How Order Fulfillment Companies Work

Cody Cromwell
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What Order Fulfillment Companies Do: A 5-Step Overview

There are two separate approaches that order fulfillment companies use for their services. These approaches include on-demand order fulfillment and daily order fulfillment. The latter is sometimes referred to as scheduled order fulfillment. A typical day for your order fulfillment company involves receiving a client request for services, fulfilling the requested services, then merchandise the orders.

Order fulfillment companies handle a client’s order by taking in orders or requests through a client portal. Once the order or request is received, the order fulfillment company confirms that it is in fact a legitimate order and valid to fulfill. Then, the order fulfillment company identifies and selects the appropriate order for the specific order type. After the order type is selected, the order fulfillment company follows up with the client to confirm the order or whenever there is an update for the order. The order fulfillment company then sends out the ordered items based on the order type and shipping schedule.

Once the order fulfillment company sends out the orders, it updates the clients on the status of their orders. The order fulfillment company ensures that the client receives the order against their order and that the products, services, and shipping details are all in order.

Your order fulfillment company also offers a 24/7 customer service call center for your convenience. The customer service individuals are close to the scheduled time and place of fulfillment. This is done to ensure that the clients’ orders are delivered on time.

Inventory is Delivered to Your Fulfillment Company

In traditional wholesale, there is one seller and one buyer. The seller takes the inventory to the buyer. There is a lot of risk associated with this system. Does the buyer even exist? Will the seller be paid?

The advantage of selling an inventory directly is that everyone is in the same room and can come to a mutual understanding of the deal. The advantage of selling to a third party is that they do not require you to sell in person. The inventory may arrive to the fulfillment center undamaged and you may be able to collect money without meeting the buyer.

Large ecommerce sellers use third parties to fulfill their orders. Applications have been built to connect buyers with sellers. The two parties trade in the used inventory. The third party puts together the orders, calls their customer, ships them the order and informs the fulfillment company.

The fulfillment company fulfills the order and collects money. After fees, the seller gets the money. If the order was fulfilled by a third party, the seller receives the order, opens it, reviews the item before signing the order and then passes it on to the customer.

The seller puts the item in a box, writes the order number on the box and sends it to the carrier. The carrier goes to the fulfillment center. The fulfillment company professionally packs the item, writes the order number on the box and the carrier drops it off at the destination.

Your Fulfillment Company Receives, Sorts & Stores Your Stock

If you have ever opened your mailbox to find a multitude of boxes containing all your online purchases from a giant ecommerce site, chances are that the boxes are being shipped from a fulfillment center, rather than your home. The fulfillment center is your company’s warehouse.

If you have ever received a product from the flat-packed bedroom set you ordered on Amazon, chances are that the product was shipped from a fulfillment center. From the time you order your shipment (even before they are printed), to the time you see your product on arrival, to the time you take it out of the box, and even for years after the product is delivered to your home (if you purchase durable products), your product is in the hands of a fulfillment center.

But how exactly do fulfillment centers work? And what does your fulfillment company need to know about the products you sell in order to successfully fulfill your orders?

To begin, once a product is received at a fulfillment center, the product is quickly scanned. Not all products are perfect, and some can have damages from shipping. If a product is damaged in any way, the product is placed into a bin and put aside or recycled.

Properly packed products are then moved along to the next step of receiving. Once the products are received, sorted, and placed into bins, they are finally ready to be shipped to fulfill your orders.

Customer Orders Route to Your Fulfillment Company

Most of the time, customer orders will arrive at a fulfillment center (or warehouses) from a third party such as a shipping company. It is the responsibility of the fulfillment center to receive the incoming orders, unlike a retail store which takes ownership of the incoming orders during the transaction process.

The process of receiving the orders is governed by the shipping company’s workflow pattern. Efficient fulfillment centers continuously monitor this data and use it to make informed decisions further in the process.

Wrap Up

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Pick, Pack & Ship

Order fulfillment companies include fulfillment houses or drop shippers. Both functions perform the same basic task of filling online orders. The difference is that one center functions as a warehouse and the other center functions as a hub where orders are then shipped from.

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Process Customer Returns

After an item is received or shipped, customers can return it. Usually, the items have a return policy outlined on the description of the product. If there is none, it is possible to return the items under the eBay Buyer’s Return policy.

The customer can return the product during the 30 days after the date of purchase. But remember, this policy only limits the liability of the seller. The buyer will have to return the product (or in this case, an item) for a full refund as soon as possible.

When the customer returns a product, the product must be in this condition:

the product must be unopened; 2) the product must be still with its original packaging (e.g., the original manufacturer’s packaging, including plastic bags, tape, labels, etc.); 3) the product must contain all of the accessories and parts that were included; 4) the product must not be used; 5) the product must not be damaged.

When the customer returns the product, the seller also has three days to ship the replacement or refund the money to the customer. If the seller does not ship the replacement or refund the customer within three days the seller is liable for it.

Why Businesses Use a Fulfillment Company

There are thousands of ways you can choose to save online. The options today feature everything from credit cards to bitcoins to e-bay. However, only a handful of companies offer a discount online delivery service. These companies match customers with locally available items, ship them to the customer free of charge, and even their items to the customer with inside their business.

