What is a Fulfillment Center & how it can change your business
There is a very simple explanation of what a fulfillment center is, especially when it comes to print on demand. However, we are going to look at the in’s and out’s of what a fulfillment center actually does, what is order fulfillment, and why it’s so important to your store.
In short, a fulfillment center is a storage facility where items are stored and orders are fulfilled and shipped to customers. This is now standard practice for many eCommerce stores that don’t have their own warehouses, or for larger retailers who may use fulfillment centers around the world to speed up shipping.
For print on demand, this process is a little different. Typically a fulfillment center here takes care of the whole process, including order processing, custom printing, and shipping to the end-user. This is also where the term fulfillment comes in, we will talk a bit more about that later on in the post.
What is a fulfillment center in detail?
We have already touched on what a fulfillment center is, but now we will go into a bit more detail about how they work. From an operational side, fulfillment centers effectively help move online orders to the customer’s address. This is often referred to as the order fulfillment process, an order is received by the online store and sent to the fulfillment center to be processed, packed, and dispatched.
eCommerce stores tend to use fulfillment centers to help with logistics, storing goods strategically around the country (or world) ready to fulfill a customer’s order. The process is fast, efficient, and helps to reduce shipping costs.
It’s not just shipping that is made easier, a fulfillment also takes care of inventory management, shipping rates, and of course the holding of physical stock. This allows eCommerce stores to concentrate on selling items without the hassle of running their own warehouse.
What are the benefits of a fulfillment center?
The benefits should already be fairly clear, however, there are some that go under the radar that is vital to the success of any eCommerce business. Let’s take a look at customer service, for example, businesses can now address customer issues and resolve them faster due to having more time to do so.
Another benefit is the ability to scale your store. Scaleability is the number one reason that businesses fail, by using a fulfillment center, you can achieve this without the pain points that other stores face.
7 out of 10 U.S. consumers say they’ve spent more money to do business with a company that delivers great service.
One advantage that is perhaps overlooked is simply leaving the fulfillment to the experts. For many eCommerce store owners, managing stock plus picking and shipping orders can be a nightmare, even for those at the start of their journey. By using a fulfillment center, you can alleviate these problems, leaving the fulfillment processes to the pros.
You don’t need to manage any returns. This is a standard part of eCommerce, you will get returns, maybe for the wring size, or there is a small problem with the product, returns are almost a given. Some stores build in a 10% return rate to their costs, but knowing that you don’t have to deal with this, is a huge relief. The fulfillment center will take care of returns, issuing replacement orders if needed or restocking uncustomized orders.
It’s important to remember, if your items are customized, you should build in a disclaimer to your returns policy, as not all fulfillment centers will accept a returned customized product.
How is it different from a warehouse?
On the surface of things, a fulfillment center and a warehouse might appear to be one and the same, there are however some big differences. The largest of these is how a warehouse works in principle, it’s simply a location where stock is held. A warehouse is typically used in wholesale and for companies who are holding items in bulk, they tend to be more static in terms of shipment and overall serve as a storage solution.
What is order fulfillment?
Now that we have cleared up what a fulfillment center is, it’s time to explain what order fulfillment means. In essence, order fulfillment is the process that takes place from order to delivery, and everything in between.
The process is fairly straight forwards and consists of the following steps:
- Order is received
- Order request is registered in the inventory system
- An order confirmation is sent to the customer
- Order request is sent to the warehouse
- A warehouse worker locates and picks the ordered item
- Order is packed and prepared for shipping
- Order is shipped
- The customer is notified that the order is on its way
- Order is delivered
- If necessary, order returns are handled and refunds granted
- Inventory is updated
Choosing a good fulfillment partner is essential to the success of your online store, especially when it comes to print-on-demand or any other products that require intervention before being shipped to the customer.
Each fulfillment center might have its own systems in place, but essentially they are mostly the same. The advantage to this is the stock levels of items are constantly updated, allowing you to see what items are low in stock and which items you might need to push on sales.
