What does a fulfilment centre do?

20 February, 2020

If you're venturing into e-commerce, or you're trying to optimise your delivery strategy, you're likely to have come across the term "fulfilment centre" in your research. But what does one actually do? To help you gain a better understanding of what services you can expect from a fulfilment centre and how they can benefit your delivery operations, we're going to answer this question in this article.

What is a fulfilment centre and why is it different from a warehouse?

A fulfilment centre serves the purpose of housing and dispatching orders to customers that have been purchased on e-commerce platforms. It usually acts as a third-party logistics partner for the retailer and is the physical location where their goods are stocked. Online retailers don't often have brick-and-mortar sites, and by utilising a fulfilment centre, they ensure that goods are managed and shipped quickly and cost-effectively by a specialist distributor.

A warehouse, on the other hand, is simply a large industrial space that stores inventory. It's likely to be a building that your business owns or rents exclusively for your goods, or you may share it with other companies that have similar storage requirements.

What does it mean for inventory management?

Delegating inventory management to a logistics partner frees up your time from having to monitor your stock continuously. The fulfilment centre should have a sophisticated inventory management system that integrates with your e-commerce platform and allows you to check on stock levels remotely. You can then timeously contact suppliers and ensure that your products are topped up at the logistics centre. This ensures continuous product availability for your customers and also prevents expensive pile-ups of obsolete stock.

Your e-commerce fulfilment partner will also take on the responsibility of checking stock for damage once it arrives from your supplier or manufacturer. Depending on your arrangement, they will initiate a return process or inform you so that you can deal with the issue and request the necessary refunds.

Likewise, if a customer returns a product, it will come back directly to your fulfilment centre where protocol will be followed to reshelve it if undamaged and provide you with the necessary information to ensure that the customer is reimbursed.

Why a fulfilment centre is a perfect solution

E-commerce on a global or even national scale requires careful planning and access to reliable and efficient distribution channels. Customers, regardless of location, are increasingly becoming accustomed to fast turnaround times, high quality of delivery service, and competitive shipping prices when placing orders online.

Whether you're a start-up that's testing the waters in a new geographic location, or you're an established online retailer that wants to reduce warehousing costs and improve delivery times, a fulfilment centre offers numerous benefits for your logistics.

The core benefits of a fulfilment centre are:

  • A faster and cheaper method of reaching foreign markets.
  • Allows your business to scale without renting or buying a physical location to house your inventory.
  • Delegate shipping and returns handling to a specialist, freeing up time and resources.
  • Quickly oversee your stock levels and make purchasing decisions based on demand.
  • Secure better shipment rates and greater efficiency when dealing with customs.
  • Make use of the provider's established links in the territory you are targeting, ensuring a more secure and reliable logistics channel.

Each fulfilment centre is likely to have a unique set of services and capabilities. It's essential to have a clear understanding of your distribution needs so that you can check whether the provider can accommodate your particular product. At Asendia, we help hundreds of businesses to launch their products into foreign markets, or for established organisations to expand globally by offering a better customer experience.

If you'd like to find out more about our fulfilment centres or to get a quote, simply get in touch with us today.

To find out more about our order fulfilment services, get in touch with the team here at Asendia.