses to focus more on development and growth.

When the customer places an order online and has it within a few days, remember to thank the fulfillment center behind the scenes that made it all happen.