Fulfillment Services

What are Fulfillment Services?

What are Fulfillment Services? On a high level, fulfillment services are companies that store your products for you, fulfill and ship orders directly to your customers, and handle returns as needed. But fulfillment services aren’t so simple after all – there are numerous specializations and different types of fulfillment services offered. What makes it challenging is that many of them can mean the same thing, with slight and subtle differences, such as:

• Apparel Fulfillment Services Companies – these companies focus on the storage and distribution of apparel and clothing.
• E-commerce Fulfillment Services Companies – these companies focus on fulfilling orders from online shopping carts.
• Warehouse Companies – these companies focus on simply storing products in a warehouse.
• Public Warehouse Companies – these companies store products and also ship out orders.
• CD/DVD Fulfillment Companies – these companies focus on making CD’s and DVD’s and shipping them to customers.
• Fulfillment & Call Center Companies in One – these companies offer fulfillment and call services bundled together.
• Product Fulfillment Services Companies – these companies fulfill orders for various products.
• Order Fulfillment Services Companies – these companies specialize in receiving orders for products and shipping them to customers.
• Literature Fulfillment Services Companies – these companies focus on the distribution of literature, and oftentimes offer print services as well.
• Pick and Pack Companies – this is another name for order fulfillment companies…they “pick and pack” orders.
• 3PL Companies – these companies usually offer full-scale shipping services in addition to storage and order processing services.

Fulfillment services are essential operations that handle the logistics of getting products from businesses to their customers. These services cover everything from receiving and storing inventory to processing orders, packaging products, and managing shipping. Whether you’re an e-commerce store or a growing retail business, fulfillment services play a huge role in ensuring that your products are delivered accurately and efficiently.

But don’t worry, we can point you in the right direction if you don’t know which is the best for you! Because it’s sometimes confusing to differentiate between these different types of services, we decided to create a comprehensive listing of the various fulfillment services along with a brief description. Take a look at this thorough list of fulfillment services 3PLs offer to see the depth of help you can receive by outsourcing fulfillment.

Storage and Fulfillment Services

Storage and fulfillment services involve the organized and efficient warehousing of products before they are processed for orders. Fulfillment centers use advanced inventory management systems to track and store items in designated areas, such as shelves, bins, or pallets, ensuring quick and accurate retrieval when needed.

Proper storage maximizes space utilization and minimizes the risk of damage or loss. These services often include climate-controlled environments for sensitive products and regular inventory audits to maintain accurate stock levels, supporting smooth order fulfillment.

Product Fulfillment Services

Product fulfillment services encompass the entire process of receiving, processing, and preparing customer orders for shipment. Once an order is placed, the fulfillment center picks the correct items from storage, carefully packs them according to the brand’s guidelines, and ensures all necessary documentation, such as invoices or promotional materials, is included.
These services may also involve custom kitting, where multiple products are assembled into a single package, and personalized packaging to enhance the customer’s unboxing experience. The goal is to deliver accurately picked, well-packaged products that meet customer expectations.

Shipping Fulfillment Services

Shipping fulfillment services focus on the final leg of the order fulfillment process: getting the product from the warehouse to the customer’s doorstep. Fulfillment centers partner with various carriers to offer multiple shipping options, from standard to expedited delivery, ensuring flexibility for both businesses and customers. They use sophisticated shipping software to compare rates, select the most cost-effective and timely carrier, and generate tracking numbers.
These services also handle international shipping logistics, including customs documentation, to ensure smooth delivery across borders. The objective is to provide fast, reliable, and cost-efficient shipping that enhances customer satisfaction.

E-Commerce Fulfillment Services

Due to the explosive growth of e-commerce sales, most of the best fulfillment centers now offer e-commerce fulfillment. E-commerce fulfillment companies link directly to your online shopping cart, receive your orders automatically into their WMS (warehouse management system), and process orders that are shipped directly to consumers. The best e-commerce fulfillment companies can link to your Web store and also integrate with other online sales channels, such as Amazon, eBay, Jets.com, Walmart.com, and Facebook, etc.

