In this blog, we’ll provide an in-depth overview of e-commerce distribution, covering everything from order fulfillment and shipping to warehousing and inventory management. Whether you’re a new e-commerce entrepreneur or an established online retailer, understanding the distribution process is crucial to ensuring the smooth operation of your business.
Join us as we explore the key components of e-commerce distribution and provide tips for optimizing your operations and delighting your customers.
What is E-Commerce Fulfillment?
E-commerce fulfillment, to put it simply, is the procedure of fulfilling online purchases. You must deliver a product within a specific time frame and within the budget range mentioned if someone purchases it on your online shop. The entire procedure of shipping an order to a consumer after confirming the online order is called e-commerce fulfillment.
This link in the distribution chain is in charge of receiving and holding commodities, order fulfillment, selecting products, packaging them, sending them to customers, and handling returns.
Any online retail company’s success depends on e-commerce fulfillment. In addition to saving you money and time, a well-thought-out and managed fulfillment strategy simplifies your e-commerce operation by increasing your market share.
Challenges of the Increasingly Complex E-Commerce Industry
1. Same-day delivery demands
Through creativity and cutting-edge technology, businesses like Lazada have sparked an unprecedented boom in e-commerce. Their example has paved the way for advancements in omnichannel distribution and rising consumer expectations, the two main elements continuing to influence the growth of today’s e-commerce distribution centers. The days when online orders could come in 7–10 days are long gone.
Retailers today risk losing clients to rivals if they don’t offer same-day shipping. Retailers must improve their management and fulfillment processes to follow the Lazada model and deliver goods to customers.
2. Rising inventory management problems
Overselling, or getting more orders than the inventories can handle, is a common issue for many online retailers. Online retailers must inform customers when a product has run out of stock, resulting in lost sales and dissatisfied customers. Customer complaints can further deter potential revenue from other customers.
How Distribution Centers will Address Customer Demands
Focusing on agility
Several different warehouses are emerging to accommodate the expanding needs of the e-commerce sector. The specific warehouse, which made up a very modest percentage of the distribution chain, has evolved into something more strategic and intricate.
Businesses seek to enhance their supply chain, including their distribution centers’ locations, to meet their customers’ changing needs. It is essential to have flexible warehouses that adjust to shifting market conditions.
Using innovative technologies
Innovative new technologies like robot picking, autonomous vehicles, augmented reality, and others help businesses confront pressing difficulties while also empowering employees, boosting productivity, and creating a safer work environment. Such cutting-edge distribution and fulfillment facilities provide the flexibility to grow operations to meet future demands.
Offering negotiated rates
Since they may get a cheaper cost, modern distribution centers are prepared to bargain with exporters that guarantee a massive volume of orders; this simplifies the shipment and returns cycle. Additionally, decreased fixed transportation costs allow businesses to start providing free shipping to clients, which can stand out in a busy market.
How Does an E-commerce Distribution Center Operate?
An e-commerce distribution center is where operations are organized to collect goods, pack, and distribute online purchases on time and undamaged.
Fulfillment centers work with B2C (Business-to-Customer) brands. Their goods are stored, picked up, packed, and delivered from an e-commerce distribution center straight to a customer’s door. Picking, packing, and entire shipping purchases, in addition to managing finance, marketing, and other business chores, can take up more time than is allotted in a day.
Now that their e-commerce operations are scaling, B2C firms use a fulfillment center.
Services offered by distribution centers include:
- Inventory management in real time
- Selecting, assembling, and packing
- Processing and delivery of orders
- Transport management
What are the Main Differences Between Fulfillment Centers and Warehouses?
An e-commerce fulfillment distribution center is intended to improve the customer experience related to ordering things and getting them delivered on time, while a warehouse’s primary function is to hold inventory. Because a 3PL (Third-Party Logistics) fulfillment hub is close to the consumer, this is made workable by merchants storing their inventory there, which also helps to speed up the shipment and save money.
Long-term vs. Short-term storage
A 3PL’s e-commerce fulfillment distribution center includes a warehouse that maintains a seller’s goods. Still, its primary aim is to handle the activities between when a client buys goods and when the product is shipped to their home or business.
In a perfect world, inventory wouldn’t stay in a fulfillment facility for more than 30 days. Long-term storage may be required if merchandise needs to remain in a fulfillment hub for an extended period, in which case most 3PLs would incur a higher warehousing price.
The merchant and 3PL should communicate about inventory levels. To ensure that the 3PL fulfillment hub has adequate inventory to meet consumer demand, sellers must maintain an acceptable stock level of their products about how customers place orders.
Facility operations
Because a warehouse is used to store inventory, it is not in use. But, an e-commerce fulfillment distribution center for orders is busy. A 3PL offers complete order fulfillment services at its fulfillment facility, which include:
- Getting supplies
- Sorting
- Item kitting if necessary
- Boxes for packing
- Creating shipping labels
- Shipping requests
- Regulating returns
A warehouse activity only occurs when new or removed inventory is recorded.
Frequency of pickups by shipping companies
A 3PL has connections with many shipping firms. A fulfillment center needs a variety of businesses to pick up deliveries at least once daily, more as necessary because it fulfills B2B (Business-to-Business) and B2C (Business-to-Customer) requests as soon as they are placed. This makes it more likely that businesses will fulfill goods as promised to the customer.
The shipping providers may be required to pick any shipments with particular delivery timeframes, like same-day or next-day, at specific times to assure on-time delivery, based on how a seller decides to transport their products. Sometimes specific carriers will arrange pickups for both local and foreign cargo.
