What is Fulfillment? Definition, Benefits, Tools and More

1. What is Fulfillment?
2. Why is Fulfillment needed?
3. Who is Fulfillment suitable for?
4. What are the advantages of Fulfillment?
5. What are the disadvantages of Fulfillment?
6. What does Fulfillment cost?
7. How can the right Fulfillment solution be found?
8. Which tools are suitable?
9. Conclusion

A well-functioning fulfillment process is the foundation of satisfied customers. However, fulfillment is also one of the biggest challenges. Particularly in e-commerce, there can be a rapid increase in orders, overloading a company's internal resources. In this article, you will learn what fulfillment is, who outsourcing is suitable for, what the advantages and disadvantages are, and much more.

What is Fulfillment?

Fulfillment refers to the entire process of order processing and delivery, including storage, picking, packing, shipping, and handling returns of products. The goal is to ensure as efficiently as possible that customer orders are fulfilled on time and correctly.

The fulfillment process includes:

1. Goods receipt and storage: Products are delivered to a distribution center and stored there in preparation for shipping.
2. Order processing: When an order comes in, the items are selected, packaged, and prepared for shipping.
3. Shipping: The finished orders are shipped to the customers via a freight forwarder.
4. Customer notification: Customers are usually informed about the shipment of the order by email and may receive a tracking number.
5. Returns handling: In the event of returns or defective products, a process for returns handling and refund is initiated.

Especially in e-commerce, fulfillment is often partly or completely outsourced, as the necessary resources are not available internally. 

Why is Fulfillment needed?

A well-functioning fulfillment is necessary to ensure smooth order processing. This is crucial for customer satisfaction and ultimately also for the success of a company. Particularly in e-commerce, the number of orders can suddenly increase significantly. Therefore, it makes sense to deal with the issue of outsourcing early on in order to avoid bottlenecks and ensure fast processing.

Who is Fulfillment suitable for?

Fulfillment is particularly suitable for companies that

• Sell products online.

• are growing quickly and need to handle ever larger quantities of orders.

• want to focus on their core business and outsource logistical processes.

• want to increase the efficiency of their logistics processes.

• have limited resources but still want to process orders quickly and reliably.

What are the advantages of Fulfillment?

Outsourcing the fulfillment process entirely or in parts brings you quite a few advantages. Let's look at five reasons that speak for support from fulfillment service providers.

1. Utilize experience in fulfillment: By outsourcing storage, packing, and shipping to a fulfillment center with many years of experience, companies benefit from the expertise of the staff, software, and technology. This know-how enables an optimal fulfillment process.
2. Expansion of customer base: Fulfillment centers are internationally networked and know the regulations of other countries in order to enable worldwide order processing. This opens up the possibility of operating globally and reaching a large part of the international, digital customers.
3. Better customer service: Outsourcing can offer better customer service. Fulfillment centers often offer 24/7 support, easy returns, and delivery guarantees. This improves the customer experience and strengthens customer loyalty.
4. Higher scalability: Fulfillment centers help in handling increasing order quantities, whether due to seasonal fluctuations or general expansion.
5. Lower shipping costs: A national and global location network often offers price advantages in shipping. Even the distribution of products across multiple warehouses is a way to reduce shipping costs.

What are the disadvantages of Fulfillment?

Although a lot speaks for it, there are also disadvantages when tasks are outsourced from fulfillment.

1. Loss of control: By using a fulfillment center, direct control over the order process is lost. Companies can become heavily dependent on the service provider, which requires a trustworthy cooperation.
2. Limited customization options: Fulfillment centers often offer standardized services and can only respond to a limited extent to individual processes or requirements. Special adjustments in packaging, quality management or additional services may not be possible.
3. Costs: The cost structure of fulfillment centers can be complex. Various fees may apply for goods receipt, storage, packaging and shipping. If order volume is low or processes are highly individualized, using a fulfillment center can be more expensive than handling it yourself.
4. Limited customer communication: If you use the customer service of the fulfillment center, you no longer have direct contact with your customers. However, they provide valuable insights into products, processes etc. If you only outsource the shipping process, you must ensure that you continue to have full insight into the process in order to be able to handle customer inquiries in a timely manner.
5. Communication difficulties with the service provider: Communication problems can occur when outsourcing order processing, if the service provider is in a different time zone or speaks a different language. This can lead to misunderstandings and delays in order processing as well as shipping, which can negatively impact customer satisfaction.

Fulfillment advantages and disadvantages

What does Fulfillment cost?

The costs of fulfillment are made up of various items related to the storage of inventory, the processing of orders, and the delivery to customers.

These include among others:

• Setup costs
• Shipping costs for goods receipt
• Processing costs for goods receipt
• Storage costs for inventory management
• Picking and packing costs
• Costs for labels and inserts
• Costs for assembling orders
• Shipping costs for outgoing orders
• Fees for handling returns and restocking

The costs vary depending on the provider and service. Companies should carefully check each item to make the best decision for themselves.

How can the right Fulfillment solution be found?

The suitable fulfillment solution depends on several factors. Here are eight steps that can help you in your decision making:

1. Order volume: The order volume of your company is a decisive factor in choosing the right fulfillment solution. A higher order volume requires a solution that is capable of working efficiently while maintaining the quality and speed of order processing.
2. Product type: Depending on the type of product, a special handling is required for storage and shipping. The type of products influences the requirements for the fulfillment solution, as for example, fragile goods require different packaging and shipping measures than solid products. Here you can read on Selecting a Shipping Service what you should pay attention to.
3. Sales channels: If you sell on various platforms, choose a solution that allows for seamless integration of these channels. This way, orders are captured and processed across all platforms.
4. Storage: Decide whether you want to store products yourself or prefer external storage. The decision depends on your storage space needs, budget, and delivery requirements.
5. Returns: When looking for the right fulfillment solution, you should consider whether you need an integrated return handling. It's not always directly offered.
6. Customer service: Check whether the fulfillment solution also offers customer service services or whether you want to handle this area internally.
7. International expansion: If you want to sell your products worldwide, make sure that the chosen solution offers international shipping and ensures compliance with global regulations. This is where byrd a European network can support such expansion.
8. Costs: Compare the costs of the various fulfillment options and make sure that the chosen solution fits your budget.

Which tools are suitable?

Shipcloud

Sendcloud

Alaiko

Hive

LetMeShip

Beckmann Systemlogistik

Zenfulfillment

byrd

You can find more tools at OMR Reviews under the Shipping category.

Conclusion

Fulfillment significantly contributes to the success of a company. Whether you opt for an in-house solution, working with a fulfillment service provider, or a combination of the two, the paramount goal remains to create the best possible experience for your customers.