{"id":25849,"date":"2019-04-10T11:06:16","date_gmt":"2019-04-10T11:06:16","guid":{"rendered":"https:\/\/www.parcelpending.com\/blog\/what-is-a-fulfillment-center-2\/"},"modified":"2023-04-04T17:37:58","modified_gmt":"2023-04-04T17:37:58","slug":"what-is-a-fulfillment-center","status":"publish","type":"post","link":"https:\/\/www.parcelpending.com\/en-ca\/blog\/what-is-a-fulfillment-center\/","title":{"rendered":"What is a Fulfillment Center?"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Third-party logistics (3PL) providers, also referred to as fulfillment service providers, utilize multiple fulfillment centers to help eCommerce retailers complete order processing or order fulfillment for online orders. Below, we&#8217;ll discuss how fulfillment centers operate and why adding <\/span><span style=\"font-weight: 400;\">a <\/span><a href=\"https:\/\/www.parcelpending.com\/en-ca\/about-parcel-lockers\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">parcel locker<\/span><\/a><span style=\"font-weight: 400;\"> solution might be an ideal solution for an eCommerce business or brick-and-mortar retailer to support the order fulfillment process, reduce fulfillment fees (and shipping costs!), and improve customer satisfaction.<\/span><\/p>\n<h2><strong>What Is a Fulfillment Center?<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">So, what is a<\/span><span style=\"font-weight: 400;\">n <\/span><span style=\"font-weight: 400;\">eCommerce<\/span><span style=\"font-weight: 400;\"> fulfillment center<\/span><span style=\"font-weight: 400;\">? As online shopping and overnight delivery became a more critical facet of a retailer&#8217;s success, many retailers soon realized that there simply was no logistical way to store all their inventory in one location. There was not enough space in any one warehouse, nor was there a centrally located spot that made it possible to ship orders next<\/span><span style=\"font-weight: 400;\">&#8211;<\/span><span style=\"font-weight: 400;\"> day or overnight.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In response, many companies started building or investing in fulfillment centers in various places (often referred to as hubs) around the country. These buildings are spaced out and located by key shipping hubs (such as those owned by UPS or FedEx) in order to minimize delivery times <\/span><span style=\"font-weight: 400;\">and <\/span><span style=\"font-weight: 400;\">shipping costs, as well as streamline the<\/span><a href=\"\/en-ca\/blog\/what-is-the-order-fulfillment-process\/\" target=\"_blank\" rel=\"noopener\"> <span style=\"font-weight: 400;\">order fulfillment process<\/span><\/a><span style=\"font-weight: 400;\"> .<\/span><\/p>\n<h2><strong>How a Fulfillment Center Works<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">So <\/span><a href=\"\/en-ca\/blog\/what-is-the-order-fulfillment-process\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">what is order fulfillment<\/span><\/a><span style=\"font-weight: 400;\"> how do fulfillment centers tie into the process? Whether <\/span><span style=\"font-weight: 400;\">outsourcing fulfillment service<\/span><span style=\"font-weight: 400;\"> or operating an in-house <\/span><span style=\"font-weight: 400;\">fulfillment warehouse<\/span><span style=\"font-weight: 400;\">, this is a crucial part of <\/span><span style=\"font-weight: 400;\">order processing<\/span><span style=\"font-weight: 400;\">.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Fulfillment<\/span><span style=\"font-weight: 400;\"> centers, not to be confused with distribution centers, help complete the <\/span><span style=\"font-weight: 400;\">online order<\/span><span style=\"font-weight: 400;\"> process. There, an online <\/span><span style=\"font-weight: 400;\">retailer<\/span><span style=\"font-weight: 400;\"> stocks their <\/span><span style=\"font-weight: 400;\">inventory<\/span><span style=\"font-weight: 400;\">, stores it, and sends it out when a <\/span><span style=\"font-weight: 400;\">customer<\/span><span style=\"font-weight: 400;\"> places an order. Once a <\/span><span style=\"font-weight: 400;\">customer<\/span><span style=\"font-weight: 400;\"> makes a purchase, the <\/span><span style=\"font-weight: 400;\">fulfillment<\/span><span style=\"font-weight: 400;\"> center closest to them is notified. <\/span><span style=\"font-weight: 400;\">Warehouse<\/span><span style=\"font-weight: 400;\"> staff find the <\/span><span style=\"font-weight: 400;\">inventory<\/span><span style=\"font-weight: 400;\">, package it, label it, and ship out the <\/span><span style=\"font-weight: 400;\">customer order<\/span><span style=\"font-weight: 400;\">. A <\/span><span style=\"font-weight: 400;\">fulfillment warehouse<\/span><span style=\"font-weight: 400;\"> can process orders for:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><b>B2B<\/b><span style=\"font-weight: 400;\"> \u2013 <\/span><span style=\"font-weight: 400;\">Business-to-business customers, where high volume orders (e.g., bulk or wholesale orders) are sent to retailers.