Benefits of Using an Order Fulfillment Service

What are order fulfillment services?

Order fulfillment services are businesses that allow companies to outsource the fulfillment needs of their ordering process. These services store inventory and ship customer orders. Clients typically include online retailers, e-commerce businesses, and brick-and-mortar stores without distribution centers or warehouses.

Order fulfillment centers provide users with the following services:

• Receiving: An order fulfillment service receives, unpacks and stores a client’s inventory.
• Inventory management: Order fulfillment services handle inventory management with the help of specialized inventory software. They track the number of products on hand, noting excess inventory and inventory that must be replenished.
• Order management: Order management services track the ordering process from beginning to end and handle order processing, delivery and product returns.
• Product listings: Some order fulfillment services provide search-optimized product listings that companies can post on their websites.
• Advanced reporting: Some order fulfillment services give companies detailed reports that help them track the entire logistics process.

Benefits of using order fulfillment services

Outsourcing all or part of your order fulfillment process has several advantages. It is particularly attractive for merchants with an online store and no warehouse and distribution facilities. Even established brick-and-mortar businesses contract with order fulfillment services to reduce infrastructure costs and improve operational efficiency.

• Order fulfillment services help manage seasonal sales fluctuations. While increased sales are always desirable, unforeseen surges and seasonal rushes can create headaches. To respond to a higher-than-normal order volume, a business may hire additional workers, buy more capital equipment or even lease extra warehouse space. When sales inevitably trend down to “normal” levels, you’re left with extra workers, equipment and square footage you no longer need. An order fulfillment service lets you effortlessly ramp up for sales surges and scale back when needed.
• Order fulfillment services keep payroll costs down. A fulfillment service eliminates the need to hire, train and manage workers. If sales decline, you don’t have to lay off any employees. Your only concern is to provide the fulfillment services company with your products in the quantities required to meet demand.
• Order fulfillment services lower your shipping costs. Free shipping is an excellent marketing tool. However, no shipper will send your goods to customers for free. If you’re not big enough to maintain facilities throughout the country, using an order fulfillment company with a regional, national or global e-commerce infrastructure lets you take advantage of bulk delivery discounts, resulting in lower shipping costs for your customers.
• Order fulfillment services help you grow into new markets. An order fulfillment company can extend your reach without undue capital investment. If a new market you’ve ventured into doesn’t work out, you haven’t spent money and resources to expand your infrastructure. Your order fulfillment services partner supplies the infrastructure and scales it over time as your business grows. You don’t have to commit to high and potentially risky new overhead costs.
• Order fulfillment services lower fixed costs. When you carry inventory, you’ll pay the same rent and utilities for warehouse space even if your sales are flat or in decline. However, when you contract with an order fulfillment service, that fixed cost is now a variable cost. When business is slow, your order fulfillment costs go down. Of course, they also go up when sales increase, but that’s a price well worth paying.
• Order fulfillment services let you focus on your core competencies. The logistics of order fulfillment can be complex. An order fulfillment company is equipped with employees and managers who understand the ins and outs of order fulfillment. By contracting their services, you can focus on improving your product without spending money and time on hiring and training new employees.

Types of businesses best suited for order fulfillment services

These types of businesses benefit significantly from order fulfillment services: 

• E-commerce retailers
• Subscription box businesses
• Sellers of heavy or specialized items

E-commerce retailers

E-commerce involves customers selecting the products they want and the shipping method they prefer. This model creates a constant stream of order fulfillment and shipments of varied, unique orders. Sales tend to ebb and flow with the seasons, so it can be challenging to track, fulfill and ship orders. 

An order fulfillment service can remove these burdens from e-commerce businesses while providing a digital tracking system that acts as a central inventory database. The order fulfillment service can also handle the hassle of returns and exchanges. 

Subscription box businesses

There are many kinds of subscription box services — including groceries, health and beauty items, and clothing —  but order fulfillment is an essential element of all of them. Fulfilling orders can become a challenge because there are so many subscribers in various locations.

With subscription box fulfillment and shipping, you’ll need to regularly deliver a group of products to customers with a fulfillment process customized to various shipment deadlines. An order fulfillment service can handle this complex process using delivery waves based on how far away subscribers live from the storage facility. 

Sellers of heavy or specialized items

All businesses generally have the same order fulfillment steps: receiving inventory, organizing it, picking out a product for an order, packaging it and shipping it. This process is affected when items are particularly heavy, specialized or easily breakable. An order fulfillment service can safely store cumbersome items while developing an effective method of packing and shipping bulky or heavy packages.