Ecommerce Fulfilment

what is ecommerce fulfilment

By Rob Binns | Senior Writer | 25 February, 2020


There are two hard and fast rules when it comes to online businesses.

The first? All businesses have to begin somewhere – and it’s usually at the bottom. Do a little digging, and you’ll find that even the most accomplished ecommerce entrepreneurs probably started out with a pair of scissors and a roll of parcel tape in hand, filling orders from their front room.

The second? As your small business grows, you’ll need to start offloading some of your workload. You’re already taking on new staff, and outsourcing everything from payroll and HR to website design… so why not put down those cardboard boxes, and hand over the keys to your ecommerce fulfilment, too?

With an ecommerce fulfilment service, you can wave goodbye to the hassle of managing your own warehouse team, and know that the picking, packing, and delivery of items is (quite literally) in safe hands. As for you, an online dashboard makes it easy to keep tabs on your stock’s comings and goings in real time, while dedicating your own day to growing your business.

But what is ecommerce fulfilment, exactly? What do we mean by a 3PL service? How does it all work, and which provider offers the best value for your business? Let’s find out.


What is ecommerce fulfilment?

Ecommerce fulfilment refers to the process of getting the stock you sell online to the customers that have ordered it. It primarily refers to the sorting, selection, packaging, and delivery of items to your customer.

 

Ecommerce fulfilment can be done either in-house (not recommended for growing businesses) or by outsourcing the logistics to a third party company, who’ll do it all for you. Handily, this company is called a third party logistics (3PL) provider

Rather than arranging for the products you sell to ship straight from the supplier to the customer (drop-shipping), you’ll instead have them shipped to a fulfilment centre (a fancy name for the warehouse where your goods are stored) operated by the 3PL of your choice. You’ll own those goods (inventory), but the 3PL takes care of their storage and management. 

So, what happens when an order comes in?

what is ecommerce fulfilment

How much time, money, and hassle could your business save by outsourcing your ecommerce fulfilment duties?


Want to explore how outsourcing your ecommerce fulfilment can help your business scale? Yes, let's go!

How does it work?

It all starts with your customer. Browsing your website from their home, office, or commute, they – on an impulse – hit the ‘Buy Now’ button. It’s then that the cogs of the ecommerce fulfilment process slowly begin to turn….

Receiving

The order details are transmitted in real time to your 3PL provider, which receives them at the order fulfilment centre where your inventory is stored. Sounds deceptively simple, right? So how is it achieved?

Well, most 3PL companies offer integrations with all the primary platforms you’d think of selling through – Amazon, eBay, Shopify, WooCommerce, Magento, you name it. This allows for the bidirectional (and completely automated) flow of order, stock, and shipping information between your ecommerce website (where the order is placed) and the fulfilment centre (where it’s picked and packed).

Picking, packing, and shipping

‘Picking’ refers to the selection of the right items from the fulfilment centre. It won’t just be your inventory stored on the many shelves of the warehouse – one centre can cater to the fulfilment needs of multiple different ecommerce businesses. 

Similar products being sold by various sellers may also be housed in the same area of the building – so the picking of the correct goods by your 3PL team is a crucial part of the process. Thankfully, it’s done for you when you outsource your ecommerce fulfilment, so you won’t have to worry about it too much!

what is fulfilment in ecommerce

The items are then ‘packed’. Fulfilment centre staff (in a method pre-arranged with your team) package the goods so that they look nice, are protected against the perils of a potentially bumpy journey, and arrive to the customer in perfect condition. The 3PL ships them off; you’re left with a happy customer, and a full bank account.

Did You Know?

3PL (third party logistics) providers are key to the success of the world’s biggest companies. 86% of all Fortune 500 companies (and 96% of the Fortune 100) already use 3PL companies to streamline their operations and cut costs.


What is a 3PL service? 

A third party logistics (3PL) service is a business to whom you’ll outsource vital responsibilities in your end-to-end supply chain. When it comes to the process of getting products from A (your supplier) to B (your customer), a 3PL is what makes the journey a smooth one, and does most of the work in-between. 

For ecommerce businesses, a 3PL handles the receipt of goods from the supplier, and is then responsible for their secure storage, packaging, and shipping to your customer. 

But how do you choose the right one?


