WHAT IS A FULFILMENT CENTER?
Adequate warehousing and fulfillment services are highly crucial for e-commerce companies, regardless of product quality, sale visits, or marketing techniques. Businesses can be categorized into either Business-to-Business (B2B), selling products and services to retailers. Business-to-Consumers (B2C) sell products and services directly to consumers. A business completes when the customer receives the sale item ordered. This act of delivering products to customers is referred to as Order fulfillment.
A fulfillment center is a hub for all logistics processes needed to get a product from the seller to the customer. It is likened to a distributor center designed to timely deliver online orders from an e-commerce store to customers’ doorstep. This fast delivery of online orders is the primary goal of an order fulfillment center and, consequently, the heart of the business.
A fulfillment center can be owned by individual e-commerce stores or a third-party logistics company. However, the fulfillment center pricing and its complex processes could be problematic when setting up an order fulfillment center. On the other hand, hiring a third-party fulfillment center is cost-effective if you have a small e-commerce business or low margins. This is because the fulfillment center caters to multiple e-commerce businesses and not just one. Amazon is a perfect example of an e-commerce store. That is the largest in the world with high margins and hence has the largest fulfillment center of its own.
HOW DO FULFILMENT CENTERS WORK?
Order fulfillment centers are concerned with the work that helps get online orders to your doorstep if you are a customer. The roles of a fulfillment center are following:
1. Service to the e-commerce store (seller):
This includes receiving products or inventory for the stocking process, inventory management, sorting products into categories. Preparations for peak shopping seasons, and attending to all the logistics processes needed in the supply chains.
2. Service to the customer
This includes receiving and processing orders, kitting and assembling items, order merging, product packaging, labeling, negotiating the shipping prices base on the volume of orders, and shipping products to the customer’s address (retailers or consumers directly). The fulfillment centers also render customer support, including communication with Chinese suppliers, reporting problems, or making product exchanges or returns.
The order fulfillment center also handles sales calculations. It caters to costs incurred from inventory problems such as pick-up errors or product damages and quality control via automated machines and technology used in order processing and inventory management.
WHAT IS A FULFILMENT WAREHOUSE?
A conventional warehouse is an industrial space where inventories are stored in bulk for some time. In contrast, a fulfillment warehouse is an ample space where order fulfillment centers keep inventories and perform other jobs such as maintenance of the invoices, generating pick lists, packaging, labeling, shipping, and handling returns for online orders.
Often, a fulfillment warehouse is used interchangeably with the term “Fulfilment center” because the bulk of the work of an e-commerce fulfillment center is done in the fulfillment warehouse.
The essence of the fulfillment warehouse is to receive from the sellers more inventories enough to be available for customers’ orders before shipment. This is based on the closeness to customers. A list closer to your customers will give your e-commerce business a tremendous advantage over your competitors.
Some large online retailers have their e-commerce warehouse(s) for storing excess inventory, while others, in conjunction with some other e-commerce businesses, hire space in a fulfillment warehouse.
BENEFITS OF USING A FULFILMENT CENTER
1. No need for personnel.
Using an order fulfillment center as an online seller will relieve you of having to stress yourself or hire staff to store inventory, packing supplies, and post office lines.
2. No need for a physical store.
Using an order fulfillment center saves you, especially a start-up e-commerce manager, from the cost and stress of managing physical space. Outsourcing your order fulfillment processing to third-party logistics companies for professional operation is not only task-relieving but also cost-effective.
3. Use of Technologies.
With automated machines and technologies, fulfillment centers run their order processes professionally. Hence, they are capable of
- processing thousands of orders daily, whether wholesale or retail, without making any error
- stocking extensive selections of products
- managing huge inventories and delivery systems of products easily
- providing time updates for the customers depending on the kind of products. There are two types of updates
- Generic updates: updates that show that the order has been processed
- Detailed updates: updates are shown at every stage of order processing, from picking to packing.
A fulfillment center also collects the payments and shipping records for all online orders through an automated processing system. As an online seller, you can always access these updates, including your inventory status, even if you are absent on-site.
4. supply chain efficiency
Market demands by the consumers, such as free shipping and fast delivery time, are highly challenging to meet in today’s fast-growing e-commerce community. Using an order fulfillment center makes shipping more accessible, cheaper, and quicker. And promotion such as “free shipping” is one of the best ways to retain customers.
5. More time to face other crucial tasks.
Since the fulfillment center has been saddled with the task of processing orders, then you can focus on some other crucial jobs for your e-commerce business growth and expansion.
