The United States’ logistics costs rose to $1.64 trillion in the year 2018. This change translates to almost an 11.4% rise in the overall corporate logistics outlay. This rising cost is responsible for the emerging need to outsource logistical support to fulfillment centers.
These centers have continued to gain traction in the global supply chain. The facilities are a solution to the logistical nightmare that companies encounter.
As e-commerce trends change, you need more physical space to enhance capacity. Fulfillment centers enable you to outsource shipping and warehousing functions.
Are you wondering what is a fulfillment center? This definitive guide has all the answers.
What Is a Fulfillment Center?
As a merchant, you have likely heard about these centers. Well, these physical facilities provide packaging and shipping services. They relieve you of the burden to provide inventory space.
Warehousing may require adequate spacing for extended periods. Unfortunately, most companies lack the internal capacity to provide such magnitudes of industrial space. These centers provide outsourced warehouse solutions to bridge this gap.
How Fulfillment Centers Work
Most corporate leaders grapple with understanding how these centers work. Well, these third-party service providers help get orders made online right to the client’s doorstep. They offer both warehousing and shipping solutions to companies.
Depending on their capacity, fulfillment centers can offer both B2B and B2C solutions. B2B solutions typically deal with high-volume warehousing services. Conversely, B2C solutions involve the delivery of orders to individual customers.
Difference Between a Warehouse and a Fulfillment Center
Most business owners wonder what differences exist between a warehouse and a fulfillment center. When considering logistical support, it’s essential to understand the difference.
Operations
Compared to a warehouse that is often static, fulfillment centers have complex operations. These operations involve handling packaging and shipping solutions.
Other common operations in a fulfillment center include receiving inventory and managing returns. Warehouses often only undertake the process of adding or transferring merchandise. As such, there are limited operations in a warehouse setting.
Frequency of Pickups
The frequency of pick-up varies when you compare a warehouse and a fulfillment center. The latter exists to fulfill direct-to-consumer orders within specific timelines. This means that they need shipping carriers to facilitate daily delivery.
The frequency of pickups inside the centers must be frequent. The only difference is that such fulfillment centers have cutoff times. This allows for a flawless process of delivery.
Warehouses store merchandise for longer. As such, the pickup schedules are less frequent. They also wrap merchandise together in pallets enabling a single dispatch of bulky merchandise.
Storage
A primary difference between warehouses and fulfillment centers is the aspect of storage.
The main objective of a center is to turn inventory around faster. With such a goal, the centers focus on short-term storage. In ideal circumstances, the stock should not sit idly in there for more than a month.
Warehouses take a different approach. They serve the long-term need for storage. This means that products in a warehouse can stay for more than a month. The difference is that these centers exist to bridge the efficiency gap.
Understanding the difference between a warehouse and a fulfillment center is critical for merchants. Such insights help you determine what option serves your needs better.
Advantages of a Fulfillment Center
Now that you understand what is a fulfillment center, let’s look at the key advantages of these facilities.
Eliminating the Hassle of Inventory Storage
Most businesses have moved away from the brick-and-mortar model over time. With the shift, comes diminishing space. As an eCommerce business, the hassle of inventory storage can be a real nightmare.
Fulfillment centers exist to bridge this gap. You can quickly eliminate the stress of managing physical space. They also make the process of packing supplies and storage less of your business.
Merchants prefer these centers due to their capacity to provide extra space for additional products.
Fulfillment Centers Help You Reach New Markets
Merchants who wish to expand into new markets can benefit from fulfillment centers. All you need to do is to locate a center in the new market. The fact that they facilitate shipping and storage makes your experience as you expand worthwhile.
Fulfillment Centers Help You Focus on Core Competencies
Shipping and packaging make most companies flinch. The time and resources required to manage your logistical needs can affect your ability to deliver according to your client’s expectations. However, with the help of fulfillment centers, it’s possible to focus on the core competencies.
You’ll be able to free up critical additional time. Such time would have ordinarily been allocated to packaging and shipping. Fulfillment centers offer support to companies so that such entities can focus on more significant roles, such as marketing.
Cost Reduction
Every business aims to make profits. Any avenue that can help you cut on costs is worth your consideration. Logistical costs, including warehousing and shipping, can be overwhelming.
Are you keen on saving on costs? Then you should consider fulfillment centers.
You can’t afford to keep up with the numerous logistics costs on your own. However, with fulfillment services, these costs should no longer be a concern.
What to Consider When Choosing a Fulfillment Center
Are you ready to go all out and source fulfillment services? Well, before you head out, you need to consider the facility’s proximity to your target market. You also need to consider its credit ratings.
Before settling for a specific fulfillment center, you should also consider your years of experience. Other factors, such as customer testimonials and reviews also count.
Fulfillment Centers Are the Solution to Your Logistics Dilemma
With these insights, you now understand what is a fulfillment center. You no longer have to feel overwhelmed by the shipping and packaging needs of your business. This outsourcing option helps you enhance efficiency.
With a reliable fulfillment service provider, you can now watch as your business thrives.
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