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What Is a Fulfillment Center?

Fulfillment center and fulfillment houses are modern terms for an in-store packaging room. The terms have been coined during the mid-1990s, and basically "fulfillment unit" is used about an indoor packing unit that is not accessible to customers. These in-store packing units are available only to store owners or managers who control access to their products and merchandise. Other retail establishment owners may purchase a fulfillment unit and hire outside packers and movers, but a fulfillment house offers better efficiency, reliability, and security.


To start an in-store fulfillment center, a warehouse operator purchases a loading dock from a supplier of semi-automated trucks. A receiving dock, or post office dock, is attached to a fulfillment unit and is used to store incoming shipments until they are ready to be unloaded at the customer's location. Most fulfillment centers also have a distribution center on the premises, which is where incoming product is loaded into trucks, distributed according to preset routes, and delivered to individual retailers or to company accounts. A distribution center may also include a receiving and pick-up area for multi-location deliveries.


Retailers often outsource order fulfillment because it's the easiest way to handle their ecommerce orders. Instead of hiring employees, they assign these tasks to an on-site logistics partner that will then fulfill the order once it's received by an online retailer. This arrangement is ideal for small enterprises or ecommerce sites that don't handle large volume orders. An ecommerce site typically sells goods in small quantities to the public and requires large inventories in order to remain profitable. Handling large orders would require a large infrastructural investment. Using a fulfillment center provider enables small entrepreneurs to maintain low overhead and maximize profit margins.


An in-store fulfillment center provides two main services to retailers. First, the facility will pack and ship orders from the retailer's location to the customer's location. Second, the center will hold inventory in its warehouse until an order is received. Once an order is received, the warehouse will either pick up the product or deliver it to the customer. Retailers can obtain full truckloads of merchandise that they can distribute to individual customers as well as to multiple locations. In some cases, these warehouses will act as third party warehouse service providers, allowing retailers to obtain materials in bulk without needing to build their own inventory.


Distribution centers are sometimes referred to as fulfillment hubs or distribution centers, but in reality they serve a much different purpose than simply holding inventories. In the case of distribution, the warehouse is used to store products that are not immediately necessary for sale to the public. Rather, these are products that retailers will order in large quantities and which must be kept in a warehouse until an order is received. This warehouse can also be used interchangeably with a warehouse, so long as the latter facility has adequate floor space and is protected from damage.


While it is true that warehouse equipment and supplies are usually part of a fulfillment center, this is not the only function a warehouse serves. Many warehouses handle all types of shipping and receiving, including packing and receiving orders. These warehouses are used to send packages to retailers, manufacturers, wholesalers and other businesses that want to receive packaged goods in their possession. These warehouses are also used to handle returns, which can be extremely taxing on some businesses.


Distribution centers are most commonly used by manufacturers who have international shipping needs. A distribution center can hold thousands of containers that can hold just about any type of merchandise. Some distribution centers will also have tie-ups with distributors, allowing them to ship directly to the customer instead of having to perform the shipment themselves. In some cases, these centers will even take payments for their services, such as for goods that do not qualify for retail sales.


Fulfillment services are very important to the modern e-commerce operation. Many companies rely heavily on the ability to quickly process and ship orders, and they often pay close attention to the type of fulfillment services they have contracted for. If you are planning to start an e-commerce business, it is a good idea to find a reputable fulfillment services provider. A logistics company should have a good reputation, be in good standing with the Better Business Bureau, be willing to provide documentation of previous work completed and meet all minimum requirements. The paperwork that must be filled out is not particularly difficult and can be accomplished by anyone with even minimal IT knowledge.

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