Why an internet company needs an order fulfillment center
An internet based company that sells items to the public has two choices, to either create a physical department with employees, warehouses and all of the headaches and expenses that go with it, or utilize a third-party fulfillment center. A fulfillment center is a simple business to understand, they hold your inventory in their warehouses and use their employees to process orders that get shipped to customers. The sales happen on your website, and a software system transmits that information to the warehouse where your inventory is held. The employees of that business then pick the order from inventory and pack it into the appropriate boxes that have been specified by the business owner. The order is transferred to the customer through the shipping method specified, and the inventory on hand is updated in the system. This process will incur a charge that is paid to the fulfillment company.
The main reason that business owners will choose to outsource this kind of processing if for convenience and the reduction of risk to the business future. If sales are not predictable, it is quite dangerous for a business to sign a lease for warehouse space and hire employees as there is no way to know with any certainty that you have chosen the appropriate amount of space. A mistake of underbuying space leaves you with a warehouse that cannot fully execute the needs of the business. Overbuying space leaves you with a potential high bill for rent that is not covered by sales. The results of making a choice that is incorrect can have devastating effects on the future of the business.
Using an order fulfillment center removes the responsibilities associated with warehouse management and employee management allowing the business owner to instead concentrate on growing the sales of the business itself. The other crucial benefit to using third party fulfillment centers is that you can scale to your needs as necessary. If you need more space because sales are high, you can simply request a service increase and almost immediately scale to the level you need. If your sales are not as high as expected, you can easily scale down your operations without having to pay for space or services that are not necessary. This fact alone can be a lifesaver at the introductory stages of a business.
Another benefit to using fulfillment companies is that you can position your inventory closer to your customers, therefor paying cheaper shipping fees and processing of orders delivered to the customers faster. If the ground delivery of a product is estimated at 5 business days, it very well might be delivered to the customer in half that time if the warehouse is located somewhere nearer to them than the other side of the country. In the cases when a customer expects a delivery in five days and receives it in three, you are receiving the added benefits of a happy customer even though you are paying less for shipping. The situation is a win win for everyone.
Contact Ship My Orders today to inquire about our order fulfillment services.