Retail Fulfillment Services

Retail fulfillment centers ship inventory to big box stores (such as Amazon, Home Depot, Best Buy, etc.) or Mom and Pop shops (smaller specialty retailers with a brick-and-mortar presence). These orders are larger than B2C online orders, and often require very specific packaging and labeling which are detailed many times in routing guides and instructions for each specific retailer.

Adding to the difficulty of retail fulfillment is that many retailers charge you fees when orders are shipped incorrectly to their DCs (distribution centers). The fees, otherwise known as “chargebacks,” can be extremely taxing, so finding a fulfillment center that is highly competent in retail fulfillment is essential. Furthermore, larger retailers usually require the exchange of order information to be completed using EDI (electronic data interchange) software.

Multi-Channel Fulfillment Services Capability

Multi-channel fulfillment simply means that a fulfillment company can fulfill orders for an assortment of different sales channels, including direct to consumer, business to business (to retail), etc. Fulfilling orders to multiple channels isn’t a “cakewalk”, so it requires a very highly skilled fulfillment center that has years of experience with the nuances of both B2B and B2C shipping.

FBA Prep and Long-Term Warehousing

Due to the popularity of Amazon, FBA prep and storage (Fulfillment by Amazon) has grown in popularity. In this scenario, a fulfillment center receives products, prepares products for delivery to Amazon DCs by applying appropriate labels, etc., and sometimes even stores products on a longer-term basis in order for companies to avoid Amazon’s long-term storage fees. Because Amazon ultimately earns most of the fulfillment and shipping fees, many fulfillment providers don’t offer this service. We created a list of companies that do offer FBA Prep services which you can view.

Crowdsourcing Fulfillment Services and Shipping

Crowdsourcing through sites like Kickstarter and IndieGoGo means shipping items to people as a ‘thank you’ for giving money. Sometimes the ‘thank you’ gifts will include the product or a prototype of the product, as well as swag and apparel. Unlike ongoing fulfillment and shipping of orders, crowdsourcing fulfillment is usually done one time in a large batch after the crowdfunding has been completed and the funding goal has been achieved.

Influencer Fulfillment Services

Influencer fulfillment services are specialized logistics solutions designed to handle the storage, packaging, and shipping of products for influencers who run their own brands or promotional campaigns. These services streamline the process of getting products from the influencer to their customers by managing inventory, processing orders, and ensuring timely deliveries. Outsourcing fulfillment is crucial for influencers because it allows them to focus on their core strengths—content creation, brand development, and audience engagement—while leaving the complex and time-consuming task of fulfillment to professionals. This not only improves efficiency but also enhances customer satisfaction, as experienced fulfillment providers ensure accurate, fast, and reliable shipping.

Monthly Subscription Fulfillment Services and Auto Shipping Capability

Subscription box fulfillment (otherwise known as auto shipping) takes place when a company ships out product on a recurring basis (usually monthly). An example of this type of fulfillment is the Dollar Shave Club, where a razor is sent to customers each month. Subscription box fulfillment centers have to be very well-versed in batch shipping, and receiving an updated list of monthly orders.

Furthermore, great flexibility is required to not only meet different and oftentimes very ornate packaging and insert requirements  but also to work with a wide range of products and high SKU count.

DRTV Fulfillment Services

DRTV (Direct Response Television) fulfillment services refer to the specialized logistics and operational processes that support direct response marketing campaigns aired on television. These services handle the entire back-end process after a customer responds to a TV ad, including order processing, inventory management, packaging, and shipping. DRTV fulfillment providers often offer additional services such as call center support, payment processing, and returns management. 

The goal of this fulfillment service is to ensure customers receive their orders quickly and accurately, which helps maintain the momentum and success of DRTV campaigns. Effective DRTV fulfillment services are designed to handle high volumes of orders within a short timeframe, making them essential for the fast-paced nature of direct-response marketing.

Social and Flash Sales Fulfillment Services

Are you selling products through sites like Etsy or Daily Deals? Flash sales on these sites require expedited shipping that might become impossible to fulfill if attempting it on your own. Outsourcing to a fulfillment center dealing in social and flash sales is to your advantage. Fulfillment centers that are very technologically savvy and have the ability to integrate online with different social media channels offer the best service.

