Ecommerce fulfillment is one of the best new aspects of business in the online space. This is due to the fact that fulfillment companies are now able to allow online merchants to be completely virtual, employing no direct employees and having to secure no physical space in order to sell products to the public. This is accomplished through the traditional ecommerce components of a website that has an integrated shopping cart and payment system, combined with new software which transmits the order information not only to the merchant but also to the fulfillment company. This entity is a third-party business that is employed by the shop owner to house all inventory that can be purchased by the public, and to use their own employees in order to pick the orders from inventory, prepare it for shipment and arrange the shipping that will transport that order to the customer’s door. The fulfillment company acts as the complete warehouse and shipping staff on behalf of the merchant.
Why would a merchant want to outsource fulfillment? This question can be answered many ways, as there are different benefits that are important to different merchants. The primary reason that most ecommerce merchants will choose to outsource fulfillment is convenience and the ability to not be involved in securing of long term leases or contracts. Many ecommerce merchants have little ability to predict future sales figures of their inventory, and the necessity in the past to attempt to predict the necessary warehouse sizes and employee numbers was very problematic. If the sales were under-predicted, the fulfillment staff would be overtaxed and the warehouse would potentially not be able to house the necessary inventory. If the sales were overpredicted, the merchant may be stuck in a long term lease that forces them to overpay for space that is not necessary and salaries for employees that are not necessary. Either of these scenarios can be very damaging to a business, and potentially can cripple it if the wrong decisions are made. Outsourced fulfillment removes the responsibilities of predicting sales, as there is no direct employment of staff and warehouse space can be renegotiated as necessary.
Another primary reason for many merchants to opt for outsourced fulfillment services is the ability to position merchandise closer to customers. This will allow for faster shipping times and cheaper shipping prices. If standard shipping rates are being charged to customers, shaving costs in the shipping of merchandise can be added to the bottom line of the business. If costs are passed off to the customers directly, they will be delighted by being able to choose rates that are significantly lower than your competition. This is accomplished by inventory being placed in strategic locations on major shipping routes as well as on the east coast or west coast. Through these setups, it no longer matters where the company headquarters is located, even being able to be in other countries. The prices paid for shipping and the timeframes that deliver happens within is decided by the origination point of the merchandise, and outsourced fulfillment services allows you to choose that location.