With the growth of ecommerce, manufacturers are dealing and selling products all over the world.
Various industries like furniture are especially susceptible to the growth of global demands vis a vis a vis high volumes of products being manufactured in regions like Asia.
However, working with global markets can be overwhelming for growing businesses- considering the lack of technical skills to cope with shipping and warehousing logistics.
What are fulfillment services?
Fulfilment services or third Party Logistics Companies (3PL) are providers that provide logistic services such as inventory storage, warehouse management, and transportation. They do this by having a central fulfillment center that helps retailers prepare and ship orders on-demand, to consumers.
This is where the role of fulfillment companies comes in as very significant. They help clients access international markets, ship and manage inventory with central warehouses, and collect data to forecast sales. Furthermore, by outsourcing order fulfillment, businesses can focus on other important aspects of their company.
What does a fulfillment center do?
While each fulfillment center will have its strengths and weaknesses, they all aim to provide the same thing: achieving its role as a command center for prepping and shipping orders while providing smart warehousing technology to store, track, and collect data on inventory.
Owning your own warehouse, and finding the proper technology and employees to run it can be very expensive, time-consuming, and unrealistic for many businesses. This is where fulfillment centers come in to help save costs and headaches.
Some fulfillment providers may also have multiple centers around the world, allowing them to carry out products order delivery more efficiently.
What do fulfillment services cost?
Fulfillment providers often have a wide range of services that can be mixed and matched based on client needs. They typically charge by capacity, which can include receiving, storing, packaging, shipping, and returns. The cost depends on factors like:
- Type of container unloading services required
- International and ground Shipping material and costs
- Packaging material costs
- Promotional inserts
- Storage and warehousing (bin space and pallet space)
- Returns (shipping of returns to warehouse, generation of return labels, storage, sending back costs), etc
What does a fulfillment process look like?
Most business owners who try to manage their own order fulfillment can spend valuable time managing staff, providing customer support, and overseeing shipping and packaging operations. On the other hand, outsourcing fulfillment is extremely straightforward and simple.
All that really needs to be done from the client’s side is to make sure that inventory is available. In most cases, orders upon checkout can be set up to directly invoice your fulfillment provider who will then take care of all further operations.
This includes managing returns back to the center, where your fulfillment provider also deals with damage inspection, restocking products if they are in good condition and providing you data and reports surrounding these logistics.
Fulfillment challenges faced by manufacturers
Manufactures looking to stay competitive often run into challenges when attempting to complete fulfillment especially as order volume increases past a certain point.
These challenges can be logistical and fulfillment-related, but they can also be due to stringent international legislation in place.
Having a fulfillment provider can help offset these problems and allow you to focus on other important aspects of your business.
Some of the most common challenges in the order fulfillment stage are:
1. Improperly filled orders
Whether orders are filled incorrectly during the recording phase, or during packing, the end result is usually an upset customer or vendor.
Fulfillment providers avoid this problem by having advanced logistical systems that automate and streamline order processes from start to finish.
Clear communication at all stages of order fulfillment is key to remaining competitive. This means making sure suppliers are keeping items in stock, handling customer concerns, and managing personnel.
However, the faster a company grows, the harder it becomes to maintain clear and concise communication across the business. Failing to communicate can result in delays and lost customers. This is what makes outsourcing fulfillment so important as it removes the time and costs associated with in-house operations.
3. International legislation
With the rise of eCommerce, shipping overseas is almost a given. Not only does this take considerable time, there can also be legislative barriers such as customs and duties to be aware of. These can either increase costs or complicate product shipments.
Furthermore, each country has different rules and regulations regarding labeling and packaging, items that need medical or judiciary approval, or subject to specific local custom requirements
Failure to comply can result in significant financial losses either by getting shipments seized or returned. This can make it especially difficult for eCommerce businesses to penetrate big online marketplaces like the US.
Utilizing providers like MultiB2B who have extensive networks with US online retailers can help deal with these issues and ensure smooth operations when selling overseas.
4. Getting custom clearances
Countries like the US have specific laws surrounding custom clearances for imports. This can include having the right documents and satisfying the appropriate requirements within. In addition, these are ever-changing, and each country can decide to implement and remove rules as they like.
It is helpful for eCommerce businesses to use fulfillment providers to ensure that products are properly accounted for during the shipping process. This allows customers to receive packages in an efficient and timely manner.
5. Understanding duties and tariff structures
Customs duties, or tariffs, are taxes on incoming shipments that have to be legally settled before entering a country. These can include import duty, GST, VAT, and other commercial invoices.
Furthermore, there can also be additional International Commercial terms (incoterm) that have to be followed. These dictate who pays and who receives different types of duties and taxes.
Partnering with fulfillment providers that frequently ship internationally will help remove the risk of returned, or seized shipments.
As businesses grow, the need to have efficient inventory operations is imperative. The lack of capacity, or warehouse management can result in loss of customers and revenue.
Leasing your own warehouse limits businesses and increases risk and hassle. Using fulfillment providers not only alleviates this responsibility, it also ensures that shipments are being fulfilled per order, and can notify you in advance when certain products are low.
7. Delivery issues
With the growing eCommerce marketplace, businesses need to stay competitive by shipping on time and accurately. This has moved the focus on last-mile delivery, which essentially describes courier companies that ultimately hand off deliveries to consumers.
Manufacturers, especially those based thousands of miles away from their customers, can find it extremely hard to ensure quality control and manage deliveries in the last mile. Furthermore, deliveries can become extremely expensive, especially if there is a need for express services.
Luckily, businesses can take advantage of fulfillment providers’ established relationships with shipping and courier companies to ensure that customers receive the correct order within the expected delivery time.
Reasons to outsource fulfillment services when shipping to the USA
Utilizing a fulfillment provider who knows their way around fulfilling orders in the US can help smoothen the process and eliminate any concerns you may have.
The reasons for outsourcing fulfillment services when shipping to the US are:
- Helps in connecting with top e-retailers like Amazon, Walmart, Wayfair, etc in the USA.
- Helps to manage seasonal sales cycles.
- Shipping costs are reduced.
- Overhead costs are reduced.
- Improves customer service and satisfaction.
- Availability of customized inventory management systems
- Access to sales insights and analysis
For details, read our article on “Why do you need to outsource fulfillment services when shipping to the USA?”
Warehousing capabilities, advanced inventory systems, and streamlined shipping procedures are all important for any business looking to expand and sell in international markets.
However, these upgrades can come at a high cost and are often not practical for growing businesses due to their technical requirements, and inflexible attributes.
This is where fulfillment providers like MultiB2B come in to help manufacturers remain competitive amongst a highly in-demand marketplace. The online retail space is growing exponentially, and businesses looking to alleviate time and costs should look at partnering with fulfillment services.
The article is a part of our comprehensive series on “ Order Fulfillment Process in USA: Steps Involved”.