<\/span><\/li>\n<li style=\"font-weight: 400;\"><b>B2C<\/b><span style=\"font-weight: 400;\"> \u2013 Business-to-consumer customers, where orders are shipped directly to a customer\u2019s home.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Many retailers choose to outsource their eCommerce fulfillment to a third-party logistics provider so that they can focus on selling more product<\/span><span style=\"font-weight: 400;\">s<\/span><span style=\"font-weight: 400;\">, fulfilling orders quickly, and improving customer service. Third-party logistics providers<\/span><span style=\"font-weight: 400;\"> and<\/span><span style=\"font-weight: 400;\"> fulfillment companies<\/span> <span style=\"font-weight: 400;\">save them from having to manage their own inventory, negotiate shipping rates with carriers, and fulfill orders.<\/span><\/p>\n<h2><strong>Fulfillment Center vs. Warehouse: What is the Difference?<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">A <\/span><span style=\"font-weight: 400;\">fulfillment<\/span><span style=\"font-weight: 400;\"> center is different from a <\/span><span style=\"font-weight: 400;\">warehouse<\/span><span style=\"font-weight: 400;\"> in that it is a complex and continuously moving operation and facility. A warehouse space is simply a static inventory storage space. Unlike warehouses, <\/span><span style=\"font-weight: 400;\">fulfillment<\/span><span style=\"font-weight: 400;\"> centers provide services ranging from:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Receiving <\/span><span style=\"font-weight: 400;\">inventory<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Grouping <\/span><span style=\"font-weight: 400;\">goods<\/span><span style=\"font-weight: 400;\"> into a unit<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Palletizing<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Locating <\/span><span style=\"font-weight: 400;\">goods<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Packing and shipping boxes<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Labeling packages<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Shipping <\/span><span style=\"font-weight: 400;\">customer<\/span><span style=\"font-weight: 400;\"> orders<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Handling returns<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">However, like a <\/span><span style=\"font-weight: 400;\">fulfillment<\/span><span style=\"font-weight: 400;\"> center, it is important to<\/span><a href=\"https:\/\/www.parcelpending.com\/en-ca\/blog\/how-to-maximize-warehouse-efficiency\/\" target=\"_blank\" rel=\"noopener noreferrer\"> <span style=\"font-weight: 400;\">ensure your <\/span><span style=\"font-weight: 400;\">warehouse<\/span><span style=\"font-weight: 400;\"> is running efficiently<\/span><\/a><span style=\"font-weight: 400;\"> to help reduce fees and enhance quality.<\/span><\/p>\n<h2><strong>What is a Micro Fulfillment Center?<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">Where fulfillment centers are as large as 300,000 square feet and typically located in rural areas,<\/span><a href=\"\/en-ca\/blog\/leveraging-brick-and-mortar-stores-for-fulfillment\/\" target=\"_blank\" rel=\"noopener\"> <span style=\"font-weight: 400;\">micro fulfillment<\/span><\/a><span style=\"font-weight: 400;\"> centers are normally 3,000 to 10,000 square feet and located closer to the customer, cutting down on costs associated with the <\/span><span style=\"font-weight: 400;\">fulfillment <\/span><span style=\"font-weight: 400;\">operation<\/span> <span style=\"font-weight: 400;\">and delivery time.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Over the past few years, a new <\/span><span style=\"font-weight: 400;\">micro fulfillment<\/span><span style=\"font-weight: 400;\"> option has emerged in the form of \u201cdark stores\u201d \u2013 a fulfillment center where <\/span><span style=\"font-weight: 400;\">store owners<\/span><span style=\"font-weight: 400;\"> or an eCommerce company can process goods and returns rather than a place for customers to browse and shop. Turning vacated retail space into a <\/span><span style=\"font-weight: 400;\">fulfillment<\/span><span style=\"font-weight: 400;\"> center allows behemoth retailers and <\/span><span style=\"font-weight: 400;\">eCommerce retailers<\/span><span style=\"font-weight: 400;\"> to create delivery hubs in the middle of cities (and closer to customers) that typically prohibit new construction.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">By leveraging <\/span><span style=\"font-weight: 400;\">multiple fulfillment centers<\/span><span style=\"font-weight: 400;\">, retailers can slash delivery times for online orders, allowing products to reach customers in just a few hours versus a day. In short, flexible fulfillment options matter. In fact, a recent analysis concluded that <\/span><span style=\"font-weight: 400;\">micro fulfillment<\/span><span style=\"font-weight: 400;\"> could reduce order-related costs by as much as 75%<sup>1<\/sup>.