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, inspects, counts and stores a client’s inventory in their warehouse facilities.
• 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 placement to delivery, handling order processing, shipment tracking and product returns or exchanges.
• 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 your order fulfillment process offers compelling advantages for businesses of all sizes. It’s particularly attractive for online retailers operating without 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, unpredictable demand spikes and holiday rushes can strain operations. During peak seasons, businesses might need to hire temporary workers, invest in additional equipment or lease extra warehouse space. When sales normalize, you’re left with extra workers, equipment and square footage you no longer need. An order fulfillment service provides flexible scalability, allowing you to handle 10 orders or 10,000 orders without infrastructure changes.
• Order fulfillment services keep payroll costs down. A fulfillment service eliminates the need to recruit, onboard and supervise warehouse staff. You avoid the costs of employee benefits, workers’ compensation insurance and payroll taxes. If order volumes decrease, you don’t face difficult layoff decisions or severance costs.
• 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

Businesses selling oversized, fragile or temperature-sensitive products require specialized fulfillment capabilities beyond standard pick-and-pack operations. These items need specific storage conditions, specialized packaging materials and freight shipping expertise.

Specialized order fulfillment services provide climate-controlled warehousing, custom crating and packaging solutions, white-glove delivery coordination, and expertise in hazmat shipping regulations when applicable. They maintain relationships with LTL (less-than-truckload) carriers and can arrange specialized transportation for items that exceed standard parcel dimensions or weight limits.