Your Ecommerce Needs Fulfillment Center Logistics Strategy
Until you can master Fulfillment Center logistics (ship goods directly to end customers), your ecommerce operation will struggle. Nowadays, fulfillment is about more than just packing and shipping orders. A good fulfillment center takes on many more tasks and adapts flexibly to changes and current market conditions.
The Shift to Omnichannel and Hybrid Commerce
Today, companies like Konga are going hybrid – online and physical stores. That is the first phase towards the equilibrium which will be the omnichannel where immersive integration of supply chain and service will make customers agnostic of whether online or offline. Simply, you will have anywhere and anytime retail operation. Having stores will reduce the marginal cost challenges associated with pure play ecommerce, and this help it to take advantages of the online elements to deepen its competitive capabilities in the physical.
Fulfillment Centers (FC) vs. Distribution Centers (DC)
No Fulfillment Centers (FC) can win without great Distribution Centers, DC (ship goods to stores) for a nationwide operation. You can focus on your FC while the DC is outsourced. But that outsourced partner must be wholly integrated in your operations to have efficient supply chain framework. Investing in that requires moving into big logistics like the ones companies like Kobo360 do.
Core Functions of a Fulfillment Center
Fulfillment centers usually use modern warehouse management systems with a seamless shop integration which makes it easy for them and you to monitor and manage your orders and inventory. Here are the primary tasks they handle:
- Goods Acceptance & Warehouse Logistics: The use of a fulfillment center saves you the high costs of renting your own warehouse and, with good inventory management, you always have your products on hand.
- Order Acceptance, Picking, Packaging & Labeling: Data from incoming orders is automatically transferred to the warehouse. The picking team then bundles the products required for the order and forwards them to the FBA preparation and packaging team.
- Delivery & Returns Management: A fulfillment center with a well thought-out returns management system will ensure that returns are processed quickly.
Understanding Logistics Costs
The following table outlines the typical cost factors involved in working with a fulfillment center based on the provided guide:
| Service Type | Cost Basis |
|---|---|
| Storage Fee | Depends on the size of the required storage area and the period for which the products are to be stored. |
| Packaging | Typically priced per parcel, depending primarily on the parcel size and branding requirements. |
| Delivery & Acceptance | A fee is charged depending on the number of products. |
Strategic Importance of Shipping Experience
A recent study conducted by BigCommerce shows that about 58% of consumers would probably never order from an online retailer again with whom they had a poor shipping experience. With ever faster and better shipping options, the expectations of customers increase. Labelling the pallets and boxes is extremely important at this stage because a clearly visible labeling accelerates the process and thus the dispatch of your products.
According to Shopify, the average return rate in ecommerce is 20% but can be significantly higher depending on the type of products you sell. When a customer returns a product, you obviously face additional costs, so it’s important to make the return management as cost-effective as possible. A fulfillment center ensures that products are re-prepared for sale as quickly as possible and that the customer gets their money back quickly.
