What does fulfilment mean?

Fulfilment is a term you often hear in the world of e-commerce, but what exactly does it mean? In short, fulfilment refers to the entire process that starts when a customer places an order on your webshop and ends when the order is delivered or even returned. Fulfilment includes key steps such as order picking, packing, shipping, and processing returns.

You also often hear the term e-fulfilment, where the “e” stands for “electronic”, meaning the fulfilment process applies to online orders. In today’s e-commerce world, e-fulfilment is an essential part of any online business.

Learn more about the difference between fulfilment and e-fulfilment.

But did you know that you can also outsource fulfilment to a specialised company? These fulfilment partners or fulfilment centers take over the logistics process for you. This can be a solution for organisations that are growing too large, or where logistics are too time-consuming or demanding, better spent on other important tasks.

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Table of Contents

What does a fulfilment company or fulfilment center do?

A fulfilment company or fulfilment center handles the complete processing of your orders. This means that your products are stored with them, so you no longer need your own warehouse or garage. They also manage the stock, process the orders, and ship the products. If the product is not satisfactory to your customer and is returned, the fulfilment center manages the return process, so you don’t have to worry about it.

The process begins with receiving your stock. The fulfilment partner accepts the products from your supplier, stores them in their warehouses, and carefully monitors your stock levels. Once an order is placed via your webshop, the (e-)fulfilment process truly begins. The product is picked, packed, and shipped to the customer. If the end customer decides to return the product, the fulfilment partner steps in again to inspect the returned goods (and, if necessary, repack and/or clean them) before placing them back on the shelves, ready for a new buyer.

Some fulfilment centers go a step further. Customers expect more than just fast and error-free delivery and return handling. Personalised products or packaging are also possible, adding an extra personal touch. Think of details like a handwritten note or silk paper wrapping—these are the little things that elevate the customer experience to a higher level.

Value-Added Services

Additionally, as a customer, you can take advantage of Value-Added Services. These include extra services that fulfilment companies or centers can provide, such as cleaning or steaming products, (re)packaging, (re)labelling (e.g., with different currencies), or even converting clothing from folded to hanging. This service can go far beyond logistics alone. For example, offering first-line customer service to answer all questions about orders, shipments, or returns.

Some fulfilment companies have multiple warehouses or fulfilment centers. This is especially useful if you want to deliver products in different regions or internationally. By having a fulfilment center geographically closer to your customers, you can reduce shipping costs and speed up delivery times.

The advantages of a fulfilment partner

Outsourcing your fulfilment offers many benefits, especially as your business grows. Here are some of the key advantages you can expect:

  • Time-saving: You no longer need to spend time handling the processing, packing, and shipping of orders. Your fulfilment center takes care of everything, giving you more time to focus on other important tasks such as product development, marketing, or promoting your products.
  • Cost Savings: Fulfilment companies often use more efficient methods and specialised software to streamline the logistics process quickly and accurately, often providing real-time insights for you as the seller. Additionally, you no longer need to worry about fluctuations in demand for your products, as you only pay for the storage space you actually use and the number of actions that need to be performed.
  • Scalability: A fulfilment partner can easily grow with your business. Whether you have 50 orders per month or 5,000, they can adjust to your needs. You also don’t need to worry about hiring extra staff or renting additional storage space.
  • Customer Service: Many fulfilment companies offer first-line customer service. This means that customers get faster answers regarding their orders, shipping, and returns, without you having to handle it yourself.
  • Efficiency: Fulfilment companies often have years of experience and use automated systems for stock management, order picking, and shipping. This minimises the risk of errors and ensures faster delivery times.

Want to know more? Then read “Logistics: Cost or Profit?”

The right time to outsource your fulfilment

Outsourcing fulfilment can be a strategic move that gives you (and your company) the necessary space and focus to grow further. But when is the right time to take this step? Here are some indicators that it might be time to partner with a fulfilment company:

Your business is more successful than you anticipated, and now you’re swamped with daily orders. This might seem like a luxury problem, but it can quickly become a bottleneck. If you can’t keep up with demand, it can lead to delayed shipments, dissatisfied customers, and missed opportunities. By outsourcing fulfilment, you can regain some breathing room and focus on growing your business.

Are you noticing more mistakes in processing orders? Wrong items, incorrect quantities, or products arriving damaged? These types of issues are not only time-consuming and frustrating, but they can also damage your reputation. By outsourcing fulfilment to a professional partner with optimised systems, you can significantly reduce these errors and improve customer satisfaction.

Many businesses face strong fluctuations in demand, for example, during the holidays or promotional campaigns. It’s hard to hire extra staff for such short periods, and even harder to manage it all on your own. Fulfilment partners have the capacity to scale up with your business needs and can handle seasonal peaks smoothly without overburdening your company.

