The Ultimate Guide to Fulfilment Centres
Fulfilment Centres: Definition, Importance and How They Compare to Warehouses
- Warehouses are buildings used to store inventories.
- Fulfilment centres are warehouses that store goods alongside processing and fulfilling customer orders.
- Fulfilment centres handle all order fulfilment processes, from receiving, sorting and packing inventories to negotiating charges with shipping carriers and offering tracking services.
- Fulfilment centres like Bezos shoulder the logistics burden for eCommerce businesses, serving as a link between sellers and end users.
Transnational trade has grown since COVID-19. Due to bulk supply chain issues, companies now explore modern 3PL (third-party logistics) alternatives to facilitate cross-border commerce. With customer demand spanning several jurisdictions, most establishments choose fulfilment centres with an international reach.
These distribution sites are usually misconstrued as mere goods-bearing warehouses. Although most people use both terms interchangeably, they have different connotations.
This in-depth guide examines fulfilment centres, the benefits of engaging one, and notable differences between these hubs and warehouses.
What is a Fulfilment Centre?
So, what is a fulfilment centre?
Simply put, it's an area where clients' orders are validated and fulfilled. A fulfilment centre handles order picking, processing, packaging and shipping.
3PLs utilise fulfilment centres to receive, process and fulfil customer orders for companies seeking streamlined operations. Fulfilment centres ensure online orders swiftly reach customers, managing shipping processes efficiently.
The main goal of a fulfilment centre is speeding up product inflow and outflow. This service is essential as items stacked on shelves for extended periods lose value, prompting drags and losses in your eCommerce venture.
Whether your main focus is business-to-business (B2B) orders or business-to-consumer (B2C) orders, fulfilment centres can process both delivery formats. These hubs serve as the link between production and the end user.
How Does a Fulfilment Centre Work?
Besides Bezos.ai, you might have encountered other fulfilment centres like ShipBob, Shipwire, eFulfillment Service Inc. and Red Stag Fulfillment. Although these alternatives aren't as comprehensive as Bezos.ai, they share some semblance in day-to-day operations.
Here's a step-by-step guide on how most fulfilment centres operate:
Step 1: The Fulfilment Centre Receives Inventory
For a fulfilment centre to process your orders, you must send your inventory to them. Depending on your stock's location, you can forward these items via a distinctive production line or have suppliers send inventory from multiple locations. Whether your preferred fulfilment provider receives B2B inventory or international freight, they must track all items upon arrival.
Once the fulfilment centre receives, logs and performs quality checks on your inventory, they'll store it based on your preferences, as agreed upon before the transaction.
Step 2: Orders Come In from Customers
Once goods are live on your eCommerce website, you'll receive orders from clients. The best fulfilment companies deliver detailed and accurate information via email or phone, keeping customers in sync with critical updates. Most fulfilment centres utilise state-of-the-art technologies. These integrations ensure order accuracy and personalised packaging.
Fulfilment centres have employees working round the clock to meet delivery schedules. Once orders are prepped for delivery, your preferred fulfilment hub highlights outgoing goods on your unique inventory software management dashboard. That way, you can track your products' outflow.
Step 3: Fulfilment Centre Arranges Delivery
Most companies utilise fulfilment centres to ship orders towards intended destinations efficiently and cost-effectively. The best fulfilment companies partner with reputable courier services like FedEx and DHL to offer national and international deliveries.
Since fulfilment centres ship thousands of orders daily, they get shipping discounts your eCommerce business enjoys in the long run. Likewise, this partnership means you'll enjoy more delivery routes than what you'd get at a traditional warehouse. During order shipments, fulfilment centres adhere to the compliance requirements of B2B orders.
Since the fulfilment centre handles paperwork, there's no need to fret about misplaced and rejected deliveries.
Step 4: Processing Customer Returns
Once items are delivered to customers, the fulfilment process ends. However, this scenario is contingent on no customer returning purchased items. If a customer chooses to return purchased products, the fulfilment centre handles it.
Fulfilment services also receive and validate returns as a value-added service.
Clients can return their orders to the originating fulfilment hub’s address on the returns label. Afterwards, you can add these items to your inventory, sell at a discounted price or discard them.
Once you've decided, your chosen fulfilment centre attends to returned goods accordingly. Then, based on their report, you can process refunds according to your store's return policy.
What is a Fulfilment Warehouse?
Although the "fulfilment warehouse" concept is used interchangeably with fulfilment centres, they're distinct. Traditional warehouses are large industrial spaces primarily used to store inventories. With equipment like forklifts and containers, these storage areas have shelves filled with items.
On the other hand, fulfilment warehouses execute other activities besides storage. The average fulfilment warehouse is 25,000 to 50,000 square feet. Besides receiving, storing and sorting inventories, these hubs perform order fulfilment processes for businesses.
