It may come as no surprise that online shoppers are fueling the growth of fulfillment centers. The fulfillment service market is expected to hit nearly 200 billion USD by 2030. This is a direct correlation to the surge in revenue from ecommerce sales. In fact, by 2027, ecommerce revenue is projected to exceed 1.7 trillion dollars in the U.S.
For brands, the use of fulfillment centers can assist in more ways than just offering up warehouse storage (although that is definitely a bonus!). Fulfillment centers oversee a critical part of the supply chain. With the right strategy (and 3PL fulfillment partner) in place, your fulfillment services can greatly impact your shoppers’ experience.
“Creating a pleasant, easy, branded fulfillment experience can help boost engagement and set you apart from your competition.” – The Future of Commerce
Keep reading to learn more about warehousing and fulfillment, and uncover the strategic benefits of using a fulfillment center.
Here are some of the questions we’ll cover:
- What is a fulfillment center?
- What is the difference between warehousing and fulfillment center?
- What are the benefits of a fulfillment center?
- What fulfillment services should I look for?
- Fulfillment FAQs
What is a fulfillment center?
A fulfillment center is a third-party logistics (3PL) provider that picks, packs, and ships your shoppers’ online purchases. This process is also referred to as order fulfillment. While every fulfillment center operates differently, they all work to accomplish the same goals.
A 3PL provider’s main priority when it comes to fulfillment is to get the right orders into the hands of the right shoppers. They handle everything from warehousing, inventory management, picking, packing, and shipping for your brand. A vertically integrated, customer-centric 3PL provider, such as GoBolt, will also act as an extension of your team to help improve the overall shopper experience. 3PL providers do all of this as effectively and efficiently as possible so that you can focus on other areas of your business.
Some fulfillment service providers, including GoBolt, have a network of fulfillment centers for your brand to utilize. This can help get your products geographically closer to where your shoppers are in order to serve them more efficiently. This opens up opportunities for more competitive shipping rates, faster shipping speeds, and improves your sustainability efforts by reducing carbon emissions.
Fulfillment centers each operate a little differently. Generally speaking, this is how the 3PL fulfillment process flows:
- Receiving & Inventory Storage. The 3PL fulfillment provider receives the inventory into their fulfillment center and strategically stores it to maximize efficiency and organization.
- Order Management. When a shopper places their order, that order is received through the 3PL provider’s order management system (OMS). This is typically done through software that integrates with the brand’s website.
- Pick & Pack. The next step is the fulfillment pick and pack. The products that are included in the order are collected from their specified location in the fulfillment center (from a shelf, bin, or pallet location). The items are then scanned and marked as removed from that location in the warehouse management system (WMS). Next, the order is placed into a box, envelope or bubble mailer and prepared for shipping.
- Shipping. Once the orders are packed, the shipping label is printed off and affixed to the outside of the package. The order is then picked up by couriers and shipped to the shopper based on the shipping requirements or service levels (e.g. same-day, next-day, etc.).
- Returns Management. Some 3PL fulfillment providers will also handle your reverse logistics.
What is the difference between warehousing and fulfillment centers?
At this point, you might be thinking: What’s the difference between warehousing and fulfillment centers? Simply put, a warehouse is used for storing inventory for (typically) a longer period of time, whereas fulfillment centers process and fill orders quickly and efficiently.
Oftentimes, the terms “fulfillment center” and “warehouse” are used interchangeably. And while they are closely related, there are a few other notable differences that you should keep in mind.
- Warehousing is a term that only refers to storing physical inventory in a physical space.
- A fulfillment center is one part of the end-to-end fulfillment process that includes inventory management, picking, packing, and shipping.
If you can’t decide whether your brand needs warehousing or more all-inclusive fulfillment services, consider the following:
Short-term vs. long-term storage
A dedicated fulfillment center can be an ideal choice for turning out inventory faster in comparison to simply storing inventory at a shipping warehouse. The role of a warehouse may better suit ecommerce brands looking to simply store inventory for the long term (more than 6 months, for example).
While it can be tricky to ensure that your fulfillment center always has the right balance of inventory on-hand, they are the best option if your brand relies on getting products out the door and into the hands of shoppers quickly.
Order pickup & shipping frequency
On top of considering the length of time needed for inventory storage, brands should also consider the frequency of order pickups by shipping carriers. Because of the nature of fulfillment centers, your orders will likely need to be shipped out daily (or even more frequently). This is especially relevant if you offer same-day or next-day shipping by a certain time each day. If you’re looking for a 3PL fulfillment provider who can execute according to these shipping demands, a fulfillment center is a great solution.