Drop Shipping Fulfillment Services

You may prefer using drop-shipping procedures where you purchase an item from a third-party retailer and then have them ship it to consumers. Since it doesn’t involve physical inventory on your part, a fulfillment company isn’t necessary in this case.

Direct Mail Fulfillment Services

Direct mail campaigns are still popular to help promote businesses. Not all fulfillment businesses specialize in direct mail services, which can include in-house printing of promotional materials, letter services, and mailing of letter and envelope sized items rather than larger packages.

Other Types of Fulfillment Services

While the above-mentioned fulfillment services describe a lot of the main areas covered in fulfillment, there are some general warehousing services that also need explanation. Below we’ve included some of these warehouse services with a brief explanation.

Warehousing

Warehousing is the process of simply storing your goods. Warehouses will either store them on the floor, on pallets, in racks or in bins. Some companies only require the storage of products for a short or long term. For companies that require fulfillment, warehousing is needed to store inventory in the warehouse so that orders can be shipped once customers place orders.

Kitting

This might be a new shipping term for you, yet it’s important to know. Kitting and assembly services are what you do when you group, supply, and package products all as one unit. You’ll want this service to help cut down on shipping costs for your regular customers. Sometimes items need to be kitted together in a bundle or group before they can be shipped to customers.

Cross Docking

With cross-docking, you’re shipping products directly to consumers without any storage time. This means a fulfillment center that loads shipments from one truck or rail line to the next without storing it in a facility in-between or without storing it for more than a short period of time.

Freight Forwarding

Finding a fulfillment center with freight forwarding experience is equally important. Freight forwarding is the process of arranging all of the shipping from your overseas manufacturer or supplier to the warehouse location. It involves bringing the goods into the country of destination, clearing customs, and moving the product from the port to the warehouse.

Returns, Call Center, and Contract Packaging

Many fulfillment houses offer customer returns services, which is where they receive returns at their warehouse, inspect them for damage, and prepare them for either destruction or re-entry into inventory. Returns have become such an important aspect of fulfillment since online e-commerce companies offer favorable returns processing to ‘win the sale.’

Unlike returns processing, call center services are frequently offered as a service by most fulfillment warehouses. Only a small percentage of fulfillment warehouses offer inbound ecommerce call center services and order-taking services. It can be beneficial to have everything under one roof so that there is only one point of contact. However, if you wish to diversify your risk, using a separate call center company helps if you ever have a problem with either one of the two unique services.

Contract packaging is additionally important in a fulfillment center as a source for providing unique packaging services. Your products may have an unusual shape and require packaging that’s different from what’s typical. A fulfillment warehouse that offers contract packaging services can help you purchase cartons and other packaging materials to prepare your goods for shipping.

It’s important to note that some companies require more sophisticated packaging and contract bottle filling services, which most fulfillment centers don’t perform. In this case, you might need a specialized contract packager.

How Do Fulfillment Services Work?

Fulfillment services involve a series of coordinated processes that ensure products move efficiently from a business to its customers. Here’s a breakdown of the key steps involved:

• Receiving: The fulfillment process starts with receiving inventory from suppliers, checking it for accuracy and quality, and logging it into the system to ensure proper stock management.
• Storage: Products are then organized and stored in designated warehouse areas, allowing for quick and accurate retrieval when orders are placed.
• Order Processing: Upon order placement, items are picked from storage, packed according to specifications, and prepared for shipment using automated systems to enhance speed and accuracy.
• Packaging: Products are securely packed using appropriate materials, with the option for custom-branded packaging to ensure they reach customers safely and consistently.
• Shipping: Orders are labeled and shipped via partnered carriers, and customers are provided with tracking information to monitor delivery status.
• Returns Processing: Fulfillment companies handle returns by inspecting, restocking, or disposing of items according to the business’s return policies, ensuring a smooth return experience.
• Inventory Management: Throughout the process, inventory is tracked in real-time, helping businesses maintain accurate stock levels and avoid overstock or stock-out issues.