Amazon Fulfilment Centres: Is This Fulfilment Alternative Worth Considering?
What is an Amazon fulfilment centre?
Simply put, it's an Amazon-owned warehouse that stores, packs and ships incoming orders.
Sellers using the FBA (Fulfilment by Amazon) service place their inventories at Amazon fulfilment centres.
Note that FBA sellers must conform to Amazon's packing and shipping prerequisites. These sellers are also responsible for fulfilment and storage fees.
Although Amazon FBA might seem advantageous all around, this fulfilment route has some imperfections. Quickly, let's run through its notable pros and cons.
Advantages of Amazon FBA
Here are notable Amazon FBA pros:
#1 Amazon Prime Customer Access
Besides placing your items in the popular Amazon Marketplace, FBA grants you access to free one or two-day shipping to Prime members.
With most Prime members purchasing numerous items during peak shopping seasons, your virtual store generates more revenue.
#2 Increased Chances of Getting the Buy Box
Amazon's Buy Box is the prominent "Add to Basket" icon featured on Amazon product listings. If your store and Amazon have similar products, yours will show the "Buy Box".
Since Amazon considers FBA for deliveries, the chances of the "Buy Box" logo appearing on your store's other products are high!
#3 Great Customer Service and Returns Processing
Amazon's support system is swift. Keying into the FBA program grants you access to its priority 24/7 customer service.
Also, since returns can be a pain for sellers, Amazon takes charge. However, you'll encounter processing fees based on the item's weight and size.
Drawbacks of Amazon FBA
Despite its popularity, Amazon FBA has certain shortcomings:
#1 Fluctuating Fees
Amazon is known for regularly changing its processing and storage fees without prior notice.
These constant fluctuations can eat into sellers' profits and stall their ability to create budgets.
#2 Strict Guidelines
As we've established, Amazon has strict processing and storage requirements for FBA sellers. Disregarding these rules can result in non-compliance surcharges or delayed deliveries.
Fulfilment Centres and Warehouses: Major Differences to Note
Although fulfilment centres and warehouses can hold inventory, these hubs have certain distinctions, including:
#1 Facility Operations
Warehouses are typically inactive and static due to their "storage-only" purposes.
However, movement prevails at fulfilment centres because these hubs execute a complex logistics process.
Third-party logistics companies perform these activities at fulfilment centres:
- Inventory receipt
- Assembling and kitting items
- Special packaging
- Labelling orders
- Returns management.
At warehouses, the primary process revolves around inventory inflow and outflow. Unlike fulfilment centres, these areas don't provide additional logistics services.
#2 Pickup Frequency
Another significant difference between fulfilment centres and warehouses is their pickup frequency. Fulfilment companies partner with numerous shipping carriers.
Since these hubs implement Direct-to-Consumer (D2C) orders upon placement, they'll need carriers conveying orders daily to aid guaranteed same-day or two-day deliveries, depending on the client's preference.
Some fulfilment centres have pickup timelines scheduled for domestic and international deliveries. Conversely, warehouses require scheduled and less frequent pickups, as it's cheaper to execute a bulk freight shipment than create individual orders. Since freight companies pool inventories from multiple locations, delivery delays occur. Therefore, merchants should brace for longer timelines from item prep to delivery.
#3 Storage Timelines
Warehouses can accommodate inventory for an extended period. However, the reverse occurs with fulfilment centres. Typically, these hubs shouldn't host inventory for periods reaching a month as it'll see the merchant spend more on storage fees.
Instead, sellers should regularly send inventory to their fulfilment centres to ensure products aren't in short supply. While warehouses are created for inventory storage, fulfilment centres offer shipping services matching client expectations.
Fulfilment companies meet these demands speedily when retailers partner with hubs closest to their clients. This option reduces delivery fees, transit timelines and shipping zones.
Benefits of Using Fulfilment Centres
eCommerce companies enjoy these benefits when they engage a fulfilment centre:
1. Eliminates Inventory Management Hassles
With numerous working parts, managing a warehouse is challenging and expensive. Thus, it's no surprise that most eCommerce establishments engage fulfilment centres for increased efficiency and reduced costs.
These hubs are crucial, especially if your business can no longer manage multiple orders and offer prompt delivery.
So, rather than packing boxes and organising your inventory to meet client demand, outsourcing these tasks to a 3PL service lets you focus on your business.
"With outsourcing to Bezos.ai, I've got a warehouse, a warehouse manager, a warehouse supervisor, a stock manager, and an account manager. It's basically like outsourcing four people."
Barney, Founder of Gorilla Robes
2. Improved Customer Service
Customer service is the bedrock of businesses. Several estimates confirm that poor customer service can cost firms $75 billion to $1.5 trillion annually.
Due to the evergreen competition in diverse markets, eCommerce ventures seek to set themselves apart by offering top-notch customer support services.
