What You Need to Know about Fulfillment Services for E-commerce

E-commerce relies on fulfillment services, otherwise, there won’t be any products arriving at consumers’ doorsteps.

But what exactly are fulfillment services and what do they do?

In this article, we’ll dive deep into everything you need to know about fulfillment services and how they can help your e-commerce or dropshipping business.

Let’s get started!

What are E-commerce Fulfillment Services?

E-commerce fulfillment is the process of getting an order delivered to a customer once they have purchased an item. 

This involves receiving and storing inventory, processing any orders, packaging said items and then transporting them to the customer’s home.

Typically this is a third-party warehouse that e-commerce brands send their inventory to. 

Fulfillment services can save money for e-commerce stores and dropshippers, as it makes it easy to send inventory to one place and focus on other tasks that drive revenue.

Considering businesses no longer need to pay rent for a warehouse that they may never need to use, a lot of money can be saved by outsourcing fulfillment.

E-commerce fulfillment services charge by weight, dimensions, volume, storage, or some combination of these metrics. 

Why are E-commerce Fulfillment Services Important?

Imagine you’re a smaller eCommerce store, or you’re a dropshipper that is expanding its services. 

While it may have been easy at first to package and ship a product a day, once you’re sending out hundreds or thousands, you won’t have any room at home to store and ship your inventory.

You won’t have to spend any time worrying about storing your items, packaging, or shipping, as a fulfillment service will do all of that for you. 

Fulfillment services cost money. But, the time they save will pay off when you can use it in other areas of your business.

If you are a solo dropshipper or e-com owner, hiring a third-party logistics (3PL) solution may seem impossible.

But as you grow, e-commerce fulfillment services get bigger shipping discounts. 

Once you start expanding, utilizing fulfillment services in different locations will be cheaper than sending from a singular source. Shipping from the USA to abroad will add up. 

With fulfillment centers placed strategically around the world, you can increase your profits by reducing the shipping fees on your end.

You can hire a freight service to haul all your goods to wherever you need it, or you can save time and money, and scale your services with a fulfillment service that will take care of everything.

Benefits of Fulfillment Services

1. Saves time

Using a fulfillment service will save a significant amount of time, which is the biggest benefit. Every time a business saves money, it earns money that it can reinvest back into the business. 

Consider if you did everything yourself, you would need to hire additional staff to continuously unpack, organize, and deliver your items. 

The price you would have paid for additional staff will be offset with a fulfillment service.

2. Scaleable

As you start growing from a dropshipper or e-commerce business, you’ll soon start to hit limitations with how fast you can grow. 

If you are the bottleneck, then you’re going to get stuck with the amount of products you can move. 

A 3PL provider will not only have years of experience to help fulfill your orders, but they can handle a lot more volume than you can. 

A well-trained staff can help with their extensive knowledge of how to streamline the supply chain process, which goes a long way.

Being able to reach every corner of the globe as you expand your e-commerce or dropshipping business will also help get the product to your customers faster. 

With 2-day delivery being the new normal, the faster you can get it to your consumers the better.

3. Saves money

Imagine having to rent out an entire warehouse to hold your inventory. 

You’ll then need to spend additional money on the upkeep of the facility, security, and staff to keep the warehouse running.

A fulfillment service will also pass on their ability to get discounts from shipping services.

4. Better customer service

A fulfillment service will have the ability to keep everything tracked, so your customer knows exactly where their package is at any point in the delivery process. 

The fulfillment service will streamline returns, making it easy for you to keep track of everything within your supply chain.

Downsides of Fulfillment Services

1. Costs can mount up 

Any time that a fulfillment service is handling your goods, the costs start to increase. Fees normally range from $3-5 per item, but the costs can increase and turn your e-commerce or dropshipping business into an unprofitable one.

2. May not be right for your business

If you are only shipping out a few products a day, you may not need a fulfillment service. Once your business starts expanding, it may start to make sense. 

However, there are instances where you may need to take full control of the process.

If you are a gardening company, there may not be any fulfillment centers for items like trees. They need to be shipped with care. Dropshippers can rely on their suppliers as well for most of the fulfillment process.

3. Inventory that doesn’t move

Having inventory that sits around for a long time is going to start adding up. 

Consider if you have multiple warehouses around the world with items that take a long time to sell, you’re going to end up paying for items that are sitting around.

4. Multiple locations = more costs

Having multiple locations around the world can start to eat away at your profits. 