A Comparison of the Different Ways to Perform Fulfillment Services (In-House vs. Outsource)

Control and Customization

• In-House: Managing fulfillment in-house gives you complete control over every aspect of the process, from inventory management to packaging and shipping. This allows for high levels of customization and brand consistency, but it requires significant time, effort, and expertise to maintain.
• Outsource: Outsourcing fulfillment to a third-party warehouse provider can limit direct control but offers access to their specialized expertise and standardized processes. Many third-party providers also offer customization options, though they might not be as flexible as in-house operations.

Costs and Investments

• In-House: Setting up in-house fulfillment requires substantial upfront investment in warehousing, technology, and staffing. Ongoing operational costs, including equipment maintenance and labor, can be high, but if managed well, it can become more cost-effective in the long run for larger operations.
• Outsource: Outsourcing typically involves paying for services on a per-order basis, which can be more cost-effective, especially for small to medium-sized businesses. There are no upfront infrastructure costs, but the overall expense might increase as your order volume grows.

Scalability

• In-House: Scaling in-house operations requires additional investments in space, equipment, and staff, which can be time-consuming and costly. It offers flexibility but also risks under or over-investing as business needs fluctuate.
• Outsource: Third-party fulfillment services are inherently scalable, allowing you to easily adjust to seasonal peaks or business growth without needing additional investments. They can quickly adapt to changes in order volume, making them a more flexible option for businesses with fluctuating demand.

Speed and Efficiency

• In-House: In-house fulfillment can be highly efficient if well-managed, with the potential for faster order processing and shipping times if the warehouse is located near your customer base. However, inefficiencies can arise if the processes are not optimized or if there’s a sudden spike in orders.
• Outsource: Fulfillment providers often have optimized processes and strategic warehouse locations that can speed up delivery times. They benefit from economies of scale and advanced logistics networks, generally offering faster and more reliable shipping options.

Technology and Innovation

• In-House: Managing fulfillment in-house allows you to choose and implement the latest technology tailored to your specific needs. However, staying updated with technological advancements can be costly and requires ongoing investment in software, training, and upgrades.
• Outsource: Outsourced warehouse providers usually have access to the latest technology and innovations, such as warehouse management systems, automation, and real-time tracking, without additional costs to your business. They continuously upgrade their systems to remain competitive, benefiting your operations without the associated technology investment.

Focus on Core Business

• In-House: Handling fulfillment in-house can divert attention from your core business activities, as it requires significant management and operational oversight. If resources are stretched too thin, this might slow down business growth.
• Outsource: By outsourcing, you can focus on your core competencies, such as product development and marketing, while the fulfillment provider manages logistics. This can lead to more efficient business operations and faster growth, as you’re able to allocate resources where they’re most needed.

How to Choose an Outsourced Fulfillment Service

Choosing the right fulfillment service is crucial as it directly impacts your business’s efficiency, customer satisfaction, and overall success. Here are six significant ways to make an informed decision:

1. Assess Your Business Needs: Identify your specific fulfillment requirements, such as order volume, product types, and shipping destinations, to ensure the service can meet your demands.
2. Evaluate Technology Integration: Ensure the fulfillment service offers smooth and easy integration with your existing e-commerce platform, inventory management, and CRM systems.
3. Consider Location and Shipping Capabilities: Choose a fulfillment center strategically located in your customer base for faster shipping times and reduced costs.
4. Review Security and Safety Measures: Look for fulfillment services with robust security protocols and quality control processes to protect your inventory.
5. Analyze Costs and Scalability: Compare pricing structures and assess the service’s ability to scale with your business growth without compromising quality or increasing costs.
6. Check Reputation and Experience: Research the fulfillment service’s track record, customer reviews, and industry experience to ensure they have a history of reliability and professionalism.

Other Considerations for Fulfillment Services

Take some time to think about other important roles you need your fulfillment center to take on. A small list to get you thinking:

Small Business Services

Those of you opening a small business can benefit greatly from a fulfillment center providing services for startups like yours. First, you probably can’t afford to put together your own fulfillment facility. Even if you do attempt it, you’ll end up being overwhelmed. However, only some of the fulfillment centers help start-ups, while most have very high monthly minimums or other volume restrictions.