Numerous fulfilment centres offer 24/7 support via several channels, including live chat, email and phone. These mediums allow customers to easily process returns, refunds and exchanges.
Also, most fulfilment centres offer same-day or guaranteed deliveries, placing your business in a good light and prompting repeat patronage.
3. Reduced Shipping Expenses
Many fulfilment centres have an extensive network of national and foreign facilities. As such, businesses processing bulk deliveries can enjoy decent rebates.
By using a reputable UK fulfilment service like Bezos, you can save £1 to £2 per order and up to 80% on international orders.
With Bezos hosting 63 fulfilment centres across 17 countries, your business can inject funds gained from discounted shipping into other areas.
"We saved more than 80% in cost by fulfilling directly in the UK. Bezos.ai will also enable us to expand to other countries."
Ander, Operations Manager of BikeFinder
4. You Don't Need Your Own Warehouse, EVER!
If your eCommerce business has a successful product that earns it more patronage, you'll need to expand its inventory to keep up with growing demand.
However, expansions usually highlight an excellent but tricky challenge – finding space to accommodate your swarming inventory.
Since it's not cheap to lease a warehouse, adhere to quality requirements and hire employees, it'll be best to outsource your fulfilment needs to a 3PL fulfilment centre. Besides storing, sorting and packing your inventory, these hubs perform deliveries to the end user.
Unlike warehouses where you'd need to settle maintenance and lease expenses, a one-time, flat fee gets the ball rolling at fulfilment centres.
5. Utilise Revolutionary Technology
Technology is essential for most eCommerce businesses. Its advantages span inventory assessment, tracking shipped orders, protecting client data and processing transactions.
Although you can acquire related systems for streamlined operations, the add-ons are costly. Also, usage might cause multiple "back and forths".
However, many fulfilment centres have revolutionary technological tools across their network. By patronising one, your eCommerce venture can use the centre's cutting-edge technology to spearhead operations.
With Bezos.ai as your choice fulfilment company, you'll get unfiltered access to proprietary AI technology that can identify and resolve logistics issues before they get worse.
"Compared to our other 5 warehouse partners, Bezos.ai is advanced in the technology side and has bigger ambitions. Other companies are trying to catch up on technology but are not as fast."
Hielke, Owner of the Dutch Label Shop
6. Involve Experts in the Logistics Process
Inbound and outbound logistics can prove challenging. Fulfilment centres act as a "jack of all fulfilling trades" by offering numerous services.
Whether you'd like to brace for peak shopping periods, process orders or manage your business's inventory, fulfilment companies should be your go-to for expert help.
These entities process and ship countless orders daily. Their experience in the logistics domain makes them the ideal partner for your growing or established eCommerce firm.
7. Enjoy Value-Added Services
Although most businesses patronise fulfilment centres to efficiently pick, pack and ship pending orders, they can also enjoy value-added services from their logistic partners.
Value-added services typically include:
- Custom labelling and packaging
- Branded marketing inserts and tape
- Product assembly
- Automated fulfilment and returns management.
Grow Your eCommerce Business Today with Bezos Fulfilment Solutions Leading the Charge
Cost-effective and efficient inventory management is vital for eCommerce business success. Fulfilment centres and warehouses are often used interchangeably. However, these terms vary in several ways. Warehouses offer the storage space required to store inventory over a long period. Fulfilment centres provide storage and help businesses ship orders in record time.
If you own an Australian eCommerce business and want to spread your reach to the UK and other European markets, consider Bezos' comprehensive fulfilment solutions!
With 63 fulfilment centres across 17 countries (11 European jurisdictions), Bezos' fulfilment network gives your business the required push to succeed in new markets.
UK drinks brands seeking a reliable fulfilment service within the UK can use our revolutionary AI technology to resolve logistics challenges and upscale their businesses.
With integrations to over 30 eCommerce platforms and solutions, our clients enjoy seamless order fulfilment on their respective sites. Our unique software lets you track your inventory in real time. With the Automated Exception Notification add-on, you can track delays in one tap! We give our clients VIP treatment, granting each unfettered access to a dedicated account manager who delivers swift responses to queries.
Bezos.ai puts your eCommerce business in the driving seat. Contact us today for a personalised quote on your firm's unique fulfilment needs.
What is a fulfilment centre?
Fulfilment centres are hubs owned by 3PL companies. These centres execute logistic protocols for the seamless passage of items from sellers to customers.
What are fulfilment fees?
These are charges for receiving and storing inventories, processing customers' orders and returns management.
Note that these expenses vary depending on the fulfilment centre and order threshold.
What is the best fulfilment service?
Although many fulfilment services exist, Bezos.ai ranks as the most comprehensive. This fulfilment solution offers responsive customer support, discounted shipping, revolutionary AI technology and a vast fulfilment network across 17 jurisdictions.