<\/span><\/p>\n<h2><strong>Fixing Inventory Management Problems<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">An inefficient fulfillment process is one of the fastest and most common ways to lose business<\/span><span style=\"font-weight: 400;\"> and decrease <\/span><span style=\"font-weight: 400;\">customer satisfaction<\/span><span style=\"font-weight: 400;\">, especially for larger brands. Common problems within these operations include:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Inventory<\/b><b> Discovery<\/b><span style=\"font-weight: 400;\"> \u2013 A disorganized <\/span><span style=\"font-weight: 400;\">warehouse<\/span><span style=\"font-weight: 400;\"> or an uncommunicative third-party <\/span><span style=\"font-weight: 400;\">logistics<\/span><span style=\"font-weight: 400;\"> provider can make it very difficult to locate specific pieces in <\/span><span style=\"font-weight: 400;\">inventory<\/span><span style=\"font-weight: 400;\">. An inefficient item location process can lead to delays and slow down delivery times.\u00a0\u00a0\u00a0\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Damaged or Incorrect Items<\/b><span style=\"font-weight: 400;\"> \u2013 If a <\/span><span style=\"font-weight: 400;\">customer<\/span><span style=\"font-weight: 400;\"> receives the wrong item or a damaged item, that could create a sense of distrust towards the company they purchased the item from, and could even result in them taking their business to a competitor. Proper <\/span><span style=\"font-weight: 400;\">inventory management<\/span><span style=\"font-weight: 400;\">, storage protection, and packaging combined with thorough item inspection can prevent such issues from occurring.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Shipping Notifications<\/b><span style=\"font-weight: 400;\"> \u2013 Customers have grown accustomed to being able to monitor their shipment at all times, knowing both exactly where it is and exactly when to expect it. A lack of transparency around order status can lead to <\/span><span style=\"font-weight: 400;\">customer<\/span><span style=\"font-weight: 400;\"> dissatisfaction and increased <\/span><span style=\"font-weight: 400;\">customer service<\/span><span style=\"font-weight: 400;\"> calls.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Poor <\/b><b>Inventory Management<\/b><span style=\"font-weight: 400;\"> \u2013 A fulfillment center that does not keep close tabs on its 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.<\/span><\/li>\n<\/ul>\n<h2><strong>How Parcel Lockers Can Help<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">However your <\/span><span style=\"font-weight: 400;\">eCommerce<\/span><span style=\"font-weight: 400;\"> company chooses to operate this aspect of its business there&#8217;s a solution that can streamline the process in-store or at convenient delivery hubs in retail storefronts.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">That fulfillment option is known as Buy Online, Pick-up in Locker (BOPIL\u00ae) by<\/span><a href=\"\/en-ca\/\" target=\"_blank\" rel=\"noopener\"> <span style=\"font-weight: 400;\">Parcel Pending<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><span style=\"font-weight: 400;\"> When figuring out <\/span><a href=\"\/en-ca\/blog\/improving-the-in-store-experience\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">how to improve in store experience<\/span><\/a><span style=\"font-weight: 400;\">, taking advantage of providing this offering can increasingly help your business.<\/span><span style=\"font-weight: 400;\"> With this technology, customers place their order online, the fulfillment center ships their order to a nearby brick-and-mortar store, and places the item(s) in the <\/span><a href=\"\/en-ca\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">electronic locker<\/span><\/a><span style=\"font-weight: 400;\"> for the customer to retrieve at their convenience.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Customers are increasingly likely to use a <\/span><a href=\"\/en-ca\/blog\/smart-parcel-delivery-in-2021\/\" target=\"_blank\" rel=\"noopener noreferrer\"><span style=\"font-weight: 400;\">smart parcel delivery<\/span><\/a><span style=\"font-weight: 400;\"> system because:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Their orders are securely stored (unlike home deliveries)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Shipping costs are significantly reduced or completely eliminated<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Delivery time is reduced to a matter of hours as opposed to several days<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Customers are instantly notified by text or email when their order is