What is a fulfillment center?

The terms “warehouse” and “fulfilment center” are often used interchangeably. Yet they have major differences: the former refers only to the storage of goods, while the latter includes additional services.

A distribution center not only provides the necessary storage space, but also offers services that cover the entire order fulfilment process. These range from goods receipt to shipping and returns management.

Online retailers can delegate various logistical tasks, such as picking, storage, packaging and shipping. The most important advantages of fulfillment center are obvious: First of all, you save costs for your own warehouse and personnel.

In addition, you benefit from great time savings: you can invest the freed-up resources in core processes such as marketing, product development or expansion.

The tasks of a distribution center

The main function of a fulfilment service provider is to store inventory and carry out order processing. The basic services of an e-commerce fulfilment center include:

  1. Goods receipt:
    The retailer delivers the goods to the fulfilment center or the fulfilment provider collects them from the customer’s warehouse or its supplier.
  2. Receiving:
    It can take place in a fulfilment center by carton, pallet or piece. The scope, quality, completeness and correct labelling are checked before the goods are entered into the system.
  3. Storage:
    The distribution center takes care of the storage of your goods depending on the product group. Most fulfilment center specialise, for example, in fashion, food, cosmetics, heavy and bulky goods, etc.The processes and premises are adapted in relation to the core products.
    If required, special shelving and storage systems are provided. There is also the possibility of temperature monitoring, humidity control, etc.
  1. Processing of orders:
    There are several variants of cooperation here. For example, the retailer can inform the fulfilment service provider itself about new orders. Alternatively, the retailer grants the fulfilment center access to the administration area of the website or the marketplaces.
    Another option: the fulfilment provider integrates itself into the retailer’s system and accepts the orders automatically.
  2. Sorting / packing:
    The fulfilment center staff assembles the orders and gets them ready for shipment. The packaging can either be brand-specific or neutral (i.e. from the distribution center). This is a matter of your preferences and brand policy.
  3. Shipping / Delivery:
    This step is about handing over the orders to transport companies and courier services. The fulfilment service provider can also deliver the parcels itself, depending on the agreement.
    Some fulfilment center offer additional services, including gift wrapping or the insertion of flyers and vouchers.
  4. Returns management:
    Returned goods with undamaged packaging are usually taken back by the fulfilment center for goods acceptance. Returns processing usually also includes quality control and communication with end customers.

You can outsource your e-commerce logistics processes to a fulfilment center depending on your individual needs. Many providers score points for their scalable scope of services, so that you can add or cancel the individual services if the company situation requires this.

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