If your warehouse is filling up and your products are piling up in every corner of your office or garage, it’s a clear sign that it’s time to reconsider your fulfilment strategy. Instead of investing in more storage space or new locations, you can hand over these worries to a fulfilment partner. They have the infrastructure to store and manage your products efficiently, without you needing to invest in extra square metres.

Let’s be honest: nobody starts their own business to end up packing boxes and sticking on shipping labels. If you’re spending most of your time on logistics and fulfilment instead of focusing on your core business—like developing new products, building customer relationships, or working on marketing strategies—then it’s definitely time to outsource fulfilment. A fulfilment partner gives you the space to focus on growing and innovating your business.

In conclusion, the right time to outsource your fulfilment is when you find that it distracts you from your core activities. If you’re spending more time managing logistics than growing your business, it’s time to hand these tasks over to an expert. By outsourcing your fulfilment process, you can not only improve customer satisfaction but also restore your own focus.

Scanning and picking in warehouse - Widem Logistics

When not to outsource fulfilment

Outsourcing might sound like the ideal solution, but it’s not the right choice for every business. Just as there are circumstances where it makes sense to outsource fulfilment, there are also situations where it might be more logical to keep it in-house. Here are a few instances where you might want to handle fulfilment internally:

For many start-ups and small businesses, budget is one of the biggest considerations. When your company is still in its early stages and your revenue is still growing, the costs of outsourcing fulfilment can be a big investment. Fulfilment partners charge for storage, order processing, packaging materials, shipping, and returns handling.

If you only process a limited number of orders per month, these fulfilment costs could take a bigger chunk out of your profit margin than you’d like. In the early stages of your business, it often makes more sense to keep things in-house, especially if you still have the space to pack and ship orders yourself. This way, you keep costs low until your business reaches a scale where outsourcing becomes a more economical option.

Another situation where outsourcing fulfilment may be less attractive is when your business is dealing with low order volumes. If you only receive a handful of orders per day, it might be more cost-effective to keep control of your fulfilment process. Many fulfilment companies have minimum costs or order thresholds, which means that outsourcing only becomes cost-effective when you reach a certain number of orders per day.

Some products require special care when it comes to storage and transport. Think of perishable goods, such as fresh food or flowers, or products that need to be stored at specific temperatures. Items like hazardous materials (chemicals, batteries, etc.) also often require certified storage facilities and specific regulations for transport.

While many fulfilment companies can handle a wide range of products, it can be challenging to find a fulfilment partner that meets your specific needs. If your products require unique handling, it might be wise to keep this in-house until you find a fulfilment partner with the right expertise.

If you’re still in the early stages and only processing 1-10 orders per day, it’s probably more efficient to handle them yourself. You can still respond quickly to customers, and you likely don’t have a space issue yet. This way, you maintain control over the entire chain. However, once you consistently reach more than 10-20 orders per day, it may be worth considering whether outsourcing offers logistical and financial benefits.

In conclusion, the right time to outsource your fulfilment is when you find that it distracts you from your core activities. If you’re spending more time managing logistics than growing your business, it’s time to hand these tasks over to an expert. By outsourcing your fulfilment process, you can not only improve customer satisfaction but also restore your own focus.

Costs of a fulfilment partner

The costs of fulfilment can vary significantly depending on the size of your company (i.e., the number of orders, returns, or deliveries), the type of products you sell (size, weight), and the services you require. Here are the key cost factors to consider:

One of the biggest costs in fulfilment is storage. These are the fees charged by a fulfilment partner for storing your inventory in their warehouses or fulfilment centres. These costs are usually calculated based on the space your products occupy, expressed in square metres, pallets, or stock locations.

  • Pallet storage: for larger items or bulk goods, storage is charged per pallet. This is often the most cost-effective way of storing products if your items are large or shipped in bulk.
  • Location storage: smaller items stored on shelves or in bins have a different pricing structure, where costs are typically calculated per location used.
  • Flexible storage: many fulfilment companies also offer flexible storage options, where costs fluctuate depending on the amount of space your products actually occupy. This is useful if you have seasonal fluctuations in your inventory.

    Additionally, you may encounter extra costs for long-term storage when your products remain in the warehouse for longer than a specified period. This is sometimes referred to as overstock costs, which is why good inventory management is crucial to avoid unnecessary storage fees.

In addition to storage, fulfilment partners charge for picking and packing your orders. These are called order processing fees. These costs are usually calculated in one of the following ways:

  • Costs per order: many fulfilment companies charge a flat fee per order they process. This is useful for businesses with orders consisting of one or only a few items.
  • Costs per item: if your orders are more complex and consist of multiple items, the fulfilment company may charge per picked item. This means that an order with five items will cost more to process than an order with just one item.
  • Picking vs. packing fees: some fulfilment partners split these costs into picking fees (gathering items from the warehouse) and packing fees (packaging the items). This is important to know if your products require specific packaging methods, such as fragile items that need extra protection.