Warehousing, on the other hand, does not offer this same speed advantage. Shipping from a warehouse typically involves shipping freight and packing many orders onto large pallets. Freight companies will then pool shipments from other merchants together in a process called PTL (partial truck loading) or LTL (less-than-truckload) shipping. While shipping freight in this way can be more cost-effective than more on-demand fulfillment services, it comes at the cost of longer shipping times.
Operations
Operationally speaking, warehouses and fulfillment centers are quite different when it comes to their levels of activity. While a fulfillment center can be a bustling hub of activity, warehouses tend to operate on a quieter scale.
In a warehouse, activity is centered around when inventory arrives and needs to be stored, or on the flip side, when the inventory is scheduled to leave the warehouse.
Meanwhile, a fulfillment center includes much more frequent activity and enhanced services. These fulfillment services can include:
- Receiving inventory
- Picking orders
- Custom packaging or kitting
- Packing orders for shipping
- Preparing for shipping, including selecting a carrier and printing the labels
- Reverse logistics
What are the benefits of a fulfillment center?
Now that we’ve covered the difference between warehousing and a fulfillment center, let’s break down the benefits of outsourcing your fulfillment services.
Access to a team of dedicated experts
It takes a lot of hard work and expertise to streamline the fulfillment and shipping process. From hiring and managing staff, having the right equipment on-site, to optimizing key steps in the supply chain, and troubleshooting challenges, it’s a process that can take years to get right.
When you work with a 3PL partner with dedicated fulfillment centers, they will handle every stage of the process, including:
- Hiring and managing professionally trained staff
- Receiving your inventory and storing it using smart inventory allocation tools
- Picking, assembling, packing, and labelling orders
- Maintaining relationships with shipping carriers and negotiating rates
- Shipping out products from various locations
- Managing the reverse logistics process
Sure, your brand could manage all of these responsibilities in-house. But the risks, challenges, and investments can all be huge.
When you partner with a 3PL, you’ll gain access to invaluable expertise right out of the gate. As an example, at GoBolt we use an employee-first approach from building our own software to operating our fulfillment centers and delivery fleet for orders of all sizes – from small parcels to big and bulky items like furniture. For enterprise brands that require dedicated onsite support in the fulfillment centers, we offer the role of a Customer Warehouse Coordinator (CWC) as your main point of communication.
Lower costs
One of the major benefits of partnering with a 3PL for your fulfillment services is that you won’t have the high overhead costs associated with buying or leasing your own warehouse space (not to mention the challenge of finding vacant space), hiring labor, purchasing and maintaining equipment, adopting new software and integrating systems, packing and shipping materials, etc.
Time back
As your brand scales, it’s inevitable that you will have less time to focus on order fulfillment and shipping. Not to mention the fact that the logistics of fulfillment can be complex and time consuming. You may want those hours to focus on marketing strategy, product development, staffing, and more in order to achieve your business goals.
Another thing to consider is that fulfillment pick and pack is an incredibly important part of the customer journey. And it can be a stressful one, too! You don’t want the wrong products being shipped out to your shoppers. So if you’re looking to create a positive brand experience, leaving this part to the pros is paramount.
Ultimately, outsourcing fulfillment to the pros will help improve your shoppers’ experience, and allow you better allocate time and resources so you can focus on the other areas of your business.
Tech-enabled fulfillment services
There are a few key areas where 3PL experts can use technology to elevate the fulfillment experience:
- Inventory management, especially if you’re utilizing a perpetual inventory system;
- Real-time order management;
- Error notifications;
- Shipment and delivery tracking.
All in all, brands will find that the right 3PL fulfillment partner helps them execute more efficiently with optimized, tech-enabled solutions. We’ll go into more detail on these technology solutions a little further below.
Network strength
For any brand working without a fulfillment center, it can become quite costly to be shipping orders to every corner of the country. One of the major perks of a 3rd party fulfillment partner is gaining access to their network of facility locations.
Speed, accuracy, and flexibility
Another benefit of working with a 3PL fulfillment center is getting access to a larger team of professionals which can allow you to do more, efficiently. As shopper expectations have changed over the years, it’s become essential for brands to focus on accuracy and speed. And with the support of a 3rd party fulfillment center, you can more easily scale your order volumes up and down as needed.
When looking for a 3rd party shipping and fulfillment center, look for a partner that sweats the small stuff on behalf of your brand. With the cost of a mis-pick estimated at $50 to $75, fulfillment errors can add up quickly. Not only that, you’ll risk having very disappointed shoppers when their package arrives and the products inside are incorrect.
Custom & value added options
For many shoppers, a satisfying all-around shopping experience is just as important as the product itself. And this experience includes how the product arrives at their door, packaging and all. Custom packaging or value added options can go a long way to make an extra special impact on an order’s arrival.