Large Volume

What if your small business suddenly experiences a large volume of orders? It can easily happen if you receive a lot of publicity. A top-tier fulfillment center can handle a sudden influx of orders and expedite all shipping.

B2B and B2C

Whether you’re a B2B or B2C business, you’re going to need a fulfillment center that understands the unique differences and skills needed. In B2B, you need reliable shipment methods to business customers. Even if you’re in B2C, customers now want their deliveries yesterday rather than a day late.

International Business Shipping

Maybe you’re looking to corner international markets. Dealing with the complexities of international shipping absolutely requires a knowledgeable 3PL in your corner, including faster shipping methods.

Special Requirements

Your business may require specialized things like high SKU counts to keep track of inventory. Any good 3PL can handle these requirements for you so you don’t lose track and end up telling customers you’re out of stock.

Complex Integration

When you perform due diligence on your fulfillment center, find out whether they offer integration on various levels. They should have the capability to integrate with inventory (using ERP software such as Skubana) and with billing (using financial software like Quickbooks).

They should also integrate well with shipping software like Shipstation. Plus, they should successfully integrate with a full ERP software like Netsuite or Brightpearl.

Knowing your fulfillment center can integrate easily like this with their technology proves their worth indefinitely as your business grows to enterprise level.

Want to learn more about the terminology? View our dictionary of fulfillment terms below.

Fulfillment Services Definitions

Here are some commonly used words in the fulfillment industry and their respective definitions:

• 3PL – Third Party Logistics, which usually means a company that helps in all stages of the logistics process, from initial shipping from the manufacturer/supplier to the storage and distribution to end customers.
• E-commerce Fulfillment – This is a very specific area of fulfillment that involves shipping orders from a company’s web store or shopping cart. The process usually involves the integration of systems so that companies can send a fulfillment provider an order automatically, and then the fulfillment company can send the shipping details and tracking back to the company seamlessly.
• Freight Forwarding – Freight forwarding is the process of shipping your product internationally across country borders. This can include importing and exporting, and usually entails clearing customs, among other components.
• Fulfillment – Fulfillment describes the process of fulfilling orders of products to end customers. It is also used to describe the process of assembling products so that it can be shipped to customers.
• LTL – Less than truckload shipping, which refers to shipments that are larger in size than small package shipments (such as multiple pallets of goods) but smaller than a full truck load.
• Merchant Account – A merchant account is necessary in order to accept credit card transactions, which is usually a requirement for a company that sells products on its website.
• Pick and Pack – The process of picking orders and preparing them for shipment is referred to as pick and pack.
• Supply Chain Management – The supply chain is used to refer to the entire process of sourcing products. It’s a larger-scale concept than 3PL or logistics in that it also includes the procuring of products.

FAQs About Fulfillment Services

What are Some Security Measures to Protect Stored Inventory?

Fulfillment services typically employ 24/7 surveillance, access controls, and alarm systems to secure stored inventory. They may also use secure fencing, biometric access, and regular audits to prevent unauthorized access and theft.

How Do You Ensure Real-Time Inventory Tracking?

Advanced warehouse Management Systems (WMS) that integrate with e-commerce platforms achieve real-time inventory tracking. These systems use barcode scanning, RFID technology, and automated data updates to keep inventory records accurate and current.

Do Fulfillment Services Offer Specialized Services for Fragile Items?

Many fulfillment services offer specialized services for fragile items, including custom packaging, reinforced materials, and careful handling protocols. They may also provide insurance and dedicated storage areas to protect delicate products further.

What’s the Policy of Fulfillment Services on Inventory Shrinkage?

Fulfillment services typically have policies that include regular inventory audits and strict loss-prevention measures to minimize shrinkage. Some may offer compensation or insurance coverage for any discrepancies between recorded and actual inventory levels.

How do Fulfillment Services Handle Backorders and Stockouts?

Fulfillment services manage backorders by notifying customers and suppliers promptly and coordinating restocking efforts. They may use automated systems to track inventory levels and proactively prevent stockouts by setting reorder points and safety stock levels.

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