A fulfillment center is a place where a third-party logistics provider (3PL) provides warehouse management and order fulfillment and arranges last-mile delivery of your product to the customer. You ship your products to a fulfillment center and set up a system that notifies them of orders—ideally, automatically via your eCommerce platform or another order management system.
An ideal fulfillment center for small businesses gives them the opportunity to scale their business operations without investing in overhead like warehouse space and employees. The logistics provider will store, pick, package, and ship the products from the fulfillment center, and most manage returns as well.
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While exact service offerings may vary a bit depending on who you choose as your 3PL, these are the services you should generally expect a fulfillment center to provide:
Inventory receiving and storage
You can have your supplier or manufacturer ship products directly to a fulfillment center. If the 3PL provider has multiple fulfillment centers, you can split inventory shipments to place your products strategically around the country (or globe). The fulfillment center stores your products by SKU until an order comes in and then ships it to the customer.
Shipping and delivery coordination
When an order comes in, the fulfillment center will be notified and start picking your order—which just means grabbing the appropriate products. It’ll then package the order and ship via the appropriate carrier.
A fulfillment center will often offer a variety of shipping options, such as seven-day shipping via USPS or two-day shipping via UPS. Many fulfillment centers are rising to the challenge of providing affordable two-day shipping.
Many fulfillment centers also offer additional packing services, such as kitting—assembling multiple products into a single package so that you can sell them as a “kit” on your online store.