The order fulfillment process is why you work with a fulfillment center in the first place. The time value of these steps can’t be underestimated, and while the other option is doing it all yourself, you will soon find out that handing over the responsibility to a third-party, will allow you to concentrate on more operational aspects of your business – be smart and let the experts do their thing, while you do yours.
The 3 types of order fulfillment
It’s clear that different eCommerce businesses require different needs. With all of the factors above in mind, the best order fulfillment strategy for your business might not be the same as your competitors. The most common order fulfillment methods are outsourcing to a third-party fulfillment provider, merchant fulfillment, and dropshipping.
1. Third-party fulfillment
The most popular option is best defined as outsourcing the fulfillment processes and logistics to an external partner or ‘third-party’. Most eCommerce retailers partner with a third-party logistics (3PL) partner to outsource the fulfillment-related tasks that can often be too unproductive, costly, or complex to manage in-house.
If you no longer have the bandwidth or space to fulfill orders yourself, working with a 3PL can help automate time-consuming tasks. Freeing up the time taken up by product fulfillment allows you to focus instead on growing your business.
3PLs have inbound and outbound logistics expertise that your business can — and should — leverage. They also have the infrastructure needed to ship larger order volumes, making them invaluable as your business scales or needs to ramp up quickly.
2. Merchant fulfillment
This is often referred to as in-house fulfillment or self-fulfillment. Merchant fulfillment effectively means that sellers take care of the fulfillment process themselves, without the help of a third-party. This is popular for stores when they are just starting out, it can help to keep costs down, but it usually means sacrificing the spare room and turning it into a storage and packing room.
Merchant fulfillment gives more control over your supply chain than outsourcing the same processes, it can become costly however as hour business grows. As more orders come in, you will be faced with the decision of either investing in a warehouse, plus the labor to run. Alternatively, outsource to a fulfillment center that takes care of all those things for you.
Dropshipping allows store owners to be almost totally hands-off, products are manufactured, stored, packed, and shipped by the drop shipper. As a store owner, you don’t need to think about each aspect of the fulfillment order journey.
You could say that print on demand is also a form of dropshipping, as are companies like Aliexpress and Salehoo. However, there are a few differences that we talk about in the next section.
One of the huge benefits of dropshipping is the low barriers to entry and minimal overheads. However, manufacturers are often located overseas, which means that shipping usually takes much longer, additional taxes are also sometimes required to be paid and the whole process offers merchants very little control over the supply chain, especially when it comes to inventory management and order fulfillment.
How does Print-on-demand fulfillment work?
Much in the same way as standard fulfillment, the main difference here is that print on demand fulfillment involves the process of printing onto garments and products by the fulfillment center (or partner). In the case of Printify, we have more than 20 fulfillment partners located around the world. Each one has their own product range, pricing, and shipping times.
The actual order process remains the same as with any other eCommerce store. You place your order with your chosen print provider who in turn manages the entire process, from printing to shipping.
Let’s take for example a t-shirt with your custom printed design. Once you receive an order from your customer, Printify will forward the order details to your chosen print provider who will then add your order to a print queue. The great thing about Printify is that you can track the status of your order as it moves through the fulfillment stages, allowing you to keep your customers updated on the progress of their order.
Once printed your order will pass through a quality check before being packed and sent to shipping. All this happens while you sleep, or, make more sales (hopefully the latter), the point being that you don’t need to worry about any of these processes, allowing you to press on with making your store successful.
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The importance of location
Having multiple fulfillment centers allows you to select a print partner that can best serve your target audience. For example, if most of your orders are coming from the US, it doesn’t make much sense to use a fulfillment center based in Germany. In some cases, it’s not possible to work with a partner in the same country as your audience, in this case, you can look at additional shipping options like expedited shipping for example.
In a world where delivery expectations have increased by 42% compared to 2018, the importance of delivering on time and as fast as possible can now mean the difference between a repeat order or a dissatisfied customer.
Choosing the right Printify fulfillment partner
There are a few things to consider when it comes to choosing from our 20+ print partners. The first thing you need to consider is whether the print provider has the product you are looking for, as not all print providers offer the same product range.