ready<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Allows for express, contactless order pick-up in less than 2 minutes<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Many retail stores prefer this method, as it optimizes <\/span><span style=\"font-weight: 400;\">order fulfillment<\/span><span style=\"font-weight: 400;\"> by:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Reducing shipping costs and times associated with home delivery<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Providing a convenient, self-service BOPIS option for customers<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Improving order status transparency with full chain of custody visibility<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Indicating which orders have been picked up and which items can be returned to the shelf<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Keeping orders safe and secure until customers are ready to retrieve them<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Retailers using BOPIL have saved an average of<\/span> <a href=\"\/en-ca\/blog\/omnichannel-retail-strategy-bringing-online-shoppers-to-brick-mortar-stores\/\" target=\"_blank\" rel=\"noopener noreferrer\"><span style=\"font-weight: 400;\">45 hours<\/span><\/a><span style=\"font-weight: 400;\"> per month that were previously spent managing BOPIS orders<\/span><span style=\"font-weight: 400;\"><sup>2<\/sup><\/span><span style=\"font-weight: 400;\">. Most importantly, with BOPIL, 61% of customers make an incremental purchase just by virtue of entering the store!<\/span><\/p>\n<h2><strong>Efficient Fulfillment Is Key<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">An efficient, streamlined fulfillment center is critical to a retailer&#8217;s success. Disorganization and lack of oversight can lead to significant delays and slower shipping times. If you want to improve your fulfillment services, smart<\/span> <a href=\"https:\/\/www.parcelpending.com\/en-ca\/markets\/retail-parcel-lockers\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">retail lockers<\/span><\/a><span style=\"font-weight: 400;\"> are an easy, scalable method to streamline the order fulfillment process and keep customers happy. Lockers also help companies realize significant savings by reducing the cost of last-mile delivery.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Looking for a service to help optimize your <\/span><span style=\"font-weight: 400;\">fulfillment process<\/span><span style=\"font-weight: 400;\">? Learn more about our <\/span><a href=\"https:\/\/www.parcelpending.com\/en-ca\/markets\/retail-parcel-lockers\/\" target=\"_blank\" rel=\"noopener noreferrer\"><span style=\"font-weight: 400;\">retail locker solutions here<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><b>Sources:<\/b><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Devanesan, Jon. TechHQ. <\/span><i><span style=\"font-weight: 400;\">Retailers turn to the micro fulfillment center to keep supply chains flowing<\/span><\/i><span style=\"font-weight: 400;\">. (2021, February 22).<\/span><a href=\"https:\/\/techhq.com\/2021\/02\/retailers-turn-to-the-micro-fulfillment-center-to-keep-supply-chains-flowing\/\" target=\"_blank\" rel=\"noopener noreferrer\"> <span style=\"font-weight: 400;\">https:\/\/techhq.com\/2021\/02\/retailers-turn-to-the-micro-fulfillment-center-to-keep-supply-chains-flowing\/<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Reidel, Kate. Parcel Pending. <\/span><i><span style=\"font-weight: 400;\">Omnichannel Retail Strategy: Bringing Online Shoppers to Brick &amp; Mortar Stores<\/span><\/i><span style=\"font-weight: 400;\">. (2020, June 1).<\/span><a href=\"\/en-ca\/blog\/omnichannel-retail-strategy-bringing-online-shoppers-to-brick-mortar-stores\/\" target=\"_blank\" rel=\"noopener noreferrer\"> <span style=\"font-weight: 400;\">\/en-ca\/blog\/omnichannel-retail-strategy-bringing-online-shoppers-to-brick-mortar-stores\/<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"<p>Third-party logistics (3PL) providers, also referred to as fulfillment service providers, utilize multiple fulfillment centers to help eCommerce retailers complete order processing or order fulfillment for online orders. Below, we&#8217;ll discuss how fulfillment centers operate and why adding a parcel locker solution might be an ideal solution for an eCommerce business or brick-and-mortar retailer to [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[323,324],"tags":[],"class_list":["post-25849","post","type-post","status-publish","format-standard","hentry","category-blog-en-ca","category-blog-retail-en-ca"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.2 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>What is a Fulfillment Center? | Parcel Pending<\/title>\n<meta name=\"description\" content=\"Fulfillment centers play a vital role in the delivery process but what is a fulfillment center? 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