The Benefits Of Fulfillment Warehousing Services
Fulfillment warehousing services are a specialized genre of business that removes the responsibilities of inventory management, warehousing and shipping from the duties of the merchant. These types of services will pick up the elements of shipping to the customer from the point of order entry on a website or by another means, therefor allowing the merchant to concentrate on the important elements of marketing, product research, and the daily running of the business. While many businesses choose to do their own order fulfillment, utilizing in-house warehouse workers to pick orders and pack/ship them, there are benefits to fulfillment warehousing that cannot generally be replicated by merchants themselves who are not quite large.
The main benefit to utilizing a fulfillment warehousing service is cost savings. Because shipping charges are generally delivered from the major shippers like FEDEX and USPS as a “rack rate” or a “negotiated rate” the ability to bundle your orders within the services of a larger service will save money on each order shipped. As an example, businesses who ship goods regularly will pay a lower price than those who do not, generally based upon the volume that they ship each month. If you only ship a few items each month, you will pay the “base rate” of the shipping company, but if you were to ship thousands of items each month you will be given a significantly lower rate per item shipped. By utilizing a fulfillment warehouse, you will usually get a better rate than if you tried to do it yourself due to the volume prices that they are charged by the companies that are used for the shipping. The extra fees that are associated with picking the order from inventory, packaging those items into boxes and addressing the items appropriately are somewhat offset by the bulk shipping savings, thus providing a total service that removes the responsibilities of all aspects of fulfillment of the orders past the point of order placement from the merchant, and doing it at a price that is reasonable and provides value to the customer.
Location is another aspect of fulfillment warehousing that provides savings to customers. By being able to cut down actual shipping costs through the major carriers by having the deployment of the package coming from a warehouse that is closer to the customer, the costs associated with shipping the items are reduced and therefore passed back to the merchant as savings. For example, a merchant who has it’s physical location in Boston on the East Coast of the United States may still ship a large amount of it’s orders to Los Angeles on the West Coast of the United States. Deployment of the actual shipped orders from the main location in Boston might cost twice as much as if they were shipped from a warehouse in Las Vegas, due to the close proximity of Las Vegas to Los Angeles. Additionally, the shipping times would be significantly reduced and therefor more pleasing to the customer. The only way that this can be achieved is for the merchant to own and operate multiple warehouses throughout the country, or even the world. The alternative is utilization of strategically located fulfillment warehouses who can process the orders from their location.
The last benefit to utilizing a shipping warehouse is convenience, in that the merchant can concentrate on the more important aspects of their business and leave the headaches associated with shipping to a more specialized company. This re-allocation of time and effort can prove to be valuable to companies who can then concentrate on growth without worrying about having to hire more people or locate larger and larger spaces to warehouse inventory. Growth and scale is no longer a factor, and you can process as many orders as you can inventory at the fulfillment warehouse.