Third-party logistics (3PL) providers, also referred to as fulfillment providers, utilize fulfillment centers to help e-commerce retailers complete order fulfillment of online orders. Below, we will discuss how fulfillment centers operate and why adding parcel lockers might be an ideal optimization solution for an online retailer.
What Is a Fulfillment Center?
As online shopping and overnight delivery became a more critical facet of a retailer’s success, many retailers soon realized that there simply was no logistical way to store all the inventory in one location; there was not enough space in any one warehouse, nor was there a centrally located spot that made overnight shipping viable. In response, many companies started building fulfillment centers in various places around the country. These buildings are spaced out and located by key shipping hubs in order to minimize delivery times, shipping costs, and streamline the order fulfillment process.
How they Work
At their essence, fulfillment centers, not to be confused with distribution centers, help complete the order process. There, an online retailer stocks their inventory, stores it, and then sends it out. Once an online shopper makes a purchase, the fulfillment center closest to them is notified. They find the inventory, package it, label it, and then ship it out. Such centers can process:
- B2B – Business-to-business, high volume product sent to retailers.
- B2C – Business-to-consumer, shipped directly to a customer’s house.
Many sellers choose to outsource their e-commerce fulfillment to a third-party logistics provider so that they can focus on selling and improving customer service. 3PLs save them from having to manage their inventory, negotiate shipping rates, and fulfill orders.
Fulfillment centers are different from warehouses in that they are a complex and continuously moving operation and facility. Warehouses, on the other hand, are simply static storage spaces. Like Fulfillment centers, it is important to ensure your warehouse is running efficiently to help reduce fees and enhance quality. Unlike warehouses, fulfillment centers provide services ranging from :
- Grouping items into a unit
- Handling returns
- Labeling packages
- Locating products
- Packing and shipping boxes
- Receiving inventory
- Shipping customer orders
Inventory Management Problems
An inefficient fulfillment process is one of the fastest and most common ways to lose business, especially for larger brands. Common problems within these operations include:
- Inventory Discovery – A disorganized warehouse or an uncommunicative 3PL can make it very difficult to locate specific inventory. An inefficient location process leads to delays, which translates to slower delivery times.
- Damaged or Incorrect Items – If customers receive the wrong item or a damaged item, that could cause them to distrust the company they purchased the item from and could result in them taking their business to a competitor. Proper inventory management, storage protection, and packaging combined with thorough item inspection can prevent such issues from occurring.
- Shipping Notifications – Customers have grown accustomed to being able to monitor their shipment, knowing at all times where it is and when to expect it. A lack of transparency can lead to customer dissatisfaction and increased customer service calls.
- Poor Inventory Management – A fulfillment center that does not keep close tabs on their inventory may sell out of an item before realizing it. As a result, customers order the item, expect it, and only later are informed that it is out of stock or will take longer than expected. Lack of oversight is an easy way to lose customers and sales.
How Parcel Lockers Can Help
A fulfillment option that addresses many of the issues outlined above is known as Buy Online, Pick-Up in Store (BOPIS). BOPIS utilizes smart, remote lockers such as the units sold by Parcel Pending. With this technology, customers place their order online, the fulfillment center ships the order to the store, and then stores the items in the state-of-the-art lockers.
Customers are increasingly likely to use such a system because:
- Their packages are safe and can’t be stolen from their porch
- Their shipping costs are significantly reduced
- It speeds up the delivery time
- They are notified by text or email when their order has arrived
- Allows for express pickup, they simply go to the kiosk, scan their unique numerical code, grab their items, and go
Many retail stores prefer this method since it optimizes order fulfillment in the following ways:
- Reduces shipping costs and times caused by home delivery
- Provides convenient will call services for customers
- Improves transparency for auditing and stocking BOPIS lockers
- The machines show lists of current orders waiting for pickup
- Keeps items safe, organized, and easy to locate
Efficient Fulfillment Is Key
An efficient fulfillment center is critical for a retailer’s success. Disorganization and lack of oversight leads to delays and slower shipping times. If you want to improve your fulfillment services, adding BOPIS lockers is an easy way to retain customers and keep them happy. They also help a company save significant amounts of money by reducing the demand for home deliveries. So, if you are searching for a service to help optimize the fulfillment process, look no further.