What is a Fulfillment Center and its Importance

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Fulfilment center

Back in the day, having a website was a big thing. 

Then somebody started offering services online. 

Then somebody started selling books online. 

Then came clothes, electronics, food…and practically the whole world.

And while the many benefits of the e-commerce business model have made it possible for business people to create empires, one true hero is never recognised. 

The one who fulfills the journey from ‘Place Order’ to ‘Order Delivered.’ 

The one who runs the show in the backend. The one who makes it all possible. 
The fulfillment centre. 

What is a fulfillment centre?

You’ve heard of shipping companies, logistic service providers, warehouses, inventories, supply chains and more. But what is this fulfillment centre? 

If we have to say it like an outsider, it’s a brick and mortar facility that has a lot of people, a lot of parcels, and a lot of movement. But as an insider, it is the hub of all the activity that goes on after a customer has placed an order until it reaches him. 

You already know that if an e-commerce website lists a product online for sale, it has to actually have that product. But a fulfillment centre doesn’t just keep an inventory/stock of the products. It also takes the responsibility of sorting the products category wise, processing the received orders, packing the products, and then shipping them to the customer’s doorstep. 

While physical retail stores have sales representatives do this behind the counter, e-commerce giants do this in large fulfilment centres. As a matter of fact, Amazon – the world’s largest marketplace also has the world’s largest fulfilment centre!

However, one must note that maintaining a fulfillment centre can go from convenient to costly in no time. Unless you have a big business or high margins, it is recommended that you hire a fulfillment centre rather than setting up your own. Since fulfillment centres cater to not just one but multiple e-commerce businesses, the cost of hiring them becomes relatively low. 


How are fulfillment centres different from warehouses?

A warehouse is a place where businesses keep their inventory. A lot of e-commerce businesses tend to have their own/rented warehouses where they stock up on all/best-selling products. 

On the other hand, a fulfilment centre is more like a distribution centre. It is the place where your customer’s order is stored, packed (after receiving the order)  and shipped from. 

To make it simpler, we’ve given a fun example. 

A warehouse is like a pantry in your kitchen. It is where you stock up and store all your food supplies for cooking later. 

Whereas a fulfilment centre is like having a cook in your kitchen. The cook is responsible for taking the food from the pantry, cooking it and serving it on a plate to you. All you have to do is hear the praises about the excellent food. 

Criteria to select a fulfillment centre?

Criteria to select a fulfilment centre?

Location

Location

While e-commerce businesses often provide doorstep delivery to customers staying miles away, they must think twice before selecting a fulfilment centre. The real challenge here is to strictly define your shipping radius. Because ‘free shipping’ is a buzzword that is driving e-commerce businesses today. And the farther the fulfilment centre from your customers, the more expensive the shipping will be. So it is recommended that you choose a fulfilment centre and store your products nears to your customer.

Connectivity

Connectivity

Just because we want a fulfilment centre that is near our customers, we cannot expect it to be in the middle of a residential complex, or sometimes even within the city’s heavily populated premises. With more and more fulfilment centres being located outside the city, you must make sure to select one with easy and maximum connectivity. Things to keep in mind are the nearby highways, free roads, service roads, road safety (especially during monsoons), exit ramps, average traffic, etc. While it’s not mentioned everywhere, we recommend you take a look at the total fleet of vehicles at each centre. The more vehicles they have at their disposal, the faster the orders will be fulfilled. 


Workforce

Workforce

E-commerce businesses can never provide the warmth of in-person shopping. But what they can, is super fast delivery to the customer’s doorstep. Now imagine waiting for your order, only to find a piece of it missing or worse, damaged. Sometimes, the order is so late, that the business ends up losing customers. And a majority of the time, the reason behind angry customers is a gap at the fulfilment centre. So make sure that the centre you choose has a skilled workforce. More so, large centres have a healthy balance of automated processes and experienced employees to make sure that the mistakes are less. 

Facilities

Facilities

In the world of technological advancement, even fulfilment centres have gone from houses of manual labour to a mix between machine automation and highly skilled professionals. Depending on the frequency, urgency and demand of your products, select a centre that best suits your needs. Also, check for the size of the centre to know whether your products will be categorized well or piled up in a corner. Take a look at the size of the staging and storing infrastructure, the packaging station and supplies and the transportation. 

Environment

Environment

One must note that the climate of a place can make or break your business. While commodities can be packed and stored quite easily, fruits, vegetables and dairy products often require cold storage within the fulfilment centre. More so, in a tropical country like India, even the delivery of perishable commodities has to be super quick so that the weather does not affect the quality of the products. To do so, the fulfilment centre should have great connectivity. The same applies to the pharma industry. In case, you have a different warehouse, make sure the distance between your warehouse and fulfilment centre is not much. Lastly, check for frequent flooding, earthquakes and more in the area of the fulfilment centre that you choose. After all, losing your products to unforeseen climates is the worst! 

Why is it important to have a fulfillment centre?

While being an e-commerce business owner takes away the need to have a physical retail setup, it does require you to keep your stock somewhere. And this place is always the warehouse. But as stated earlier, a warehouse just solves half the problem. You still have to ship your products. So instead of renting a warehouse that just stores things, stock your inventory in a fulfilment centre that not only stores products but also prepares them for shipping. So that whenever the shipping personnel is ready to collect the parcel, it is completely and securely packaged.

More so, a fulfilment centre is a key to solving backend delays. You may make it extremely easy for your customer to place an order on your website but if your delivery takes time, you may lose the customer altogether. Also, sloppy packaging makes the customer feel that their products have been tampered with. It gives them a feel of sub-standard quality, being cheated of their money, or worse, internet fraud. A fulfilment centre has skilled staff to make sure that this is never a problem. They not only wrap your products well but also package them securely to make sure that bumpy roads, harsh weather and even delays cannot deteriorate the quality/damage the products. 

Conclusion

If you ask us, the true success of an e-commerce business is when its customers don’t question anything except the product price or variety. Because a fulfilment centre with a good shipping company ensures that no matter what is to be shipped, it will be done easily, quickly, and efficiently. 

FAQs

Can a fulfilment centre handle all types of products? 

  • The answer is no. If you are in the business of perishable commodities, you require a fulfilment centre with a cold storage facility. If you’re into heavy-duty tools or industrial equipment for a B2B market, you need a fulfilment centre that can comply with the safety measures and provide customised packaging. 

Can a fulfilment centre handle a large number of orders?

  • Yes. That is exactly what a fulfilment centre specializes in. Fulfilment centres are huge facilities with automation and a vast, skilled workforce to handle the requirements of not one but multiple e-commerce players. So they are completely used to thousands of orders being packaged and shipped every day. 

How accurately do they pick and pack the products?

  • This depends on the track record and staff quality of the fulfilment centre. A centre with the least errors in packaging speaks for itself. More so, with automation, the accuracy levels have increased. However, one must check for the quantity and quality of staff in a fulfilment centre before making the choice. 

Do fulfilment centres provide real-time updates? 

  • Yes, they do! When e-commerce players need to give the customer real-time updates of the stage of shipping their order is in, they require the fulfilment centre and the shipping company to do so as well. However, depending on your product there may be many processes involved in a fulfilment centre. Therefore, the updates can be of two kinds – a generic update that mentions that the order has been processed or; a detailed update of the product in every stage from picking to packing.