How to choose a 3PL service

Take it from us – choosing the right 3PL service is the most important decision you’ll make this year. Important… but not easy. Read on for our four top things to consider when choosing an ecommerce fulfilment service.

Speed

How quickly can a 3PL provider fulfil your orders? Can they offer same-day delivery, or at least next-day turnaround? How soon will they log in any items that are returned, and get them ready for resale?

Stock

How adept is the 3PL provider at managing your stock, and keeping you updated about deliveries and inventory levels?

Shrinkage

Shrinkage is a diplomatic way of referring to lost, broken, or stolen items. There’ll be an ‘allowance’ for this in any contract you sign with a 3PL, usually between 2% and 10% of your inventory. You’ll want this figure to be as low as possible, so remember to negotiate!

Site

Location, location, location! Choose a fulfilment centre that’s located centrally, and will therefore have better access to the major cities.


Which ecommerce fulfilment provider is right for your business?

Probably the most well-known 3PL provider around the world is Amazon FBA (Fulfilment by Amazon). It’s convenient, and offers excellent return management. However, FBA is also one of the more expensive fulfilment options in the UK – and, though the Amazon branding across your packages offers additional credibility, it can also be detrimental to efforts to build your own, independent brand.

That’s why we’re endorsing several other 3PL providers we’d recommend for UK ecommerce businesses. These include:

  • Huboo
  • Sprint Logistics
  • Green Fulfilment
  • Core Fulfilment
  • Abstrakt

All of these companies feature in our separate article about the best alternatives to Amazon FBA. If you’re new to ecommerce fulfilment, it’s a must-read – so check it out here.

If you don’t have much time on your hands, though – and since you run an ecommerce business, we’re guessing that’s the case – why not cut straight to the chase and receive quotes tailored to your business? Here’s how:

  1. Start by providing us with a few details about your business. We’ll ask a couple of questions about how long you’ve been trading, where you currently sell your products, and the number of parcels you deliver daily
  2. Pop your postcode in too (we’ll only match you with suppliers that are in your area)
  3. You’ll receive quotes tailored to your business’ location, and the size and quantity of the parcels you’re shipping. It’s that easy.

Our form takes about 35 seconds to complete, and is 100% free to use. You just have to be based in the UK to be eligible. 


FAQs

What is fulfilment in ecommerce?

‘Fulfilment’ is the process of receiving, packaging, and shipping goods to a customer. In ecommerce, it refers to the logistics of the process that takes place after a customer orders their goods, and before they receive them. 

Online (ecommerce) businesses outsource fulfilment to save time, reduce the need for staff and storage space, and boost scalability and customer satisfaction.

Is ecommerce fulfilment the same as drop-shipping?

Nope! Drop-shipping involves selling items on your online store which, when ordered, are sent directly to the customer – you never actually own the stock you’re selling. With ecommerce fulfilment, you’ll buy the inventory, and then outsource its storage, handling, packaging, and shipping to a third party logistics supplier.

Drop-shipping comes with less risk, and less initial investment – though you’ll have no say over how the goods your selling are picked, packed, and shipped. Ecommerce fulfilment gives you control over the entire process, and comes with vastly better profit margins to boot.

Does an ecommerce fulfilment provider handle returns?

They do indeed – in fact, processing returns can actually be one of a 3PL provider’s central functions. Why? Well, the faster your stock is back on the shelves, the sooner you can sell it – and the sooner your customer will get their refund. Plus, the right 3PL provider may also handle customer service when a return happens, and handle discounted orders for returned or damaged items.

How much does ecommerce fulfilment cost?

What you'll pay depends not only on the 3PL provider you choose to outsource your fulfilment to, but on the size and weight of your products, and the rate you're selling them at.

For a closer look at ecommerce fulfilment fees, head to our complete pricing guide. Alternatively, hit the button below to grab quotes now.

Want to explore how outsourcing your ecommerce fulfilment can help your business scale? Yes, let's go!
Rob Binns Expert Market
Rob Binns Senior Writer

Rob writes mainly about the payments industry, but also brings industry-specific knowledge of CRM software, social media monitoring, and invoice finance. When not exasperating his editor with bad puns, he can be found relaxing in a sunny corner, with a beer and a battered copy of Dostoevsky.

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