Fulfillment

Fulfillment is a key operation for every e-shop. Many companies hand this process over to specialised fulfillment centres, a form of logistics outsourcing. In practice it means the retailer only delivers the goods to the centre, and the partner takes care of everything else, from storage through dispatch to handling complaints. The whole process is often fully automated: once an online order is received, the system at the centre picks the goods, packs them to specification and hands them to a courier. This model turns high fixed costs into variable ones, which suits growing companies.

Advantages

• The chance to focus on the core business: the entrepreneur can devote themselves to product development, marketing and customers without the burden of warehouse operations.
• Scalability and flexibility: the service makes it possible to respond nimbly to swings in demand (at Christmas or on Black Friday) without investing in one's own capacity.
• Cost savings: there is no spending on warehouse rent, warehouse staff wages or technology. You pay only for the services actually performed (space in the warehouse, number of orders processed).
• Faster and more professional delivery: fulfillment centres are optimised for speed and accuracy, which leads to higher customer satisfaction.
• Easier international expansion: partners often have a global network of warehouses, which makes delivery abroad simpler and cheaper.

Disadvantages

• Loss of direct control: you hand the physical goods and the final customer experience (the packaging) to a third party, which calls for a trustworthy partner.
• Initial investment and integration: connecting an e-shop to a fulfillment centre's system can be demanding in both time and technical terms.
• The risk of choosing the wrong partner: a fulfillment centre's mistakes (slow processing, wrong parcels) directly affect your brand's reputation.
• Limited scope for personalisation: standard packaging is the norm, and unusual individual requirements can be expensive or impossible.
• Poor fit for low volumes: with a very small number of monthly orders, the per-unit cost can be higher than handling it yourself.

Practical example

A small e-shop selling nutritional supplements sees explosive growth. The owner can no longer keep up with packing orders in her garage and is running out of space. Instead of renting a warehouse and hiring people, she signs a contract with a fulfillment centre. She delivers a pallet of goods and connects her e-shop to their system. From now on, when a customer orders, the fulfillment centre automatically picks, packs and ships the parcel. The owner can devote herself to online marketing and expanding her range.