What is Fulfillment in Simple Terms and How it Works

Fulfillment is a set of services related to order processing and delivery. Simply put, a fulfillment company takes care of all the routine work related to a product after it is purchased: storage in a warehouse, packaging, labeling, delivery to the customer, and handling returns.

Why and Who Needs Fulfillment?

Fulfillment can be useful for both large online stores and small entrepreneurs who sell goods online.

For large online stores, fulfillment allows:

• To reduce costs on maintaining their own warehouse and staff.
• To increase sales through faster and higher quality delivery of goods.
• To expand the sales geography to new markets.

For small entrepreneurs, fulfillment allows:

• To focus on business development rather than logistics.
• To offer their customers a higher level of service without significant investments.
• To reduce risks associated with storage and delivery of goods.

Fulfillment Models

Let's consider several basic fulfillment models:

• FBO (Fulfillment by Operator). In this model, the seller transfers their goods for storage and processing to the marketplace's warehouse. All processes related to receiving, storing, picking, and delivering orders are carried out by the marketplace. The advantages of this model include simplifying the sales process, increasing efficiency, and expanding the sales geography.
• DBS (Delivering by Seller). In this model, the marketplace acts only as an advertising agent, while all operations related to order processing and delivery are carried out by the seller themselves. This model allows sellers to retain maximum control over their goods and minimize commissions but requires additional logistics costs.
• Real FBS/Express. This model implies that the seller stores the goods in their own warehouse and, within a short time after receiving the order, packages it and hands it over to the marketplace's partner courier for delivery. The advantages of this model include a high level of control over the goods and fast delivery within the sales region.

How Fulfillment Works 

1. The customer places an order in the online store.
2. Order information is transmitted to the fulfillment system.
3. Fulfillment center employees assemble the order, pack it, and label it.
4. The order is sent to the customer by the delivery service using warehouse services.
5. In case of a product return, the fulfillment center receives it, processes it, and arranges a refund for the customer.

A fulfillment center can provide additional services, such as:

• Cross-docking. Receiving goods from different suppliers, sorting them, and combining them into one order for delivery to the customer.
• Prep center in the USA. Preparing goods for sale in the American market, including labeling, translating instructions, etc.
• Warehouse services in Europe. Storing goods in a warehouse in Europe with the ability to deliver across the continent, fulfillment, cross-docking, repackaging, delivery to Amazon, and a prep center.

Advantages and Disadvantages of Fulfillment

Advantages:

• Improvement in service quality. Fulfillment companies have the experience and resources to ensure fast and quality delivery of goods.
• Expansion of capabilities. Fulfillment allows online stores to offer their customers new services, such as same-day delivery or express delivery.

Disadvantages:

• Additional costs. Fulfillment services are not free, so the online store needs to factor them into the cost of goods.
• Complexity of integration. Integrating the online store's system with the fulfillment company's system can be complex and time-consuming.

How to Choose a Fulfillment Company

Selecting a fulfillment company is an important stage that requires careful consideration. First and foremost, it's essential to assess the cost of services and choose an option that fits your budget. However, it's equally important to pay attention to the quality of service. Explore customer reviews of the company and evaluate the level of service. It's preferable to opt for a company with experience in your industry, which will ensure more efficient order fulfillment. Also, consider the geographical location of the company's warehouses, especially if your customers are located in different regions, which will help optimize the delivery process and reduce time costs.

Our DiFFreight Company has been specializing in international shipping and logistics services for over 12 years, which directly include fulfillment. During this time, we have successfully delivered goods to more than 23 countries, and the cumulative experience gained by our employees has enabled us to create a professional and reliable service tailored to the client. To order fulfillment services from DiFFreight Company, please contact us.