    There may also be extra fees if your products have special packaging requirements. Think of custom boxes, the addition of filling materials, or personalisation like branding, leaflets, gifts, or customised packaging.

Shipping fees are a significant component of fulfilment costs. Fulfilment partners often have favourable contracts with carriers like DHL, BPost, UPS, or other logistics partners due to bulk shipping. This means they can secure lower shipping rates than an individual retailer.

Many fulfilment companies also offer return processing services. This means they receive returns, inspect them, and restock the items. This can involve thoroughly inspecting the products, cleaning, or even repairing or repackaging them. These services may incur additional costs.

How to choose a fulfilment company

Choosing the right fulfilment company is a crucial decision that can impact your business operations’ efficiency, customer satisfaction, and ultimately your profitability. With so many providers on the market, each with their own specialties, it can be overwhelming to find the right partner. Here are some key factors to consider when making the best choice for your business.

One of the first things to look for when choosing a fulfilment partner is their experience in your specific industry. Not every fulfilment company is suitable for every product category. Companies with experience in the logistical requirements of your type of products will have a much better understanding of what’s needed for a smooth fulfilment process.

  • Product knowledge: a fulfilment company familiar with your type of products will know how best to store, package, and ship your stock. For example, the way fashion items are packed differs greatly from how electronics or fragile goods are handled. If you deal with products that require special care or storage, such as perishable goods or hazardous materials, experience with such products is absolutely essential.
  • Return management: different products require different return procedures. If you operate in an industry with a high return rate, such as fashion, it’s important to choose a partner experienced in a streamlined and customer-friendly return process.

The location of your fulfilment partner is crucial, especially if your customers are spread across a large geographical area or if you ship internationally. A fulfilment partner with multiple strategically located warehouses helps to keep your products closer to your end customer, resulting in faster deliveries and lower shipping costs.

Experience with (complex) customs requirements and associated administrative formalities can also be important. Incorrectly filling out customs documents, such as import and export papers, can lead to significant delays at the border and unexpected extra costs, such as duties, taxes, and fines. If these processes are not handled properly, costs can quickly add up, and customers may experience delays in receiving their orders.

In the modern e-commerce world, technology is one of the most important factors to consider when choosing a fulfilment partner. You want a partner that uses advanced technologies to manage your inventory, orders, and shipments. It’s important that there is an integration between the Warehouse Management System (WMS) and the e-commerce platform you use (Shopify, WooCommerce, or others). A good integration ensures that orders are automatically forwarded to the fulfilment centre and that you have real-time visibility of your inventory and order statuses.

In the world of e-commerce, the customer experience is just as important as the product itself. The fulfilment company you choose plays a major role in your end customer’s experience. By focusing on personalisation and details, you can surprise your customers and leave a lasting impression, which ultimately contributes to better customer service and loyalty.

  • Custom packaging and branding: the packaging of your products is often the first physical touchpoint between your brand and the customer. A fulfillment partner that offers flexible solutions in the area of custom packaging, such as using branded boxes, special gift packaging, or personalized stickers, can significantly enhance the unboxing experience. This directly contributes to customer satisfaction.
  • Personalization of orders: beyond packaging, there is an increasing demand for personalized orders. Think about adding a handwritten thank-you note, a small token like a sample of a new product, or even personalized items like T-shirts or mugs. These kinds of extras elevate the customer experience and make your brand stand out. A fulfillment partner that offers these options not only helps boost customer satisfaction but also contributes to building brand loyalty.
  • Return policy and customer satisfaction: a good return policy is crucial for a positive customer experience, even when a product does not meet expectations. A fulfillment partner that offers a streamlined return procedure can ensure that customers can return their products quickly and effortlessly. This process should be swift and efficient, with returns being inspected and, if suitable, added back into stock. The smoother and more customer-friendly this process is, the greater the chance that a customer will reorder from you, even after a return experience.
  • Proactive customer service: excellent customer service is key to maintaining a loyal customer base. Opt for a fulfillment partner that not only handles the technical processing of orders but also provides outstanding customer service. This includes proactive communication, for example, in case of unexpected delays, and swiftly resolving issues. When a fulfillment company can quickly respond to customer inquiries or resolve problems, it directly enhances the overall customer experience.

Are you ready to take your logistics processes to the next level and make your business grow more efficiently? We help companies, both large and small, with their fulfilment, so they can focus on what really matters: growing their business.

Contact us today for a no-obligation consultation and discover how we can optimise your fulfilment. Together, we’ll ensure that your customers receive their orders not only on time but also with a smile!

Get in touch

Are you ready to take your logistics processes to the next level and make your business grow more efficiently? We help companies, both large and small, with their fulfilment, so they can focus on what really matters: growing their business.

Contact us today for a no-obligation consultation and discover how we can optimise your fulfilment. Together, we’ll ensure that your customers receive their orders not only on time but also with a smile!

Get in touch

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