What Is A Fulfillment Company?
When considering starting your own business that deals with remote customers and a lot of shipping, the task of dealing with the logistics of this can often times become one of your greatest hurdles in the process of crafting your business plan.
A business idea is a seemingly noble, motivating concept at first, but sometimes entrepreneurs can let the details get in the way of actually fulfilling their dreams. This is especially true for businesses who create physical products rather than services or a software that can be distributed online.
When your business has a lot of products to both store and ship, this can be a real hassle for the owners, especially in a smaller operation. Having to deal with the logistics of storing, organizing, preparing to ship, and actually shipping the items out to each individual client can all come together to slow down the process of actually doing business sometimes.
Luckily for you and business owners across the world, someone noticed this need and decided to start their own business around it. Order fulfillment companies arose from this problem businesses were noticing, and are now one of the most popular means by which a wide variety of businesses across the world distribute their products.
What Exactly is an Order Fulfillment Company’s Purpose?
A fulfillment company is responsible for the management of a business’ product delivery system. It manages the entire supply chain and is responsible for keeping the inventory of its clients updated, as well as collecting payment and shipping records for every order.
Many companies will utilize multiple fulfillment centers to provide fulfillment services to their clients. This helps minimize the time and cost for both the business and their clients. In addition to this, fulfillment companies also help businesses automate some of the more tedious aspects of the process, such as purchasing of goods.
A Fulfillment Company’s Operations
A fulfillment company’s warehouse is similar to an online shopping center, with many of their services similar to a traditional retail store. Their services include inventory control, distribution, fulfillment, packing, labeling, inventory tracking, and customer service. These services can be performed in various ways, depending on the size of your company and what you need it for.
Fulfillment centers can be classified according to their method of distribution. Distribution centers typically do not allow their customers access to the actual products being purchased until they have been shipped out. A distribution center is responsible for making sure that all orders are shipped out before the merchandise they have received is released to the customers.
Some distribution centers require a small amount of inventory in order to maintain the availability of their inventory, while others have a large amount of stock at their disposal. This means that they must keep the stocks on hand to meet the demand for the products. While this is great for the company that provides these services, some of their customers may require that the products be available for immediate use.
Fulfillment Companies are Great for Online Businesses
Fulfillment companies are important for any type of company, whether online or off. The companies that handle online businesses are more prevalent, as the number of orders that they handle increases. and their ability to provide good service increases.
Those just entering the eCommerce business often don’t have an efficient, or cost-effective, way to get their products both created and then distributed all at once. Bigger operations with more revenue perhaps can do so, but even in these cases utilizing a fulfillment center is sometimes the best choice.
Companies will often decide to have their manufacturer liaison with the fulfillment company, sending the products straight to the warehouse for processing upon a client’s order. Most fulfillment companies will require you to keep a minimum amount of product in stock, though.
Some manufacturers also serve as fulfillment companies, and will design, create, and distribute your product all from one location. This is one of the most cost-effective methods for beginners, and something to check into if your business will need to do all three.
Decide if a Fulfillment Company is for You
If you’re starting a small business or if you just have a business that needs a few products delivered to your home every month, then it’s worth looking at a company that offers a larger quantity of orders to meet your company’s needs. However, if you have a larger operation then you may want to focus on a smaller company that can offer a larger quantity of products and services, or can offer you a custom solution.
Fulfillment companies can be a great way to not only optimize, but grow your business as well. Whether an existing and established company or a new startup, this could be a good move for you.