The second thing you need to consider is whether the print provider has more than one fulfillment center, while some print providers only have one fulfillment center, others like WOYC have worldwide fulfillment through a network of partners in the USA, the UK, Germany, Australia, South Korea, and Argentina.
The next thing to consider is the average fulfillment time, we are transparent with the length of time it takes for orders to be fulfilled, this can vary from 1 day to 6 days depending on the product. This might be a deal-breaker for you if you know your customers expect fast shipping.
Please note that fulfillment time is not including shipping, this is additional to the fulfillment timeframe.
The final thing to consider is the price. Some print providers will offer the same garment, the price, however, can vary. This is where you need to weigh up your options, the cheaper provider might take longer to fulfill your order, it may also be located in Europe while your customer base is in the USA, this means shipping will be more expensive and take additional time.
Our advice is to always go with the print provider that is located closest to your customer base, even if the initial cost is a little higher.
Fulfillment center myths busted
If you have been researching about fulfillment centers, you will no doubt have come across some comments and myths that might make you think twice. Well, now we are going to debunk the most common misconceptions to reassure you that working with a fulfillment center is a great idea.
1. Choose a fulfillment center close to home
While this might seem logical, it is in fact not the best way to choose your fulfillment center. Instead, you should be looking at where your customers are located, not your HQ. Customers now expect speedy delivery, usually within 2 days, locating your order fulfillment center closer to them, will result in happy customers and repeat orders.
2. It’s cheaper to do it all myself
This is a tough one to address, if you look purely at what you save then perhaps yes it’s cheaper to take the order fulfillment inhouse, however, you really need to understand what order fulfillment requires. If you’re happy to receive orders, pack orders, sort orders, manage the shipping, negotiate shipping rates, take care of returns and at the same time continue managing your store then hats-off. You could however save yourself a LOT of time and headaches by handing this process over to the professionals.
3. I am giving up control by using a fulfillment center
While this is partially true, there is a good reason for it. You are handing over a vital part of your business process to experts that can (no offense) do a more efficient job that you can. However, you aren’t giving up total control, a good fulfillment center will listen to your packing instructions, for example, let’s say you want to add a discount card with each delivery, the fulfillment center will do this for you. If you want to change the color of the packing paper, again, the fulfillment center might be open to this, depending on your chosen partner.
So, although you are giving up a big chunk of the work, you still retain some control over the order fulfillment process.
How Printify makes it easy
The whole point of dropshipping, print on demand, and fulfillment centers are to make your life easier right? So would suck if we didn’t do our bit to help out too, and that’s why we have developed several integrations that work with Shopify, WooCommerce, Etsy, eBay, and WIX.
These integrations all help to add another layer of convenience and speed to your order fulfillment process. Let’s take for example Shopify app, seamlessly integrated, once you receive an order, we will automatically send the order to the fulfillment partner, without you clicking a single button.
This same process applies to all our other integrations, allowing you to import products directly from Printify to your store. And that’s not all, you can use our mock-up generator, design on over 250 products, and get crazy with unlimited design customization.
Choosing Printify for your POD dropshipping
Armed with all this information, you are now as close to being a fulfillment expert, and this knowledge will no doubt help you when it comes to choosing the right fulfillment center for your future endeavors. But, why choose Printify for your dropshipping and order fulfillment?
First of all, we vet all of our print providers, they need to meet strict requirements including quality control, reliable shipping times, and carefully controlled stock to be able to cope with orders. As we have already mentioned, we have print providers located around the globe, from the USA to Australia (and Europe of course). Allowing us to cater to your target market.
Our print providers are also a fulfillment center, which allows them to receive your order, process it, print it, pack it and ship it to your customer.
In short, using Printify is an all-encompassing, one-stop solution that can take your print on demand store to the next level, additionally, it doesn’t cost you a thing until you make your first sale. We only charge for goods when you actually have a sale, this means no start-up cost or investment is needed, which we think is pretty amazing.
So if you have been thinking about launching your first store, but had no idea what a fulfillment center was, or how orders are fulfilled, or even what a dropshipper does, now you know, and it’s as easy as 1,2,3.
Get started with Printify today and get to know our awesome print partners, after all, you might find that these guys are a vital part of your store’s success.