Fulfillment Center: How digital order processing works

Order processing in e-commerce involves a wide range of tasks: Orders have to be managed, processed and shipped. To make logistics processes more efficient, it pays to bundle the processes in one place: the fulfillment center. In this article, you’ll find out what a fulfillment center is, how it works and what the services are it provides.

We’ll also tell you how cooperation with a fulfillment center works and what the advantages of outsourcing your logistics are.

A fulfillment center is a warehouse where eCommerce orders are processed and shipped by a professional provider. This gives eCommerce stores the opportunity to outsource logistical processes and place them in the hands of experienced professionals. So what does this mean in detail?

In the following, we take a closer look at order processing in a fulfillment center.

The logistics or distribution center is usually operated by a specialized fulfillment provider and serves as a logistics hub. Its main task is to process and ship orders quickly.

For this purpose, a fulfillment center includes:

• Receiving docks: This is where goods are received and registered.
• Shelves or pallets: depending on the type of product, goods are stored on shelves or pallets.
• Packing stations: Orders are properly packed, stamped and prepared for delivery.
• Loading docks: Packages are ready for pickup by carriers.

As soon as shoppers place an online order, the data is forwarded directly to the fulfillment provider via a digital interface. The fulfillment provider then assembles and packs the items in the warehouse. Finally, the order is handed over to the desired parcel service and makes its way to the recipient.

The processes in a fulfillment center are designed to handle orders quickly and efficiently. Orders can be taken not only from B2C (business-to-consumer) companies but also from B2B (business-to-business) companies.

A professional fulfillment provider takes care of the entire logistics process from A to Z. eCommerce brands get an all-in-one solution and benefit from a comprehensive service that leaves nothing to be desired.

The following services are usually provided by a fulfillment center:

• Order acceptance
• Storage
• Order picking
• Packaging
• Postage
• Shipping

But that’s not all. Innovative providers can do much more and support eCommerce merchants in numerous other processes, such as:

• Returns
• Repairs and disposal of returned goods
• Invoicing
• Dunning
• Customer support

Additional services such as customized packaging, picking of sets and bundles, or sustainable packaging solutions are also possible. The scope of services varies depending on requirements and is adapted to the individual needs of online retailers. Personalized fulfillment provides eCommerce brands with exactly the support they need.

A professional fulfillment center is not to be confused with a regular warehouse. At first glance, they may seem similar; after all, both are large spaces that companies can use to store their products. Nevertheless, there are some important differences, which we will take a closer look at below:

A warehouse can be housed within a company or rented externally. It is a place where a company’s inventory or goods can be stored for a longer period of time.

On the contrary, a fulfillment center not only provides its own storage space, but also offers trained professionals and additional services. Online retailers benefit from an existing infrastructure and a perfectly coordinated team which takes care of their fulfillment orders. In addition, they have direct control options in the warehouse via the fulfillment provider’s platform and can thus keep an eye on their order processes at all times.

Online retail is booming and offers access to a wide range of products that cannot be provided in stationary retail. It has never been easier for shoppers to gather information, compare prices and then choose the best deal. 

A positive shopping experience is essential. If order processing takes too long or delays in delivery occur, it will have a negative impact on customer experience. In the worst case, customers turn away and search through the large selection of eComerce stores to buy from competition.

There is no general answer to the question of how much it costs to work with an external fulfillment provider. Rather, it varies from provider to provider and depends on the services used. Normally, individual service packages are assembled that fit the needs of the eCommerce store. 

In general, costs depend

• on the individual scope of services,
• on type and size of the goods,
• on the order volume,
• and on special packaging or shipping requirements.

Especially B2C and B2B companies with high order volumes benefit from relying on  a fulfillment center. By outsourcing complex logistics processes, time and resources can be saved and workflows can be successfully optimized. In the long term, this contributes to a positive buying experience and leads to more satisfied customers and higher sales.

The cover image is by hacohob on stock.adobe.com, the other images are by industrieblick and chaiwat (also stock.adobe.com).