Here are a few custom fulfillment services that can help elevate your brand:
- Custom boxes or packaging
- Kitting
- Inserts, like a thank you note or coupon for their next purchase
Reverse logistics
Hiring a 3PL to process your returns is a very efficient and effective way to manage returned products. At GoBolt, brands can monitor the status of returned orders through our proprietary Merchant Portal. Our Return Merchandise Authorizations (RMAs) in the Portal allow you to specify how you’d like returns handled. This can be done by a case-by-case basis, or can be processed through Loop Returns, API connection, or manually through a streamlined returns creation process.
Top services to look for in a 3rd party fulfillment partner
1. Transparent communication
Communication is key to any great partnership. And that is definitely no different when it comes to brands and their logistics partners. Everyone needs to be on the same page to ensure a smooth order and delivery process.
With GoBolt, brands gain access to the Merchant Portal for full visibility into all aspects of the fulfillment process. This includes:
- Flexible shipments
- Order orchestration
- Inventory shipments/advance shipping notice
- Integrations
- Product and order management
- Error notifications
- Returns merchandise authorizations flow
2. Fulfillment technology
When it comes to 3PL fulfillment, you’ll want to seek out a partner that operates with technology at the forefront of their platform. Shoppers’ expectations have evolved, and the old way of logistics no longer serves today’s shoppers’ needs.
A few capabilities to look for from your 3PL fulfillment center’s technology:
- Integrations. Do they offer integrations with your ecommerce site and shipping partners? If not, do they have an in-house product and engineering team that can build one?
- Order management and tracking. Does their tech offer transparency into delivery status, timing of executions, and proof of delivery, including photos and signatures?
Order orchestration. Does their technology take shipping costs and delivery times into consideration? GoBolt’s automated order orchestration capability decides which fulfillment center location a shopper’s order will be fulfilled and shipped from by prioritizing the lowest shipping cost and quickest delivery turnaround. The system also considers the destination address including the country, and whether inventory is available at the closest GoBolt facility.
3. Speed of fulfillment and shipping
As mentioned earlier, shopper expectations are high around the speed of order delivery. In fact, 62% of today’s shoppers want their purchases to arrive quickly: in 3 business days or less. So when it comes to getting orders to shoppers faster, you’ll want to be sure your 3rd party fulfillment partner can fulfill and ship your orders timely.
Looking to provide your shoppers with seamless ecommerce fulfillment? Here are a few fulfillment and shipping SLAs to consider when looking into fulfillment services:
- Do they have SLAs around pick accuracy? At GoBolt, our 99.9% pick accuracy rate ensures brands can depend on us to fulfill orders with care and attention.
- Do they offer same-day fulfillment? With GoBolt, orders received before 1 PM local time will be fulfilled same-day, and into the hands of your shoppers faster.
4. Distributed network
Being able to rely on the network strength of your 3PL fulfillment partner is a great way to get your products geographically closer to your shoppers.
As an example, with GoBolt, our inter-connected network across Canada and the U.S. allows brands to store products in locations closest to their shopper. This not only reduces shipping times, but facilitates shorter shipping routes. This is not just a bonus for your shoppers and your bottom line, but also for your sustainability efforts.
5. Customer-centric
Being customer obsessed is less of an option today and much more of an expectation. Today’s brands, and their savvy shoppers, are looking for quick resolutions to any challenges that may arise.
At GoBolt, we act as an extension of a brand’s team. Every brand receives support to troubleshoot issues that come up. Communication with staff placed locally in our warehouses can also expedite issue resolution. So, should an issue arise, the GoBolt teams are equipped to solve problems so you can respond to your shoppers faster.
Fulfillment terminology FAQs
What’s the difference between a fulfillment center and an order fulfillment center?
Simply put, there isn’t a difference between a fulfillment center and an order fulfillment center. The two phrases are interchangeable. Both refer to the logistics steps that take place after an order has been placed, including processing the inventory, picking, packing, and shipping the order.
What about ecommerce fulfillment and retail fulfillment – is there a difference?
Ecommerce fulfillment and retail fulfillment are essentially the same thing. Once again, both refer to the process of picking, packing, and shipping orders. The main difference is retail may refer to an omni-channel experience where a shopper orders from a retail brand (the order may come from their storefront or from a warehouse). The term ecommerce can include a retail brand selling online, or online-first brands, such as direct-to-consumer or digitally native brands.
Interested in the services of a fulfillment center? It all starts with finding the right partner. Regardless of whether you’re in growth mode or simply looking to gain a competitive edge with your end-to-end logistics, the right 3PL fulfillment provider will assess your unique needs and provide next steps and quotes based on factors such as your monthly shipping volume.