With multiple locations, you’re going to need more inventory, which is going to incur more costs, which can add up as you start to expand your e-commerce or dropshipping business.

5. Lack of control

Lack of control is a big factor when it comes to fulfillment services. Not all services are equal, and some may end up leaving you unsatisfied with how they fulfill your orders. 

Mistakes do happen, but when a 3PL makes a mistake, it’s going to come at the cost of a customer as you’ll have to take responsibility for it.

Returns can also make for an opaque process. 

If a customer returns a package that was damaged, you’ll have no way of knowing if it was because of your 3PL or because of the customer. 

Either way, you’ll have to eat the loss without knowing who was the one to blame.

Most business owners who want to reclaim their time will find it necessary to be concerned about lack of control because fulfillment services ship most e-commerce packages.

How Fulfillment Services Handle Orders

E-commerce or dropshipping integration

The moment a customer places an order, order fulfillment begins. A fulfillment service will utilize your website’s checking out process, and take in any orders by utilizing platform integration. 

As soon as you place an order using Shopify, WooCommerce, or your e-commerce system, their warehouse software tells the fulfillment service and starts the process.

Storage

Fulfillment services will get the goods from your manufacturer and handle any needed unboxing. 

They will then sort through the items, and leave them inside their warehouse until it’s time for the items to be shipped out. 

You won’t need to unbox and organize hundreds or thousands of items in your warehouse.

Warehousing

Fulfillment services provide solutions for any type of product, whether it requires refrigeration or proper hanging, such as clothes. 

Some services also have a locked-off area for more valuable items. You won’t need to worry about any rogue employees stealing your items.

Picking and packaging

Once the service stocks your items and receives an order, an employee will locate your item and begin the packaging process. 

They will label the box, tape it up, and prepare it for shipment to your customer in record time. 

Some services can even customize your items with notes. They can also add any extra inserts, like candy (which is popular in countries like Japan). 

Shipping

Once the order is picked up and packaged, your items will be sent to a delivery service. 

The most important thing is that you send the tracking directly to your customer, and with the e-commerce or dropshipping integration. 

You won’t need to worry about this part of the process.

Returns

Processing returns can take up a huge amount of time if you’re left to do it on your own time. With a fulfillment service, they also do all the returns. Some services can even handle any complaints. 

Types of Fulfillment Services

E-commerce fulfillment

A fulfillment service will link to your e-commerce website’s checkout process and streamline the entire process. 

Once they receive the order, they enter it into their warehouse system. Then, they start processing it. The fulfillment services take care of everything from packaging, shipping, and even returns.

Dropshipping

Dropshipping is when a retail business doesn’t own any stock on hand. They rely on a third party to do the fulfillment for them. 

It’s not the same as e-commerce. E-commerce owners usually keep their products on hand and ship them to fulfillment centers.

Multi-channel 

Typically, a fulfillment service focuses on only one channel. It might be business to consumer or business to business. 

However, some services offer multi-channel fulfillment which requires expertise as operating both channels can be difficult to do well.

Fulfillment by Amazon

Amazon offers FBA, or fulfillment by Amazon, where they handle the entire fulfillment process for you while selling your products on Amazon. 

Using FBA can be great. Warehousing a ton of stock can cost a fortune if you only need a small space, which Amazon can provide.

Are Fulfillment Services Right for You?

Outsourcing order fulfillment can seem scary at first. But, you’ll need to weigh its pros and cons to see if it’s right for your business. 

As you expand, you will have less time to deal with packaging orders and handling returns. Soon, packages will overwhelm you if you do not outsource this part of the supply chain.

Choosing the right service is key to your success. 

Choosing the wrong provider can cost a lot if anything goes wrong. 

You can always do a trial run with a limited amount of inventory so you can get a better idea if fulfillment services are right for your e-commerce or dropshipping business. 

Final Thoughts

Understanding fulfillment services is crucial for the success of any e-commerce or dropshipping venture. 

These services streamline the entire process, from receiving orders to shipping and handling returns, saving valuable time and resources for business owners.

While there are undeniable benefits such as time savings, scalability, and improved customer service, there are also potential downsides to consider, including costs, lack of control, and the need to find the right provider.

The choice to use fulfillment services depends on each business’s needs and situation. 

It may not be necessary for small operations at first. But, as the business grows, outsourcing fulfillment can become key for efficiency and growth.

If you also deem fulfillment service the key to your ecommerce success, contact Sup Dropshipping now to let us be your helping hand.