ADVANTAGES OF ORDER FULFILMENT CENTER IN CHINA
1. Advantages of geographical location
- China is the country that has the most significant number of powerful e-commerce businesses, such as Alibaba, AliExpress, Taobao, 1988.com, and so on. China is also reported to be one of the countries with the fastest-growing e-commerce markets; hence China has become a world factory using order fulfillment centers as leverage.
- The geographical location of the product fulfillment center is essential for the timely delivery of products. China is located in Asia relative to the Pacific Ocean, making shipping logistics easy. The easy shipping process coupled with modern technology makes 1 -2 days delivery possible across any country. An extra benefit is attached to the fact that one of the five coastal provinces of China with fulfillment centers, Guangdong, is very close to Hong Kong, the world logistics hub.
- A location’s climatic condition is considered when choosing a suitable fulfillment center. For example, the delivery process of perishable goods in a tropical area like India must be handled professionally and superfast to avoid damage. China fulfillment centers can beat climatic conditions through automated processes and skillful professionals to take the fulfillment job.
- China is a large manufacturing country, so there will be certain advantages in the geographical location, such as close to the product transportation manufacturing origin and so on, can meet the different product needs of sellers.
2. Advantages by transportation
- China fulfillment center with modern technology and an intelligent logistic system helps speed up logistics for you. There are several shipping methods at a cheap rate from China to other countries based on the number of products, size, or bulky, which allows you, as an online seller, to adopt more flexible shipping strategies. This enhances promotion activities for marketing such as free shipping, two days shipping, free plus shipping, and so on.
- Chinese domestic shipping is fast and cheap because Chinese factories in 5 coastal provinces: Jiangsu, Shandong, Zhejiang, Fujian, and Guangdong, are close to each other.
- One factor to consider when searching for the best fulfillment center in China is easy and maximum connectivity, such as nearby highways, access roads, service roads, exit ramps, and a substantial fleet of vehicles associated with order fulfillment centers. It enhances fast delivery to customers’ doorstep and increases your daily order.
Compared with sea/rail transport clearance issues, if a foreign fulfillment center needs to import products from China by sea in large quantities, the problems encountered will be more, such as: shipping congestion, port strikes, product customs clearance issues, etc.
In addition, we have a certain sensitivity to the requirements of customs clearance, and we will quickly make corresponding plans according to the nature of the product for each country’s customs restrictions and requirements.
3. Advantages by time to stock up
- The order fulfillment center in China ensures the selection of the best quality and appropriate products during order processing and shipment as they receive enough inventory from the sellers before shipment.
- Automated and flexible operation by modern technology and skillful staff make it easier to store extensive inventories in advance to prevent problems of getting out of stock in high seasons such as holidays when there is usually a high demand for some products.
- Chinese fulfillment center helps you with inventory storage, stock management, order processing, product exchange, and return. We are eliminating language barriers and cultural differences at a low cost hence providing more time for the seller to focus on other tasks for business growth and expansion.
- Branding and packaging are other aspects of marketing your business. Branded packaging can build customers’ trust regardless of how cheap the product is. You can also entrust your labeling and properly branded packaging to order fulfillment centers in China.
4. Advantages of market layout
- Most Chinese factories and fulfillment warehouses are close to each other and close to their customers, making domestic shipping fast and cost-effective.
- In the drop-shipping sector, because of the large number of e-commerce businesses and their proximity to order fulfillment centers, China is the best place to get most online products. Some centers not only handle product returns or damage but also bear the loss. Hence, if you buy drop-shipping products in China and decide to return any of them for whatever reason, you will likely be suspended. But to avoid this, you can allow the drop-shipping fulfillment center in China to handle your product returns.
- Some large e-commerce companies from other countries have their order fulfillment centers in China, making product delivery fast and cheap. An example is the China Amazon fulfillment center which is the largest. Shopify, a Canadian e-commerce company, is also associated with the China fulfillment center.
- If you need to transport the product from the supplier to the port – chartering, booking – shipping – unloading – handing over to the overseas fulfillment center – fulfillment center processing orders – end customers, this time is conservatively estimated to be more than 2 months, sellers need to consider this a long time in advance. It takes sellers a long time to think about this. If you choose to fulfill the order directly in China, the steps can be changed to shipping the products from the supplier to the fulfillment center – the fulfillment center processes the order – the end customer.
- In addition, if a seller is considering selling in Southeast Asia in the future, it is definitely a better choice to take the lead in China because of the distance and infrastructure issues.
Every successful e-commerce company holds warehousing and fulfillment service in high esteem. For your e-commerce business to thrive, you need not just a warehouse to stock your inventories but also an order fulfillment center to handle delivery to your customers’ doorstep as quickly as possible. Great benefits are associated with using the China fulfillment center, one of the fast-growing e-commerce markets.