Choosing the best order fulfillment center can be crucial to the profitability and longevity of an online business. The majority of ecommerce merchants have chosen to put their inventory online in order to encourage sales that can happen from outside the physical proximity of their store without the assistance of a sales team or brick and mortar location. These types of decisions are based in leveraging as much technologically as possible in order to reduce the amount of human interaction necessary in order to complete the process of a sale, and therefore reduce costs of doing business.
One place where it is difficult for merchants to save money is in the fulfillment aspect of the business. Someone has to take the order from the website and pack it in a box. Someone has to manage the inventory and arrange the transportation to the customer. This process is very difficult to automate, and as a result “fulfillment centers” have become the choice of many online merchants.
By utilizing a third-party fulfillment center, online merchants are able to remain completely virtual, employing no actual people and having no commitment to physical spaces. The inventory is housed in a warehouse owned and operated by the fulfillment center, the merchant paying only for the space that is necessary to house their portion of the total inventory stored. When an order is placed through a website, that order is transmitted through software to the fulfillment center who can then process and arrange for shipping to the customer using their employees.
Through cooperative use of employees and space, each merchant contracted by a fulfillment center does not have to over purchase warehouse space or employee time, allowing them to pay for only what they use or need. This streamlining of the process can generally save a online merchant thousands of dollars yearly.
One of the greatest strengths of fulfillment center is their ability to position merchandise near customers. By reducing the amount of distance that needs to be traveled from the point of origin to the customer’s door, merchants can save money on each and every order, as long as the warehouse s near the customer.
As a result of this discovery, many fulfillment centers use a “dual-warehouse” system where an east coast and a west coast warehouse houses the same inventory. An order can be routed the shortest distance to the customer by choosing the appropriate warehouse to fulfill the order. In this way, the best fulfillment center for your business is the one offering multiple warehouses, positioned along major transportation routes and near your customers.