Fulfillment Center: How digital order processing works

by Carolina Engl – 8 Min reading time
last updated 24.8.2022 

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 the cooperation with a fulfillment center works and what the advantages of outsourcing your logistics are.

Paketlager

What is a fulfillment center?

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.

How does a fulfillment center work?

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.

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Various logistics processes are handled in a fulfillment center.

Services of a fulfillment center

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
  • Franking
  • 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.

Fulfillment center vs. warehouse: What's the difference?

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:

Warehouse

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.

Fulfillment center

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.

Especially for B2C or B2B companies with high sales volumes, a cooperation with a fulfillment center is recommended. This allows logistics processes to be optimized and handled more efficiently.

Efficient collaboration: fulfillment centers and eCommerce stores.

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.

Ein Laptop, vor dem ein kleiner Einkaufswagen steht

Convincing customers with fast delivery is a clear advantage.

It is therefore all the more important for eCommerce stores to guarantee a smooth ordering process and positive buying experience. At the same time, however, the core business – such as the optimization of selling goods or the website – must not be neglected. After all, what’s the point of fast shipping if the purchased product doesn’t live up to expectations in the end?

In order to successfully master these challenges, it is worth outsourcing your eCommerce logistics. Ultimately, working with a professional fulfillment provider brings numerous advantages:

  • By outsourcing your logistics, orders can be processed quickly and efficiently – even for large order volumes.
  • Online retailers save time and resources, while they can fully concentrate on their core business.
  • E-fulfillment offers maximum flexibility and scalability. Even increasing sales volumes or seasonal peaks can be easily handled.
  • Repetitive, manual processes are replaced by automation and relieve the workload on operations teams and customer service.
  • Thanks to innovative control and monitoring tools, order processes can be viewed and controlled in real-time. This facilitates inventory management and avoids out-of-stock and overselling.
  • Special services such as a personalized packaging design or the individual choice of carrier guarantee an exceptional customer experience.

Fulfillment Center: Estimating costs

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.

Tip: For more information, check the fulfillment costs guide.

Success in eCommerce thanks to fulfillment centers

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.

FAQ

What is a fulfillment center?

A fulfillment center refers to a warehouse where eCommerce orders are processed and shipped by a professional fulfillment provider.

What tasks does a fulfillment provider take on?

A professional fulfillment provider takes over all tasks in the logistics area: from goods receiving to storage to shipping.

How much does it cost to work with a fulfillment center?

There is no one-size-fits-all answer to how much fulfillment costs. The costs depend ,among on other factors, mostly on the scope of services, type and size of products and the order volume.

When is fulfillment worthwhile?

Outsourcing logistics is particularly worthwhile for B2C and B2B eCommerce stores whose internal resources are stretched to their limits by high order volumes.

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

Carolina Engl
Content Marketing Manager

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