How It Works

There are thousands of sell and buy stores alike that are in business every day, either they sell locally or globally. All they need to do is sign an agreement with a fulfillment company and they don’t have to worry about the hassle of taking care of the packing and shipping.

Order fulfillment companies will come by all the time to check the goods they are assigned to ship. Suppliers usually deliver their goods to the fulfillment company warehouse and drop them off. They can also pick up the goods, in case the customer paid for the shipping to be by the supplier. Many suppliers will actually send an email announcing the sale. This way, the suppliers will be able to let the fulfillment company know of the items that will be arriving. Customers will be notified of the shipment as well by an email of which they can request the shipment be held at their local FedEx or UPS destination.

Time & Priorities

Fulfillment companies are the front line of your business. If anyone has a question about your product or service, they will contact your fulfillment company. Your fulfillment company decides what goes out with the products, when, to whom, how and where those orders are processed. Your fulfillment team doesn’t have control over the production process (e.g. the time from when a product is ordered to when it arrives on said doorstep). They can however make sure the product gets to the customer innovatively and in time.

With that in mind, the most important function of your fulfillment company is to make sure the right orders are sent out to the right people. This means making sure the right person receives the right customer corrects the order, checks on the order, and the right order is sent out to the right address.

They have to make decisions very quickly, sometimes making decisions that impact hundreds, thousands, perhaps tens of thousands or more of consumers.

Another important function of your fulfillment company is to manage the product and shipping flow effectively. Every time a product is shipped from your warehouse, they have to make sure the inventory updates. They also have to optimize the process of sending products from one warehouse to another.

Flexibility & Scaling

While your company may be able to handle current orders, you’ll find that as soon as you add more staff, the number of orders you can handle at a time becomes limited. Inventory shortages or stock-outs hurt your business and are a risk that many businesses simply cannot afford.

Order fulfillment companies offer the solution.

Flexible Order Fulfillment Services

Order fulfillment companies give small businesses the scalability and flexibility to handle more orders, more quickly.

Their services can be used to ship your goods to your customers, obtain orders directly from you, label and warehouse your supplies, and give customers a clear way to buy from you.

Begin by setting up a custom warehouse in an area near your warehouse. Next, assist your order fulfillment company as they fill your orders. You just need enough inventory for your next shipment and you’ll discover how busy your orders can be!

Whether you choose to obtain orders directly from customers, use a custom warehouse to receive orders, or use an FC (fulfillment center) company, you’ll be able to grow your business faster than your brick & mortar competitors.

Savings on Shipping Rates & Packing Supplies

Perhaps the most significant, cost-saving aspect of using an online fulfillment company is in the shipping costs. Now that you can design your inventory and have your products stored in inventory management software, the next step is finding the right arrangement for shipping.

Inventory management systems are great at keeping track of what’s in your warehouse, but they don’t give you the tools to compare or evaluate your shipping options. If you have a large enough business, it’s possible that you may not have shipping set up in your accounting system. That will give you a more efficient and organized shipping process.

One of the best ways to save money on shipping is to use a fulfillment company. They don’t necessarily have a warehouse and they don’t necessarily specialize in shipping, but they can help you get your order to your customer in the best possible way for the least amount of money.

What services do they offer?

  • Shippers typically offer container loads (C.L.) services during peak season if it’s not considered high-risk for the shipper.
  • Container loads have a set amount of freight, so you can get an idea what the final price will be based on expected volume.
  • Shippers often offer consolidation services and the ability to consolidate freight at the Port of Los Angeles.

Beyond the Basics: Other Fulfillment Services

Fulfillment companies offer a way for you to manage the business of shipping products to customers. From warehousing and distribution, order processing, customer service, and return management, these services can help you grow your business.

Order fulfillment companies typically offer the following services:

Warehousing: Hiring a warehouse to store your products until they are sent to customers.

Fulfillment: When a customer places an order, the fulfillment company processes the order and ships the products to the customer.

Customer service: When a customer contacts you for a return or exchange, your fulfillment company processes the return or exchange request. Credit adjustments or refunds can also be made through your fulfillment company.

Order processing: When a customer places an order, they pay for the products on the order and the fulfillment company processes the order, reviews your inventory, and pays for any inventory you need for the specific order.

One of the main benefits is that with a fulfillment company handling your shipping, you can focus on managing your business. Fulfillment companies can also take care of customer service and order processing responsibilities so you can spend more time managing the day-to-day operations of your business.

The Bottom Line

Fulfillment companies provide consumers and businesses the means to manage large volumes of inventory while giving them the means to take care of their customers and business. As one can image, these businesses demand a lot in order to achieve their goals and make a living for those involved in the business.

There are multiple companies across the United States that fulfill orders for businesses and sell products. These businesses sell products on behalf of their profession to customers, and they need assistance in making sure they’re delivering the quality product.

There are several items that fulfillment companies work hard to ensure are delivered efficiently and on time for the customer. For example, they need to have sufficient office space and warehouse storage ready to handle all the products they ship out. These companies need to have a large workforce, as well. Service is always on time in high demand when it comes to fulfillment companies.

The success of these companies is dependent on how well they manage their resources and customer service. They need to be quick and efficient in meeting the customer’s demands, and they need to have enough staff on hand to be able to work all of the orders that come in.

In order for a fulfillment company to be successful, it needs to know just who its customers are. This allows them to work alongside them and make sure they’re getting the most out of the business.