A warehouse will schedule fewer pickups because it is cheaper to ship out all the things at once, regardless of how fast the consumer wants them.
Freight businesses that warehouses use insist on a set period to pick up the items, which can hinder deliveries and limit the seller’s ability to control shipping prices.
Benefits of a 3PL Fulfillment Center for Your E-Commerce Business
Outsource inventory storage and management
Maintaining a warehouse could be more time-consuming and costly than it is worth for a seller who does not have a big company delivering thousands of things daily. Letting an e-commerce fulfillment distribution center take care of these responsibilities can be far more effective.
When a merchant can no longer manage incoming orders and send them out on schedule, it’s a good sign that it’s time to use an e-commerce distribution center.
E-commerce fulfillment services
Sellers must partner with a fulfillment business with experience who has the technological and operational know-how to manage their sellers’ e-commerce fulfillment because more and more customer purchasing patterns are migrating from physical stores to online.
From establishing a connection with the seller’s e-commerce platform, such as a significant player in the industry, to putting operational procedures in place to handle hundreds, if not thousands, of e-commerce purchases daily.
You don’t need to own a warehouse
Suppose your business produces a popular product and expands inventory to meet client demand. In that case, you are familiar with having plenty of stock, whether in your workplace, home, storage facility, or elsewhere. Having a problem like that is excellent, but coming up with solutions may be a real pain.
When you delegate to an e-commerce fulfillment distribution center, the third-party logistics provider (3PL) can hold the whole of your stock, requiring you to accept deliveries, handle the goods, organize, and sort everything. Collaborating with a 3PL frees up extra room for possible use in corporate operations. It may also be an affordable way to improve your bottom line.
Distributed inventory
Finding out where their e-commerce fulfillment distribution center are and whether they are close to the bulk of your clients is among the crucial considerations when selecting a 3PL.
When shopping online, today’s consumers demand convenience and speed. Consumers will receive their orders as soon as possible if your product is stored near the bulk of your clients, waiting to be picked up and dispatched.
Leveraging expertise and specialization
Managing logistics may be an unpleasant and challenging task for any merchant. It adds another layer to all other business activities that businesses must address. A 3PL e-commerce distribution center can manage complex operations and all moving pieces. Fulfillment firms have been doing these activities for years, including processing orders, inventory control, packaging, and delivering.
They have the technology and connections to deliver goods fast to customers. In the long term, it is pocket friendly for the merchant to outsource distribution and shipping to a skilled 3PL.
Automate the fulfillment process
Nowadays, 3PL fulfillment businesses run their operations using cutting-edge technologies.
Automation makes it possible to capture and record each step of the delivery process in real time. Every consumer order placed in an online store is routed from the checkout process to an e-commerce distribution center, where it is picked up, packaged, and shipped. Additionally, once the order has been dispatched, the client and the seller can receive tracking information to ensure everything goes as planned.
Value-added services
While picking, packing, and shipping orders is a seller’s primary concern when collaborating with an e-commerce distribution center, sellers can also use their fulfillment associate for other related activities, often known as value-added services.
Being able to adjust to market changes and consumer needs is made possible by having these services at your disposal.
Listed below are a few activities that might resemble value-added services:
- Personalized labels and packaging
- Assembling goods to make a new SKU (Stock Keeping Unit)
- Personalized tape and promotional inserts
- Handling and automation of returns
How to Find the Best E-Commerce Distribution Center for Your Online Store
An e-commerce store needs to consider a few things before choosing an e-commerce fulfillment distribution center to manage its shipping operations. Let’s take a look at what those are.
Shipping cost
Low shipping cost is an obvious choice. Always strive to strike a deal between the services offered, their pricing, and the amount of money or profit your business will make from using those services. When comparing fulfillment shop pricing, an online business should focus on value above the price.
Determine how the benefits will help your online store before deciding on the shipping costs you’re ready to pay—making it a sensible and economical choice.
Personalization options
Today, personalization possibilities are sought after by consumers everywhere. To make receiving packages for consumers an absolute delight, the e-commerce fulfillment distribution center you select should offer personalization choices for labels and packing.
Many fulfillment providers additionally offer specialized shipping choices, such as delivery time and day, to meet their clients’ needs.
Tracking visibility
Customers hate late deliveries the most, but they also hate being unable to track them. To ensure that customers return to their stores again, online retailers must maintain complete openness and order transparency with their customers.
One of the essential requirements for client satisfaction is the ability to track orders online and receive real-time order alerts.
Conclusion
The more efficient the order fulfillment cycle, the better the customer service, brand perception, consumer loyalty, profits, and general growth. It all comes down to the technologies you use to manage and ramp up your e-commerce business and fulfillment.
FAQs
What is an E-commerce fulfillment center?
E-commerce fulfillment centers are a distinct kind of warehouse associated with 3PL services where a customer’s orders are processed, evaluated, and tended to until order fulfillment.
What is the difference between a fulfillment center and a distribution center?
While a fulfillment center’s primary responsibility is to sort, pack, and ship products to customers, a distribution center’s primary function is to store things in bulk and sell them to retailers.
What are the three types of distribution centers?
The three types of distribution centers are Automated, Mechanized, and Conventional.
What is the purpose of a distribution center?
An e-commerce distribution center is a facility for storing goods and shipments that houses the products a business manufactures. Distribution centers play a significant role in the supply chain for goods, order fulfillment, and the storage of manufactured items.
How do distribution centers work?
Distribution centers are one-stop logistics services that hold, assemble, package, and ship goods to fulfill client orders.
