Fulfillment is an essential concept in the logistics industry and is mentioned quite a lot during the time when Vietnamese e-commerce is on the rise. So what is fulfillment service? How does a fulfillment warehouse operate? And what is the difference between a fulfillment warehouse and a regular distribution warehouse that you usually see? Let's join OCIMI to find the answer in the article below!
What is fulfillment?
A fulfillment center is a part of the supply chain and serves as the hub for all logistics processes needed to get a product from the seller to the customer. It handles the entire order fulfillment process, ranging from order picking and processing to packaging and shipping. A fulfillment center exists to get online orders to customers in a timely fashion and relieve ecommerce companies of managing this crucial-yet-challenging process.
The Vietnamese e-commerce boom is powering the rise of fulfillment services, which streamline online order processing for businesses. As transactions shift online and buying habits become faster and easier, order volumes surge. Take Amazon, for instance, which averages a staggering 35 orders per second! This puts immense pressure on businesses, particularly in e-commerce, to manage their warehouses efficiently and deliver exceptional customer service. Fulfillment services come to the rescue by alleviating operational burdens, especially for those juggling high order volumes, tight processing times, and increasingly demanding customer needs. In essence, fulfillment is a specialized warehouse operation tailored for B2C businesses, handling large-scale order processing with efficiency, speed, and precision.
How do fulfillment centers work?
Fulfillment center operations consist of the work that helps get online orders to your doorstep — also referred to as the order fulfillment process. An ecommerce business’s inventory is stored strategically in a 3PL’s fulfillment center in preparation for fulfilling customer orders. The fulfillment process typically involves stages such as sourcing, storage, order processing, packaging, and shipping products to the customer's address.
1. Receiving and inspecting goods
The receiving and inspection process is the first important step in the fulfillment order processing process. When receiving goods, warehouse staff will check the following information:
Product name (batch name)
Quantity
Size
Condition (good/bad)
This process ensures that the goods are received in the correct type, quality, and quantity for storage and delivery to customers.
2. Storage
The storage process is the next important step in the fulfillment process. This process ensures that goods are stored in a way that is organized and easy to find and retrieve when orders are placed. For businesses using professional fulfillment order processing solutions like VietFul, the storage process will be calculated and automatically supported by strategies to suggest the most appropriate location for existing e-commerce items. In addition, the Vietful system also provides the ability to accurately track the location of each product and SKU in the warehouse in real time to meet quickly and accurately the following requirements:
Searching and retrieving: The system assigns a reasonable product arrangement location for warehouse staff to easily find the necessary goods when there is an order.
Optimizing warehouse space: Maximize the CBM space in the warehouse to hold as many goods as possible.
3. Order processing
When an order is placed, the fulfillment warehouse will be updated with all information such as: customer name, shipping address; product information, quantity of products, delivery date.. to start performing order processing tasks. At that time, warehouse staff will search and pick goods according to the order. However, if warehouse staff use the fulfillment order processing system to support the search and pick process, the system will provide information about the location of each product in the warehouse, helping warehouse staff to quickly and accurately find goods without errors to proceed with the usual packing process.
4. Shipping:
After being packed and checked for valid information, the goods will be transferred to the transportation department to be delivered to the final customer address. At the previous stages and the transportation stage, the status of goods needs to be updated continuously by the fulfillment service providers to support businesses and e-commerce platforms to ensure the shopping experience of customers.
What is the difference between a traditional distribution warehouse and a fulfillment center?
Customers
Typically, warehouses operate in a business-to-business (B2B) model.
Fulfillment centers typically follow a business-to-customer (B2C) model.
In other words, warehouses serve businesses primarily, while fulfillment centers serve customers directly.
Storage time
For fulfillment centers, storing and processing goods for retail e-commerce businesses is very common. However, the main goal of a fulfillment center is to quickly turn over inventory time. This means that fulfillment centers need to process orders and ship goods quickly to ensure the optimal storage cost.
In addition, most fulfillment centers are typically smaller than traditional distribution warehouses, but they require more detailed and complex equipment and management systems to operation. Therefore, many suppliers/retailers will proactively send more goods to ensure that fulfillment centers always have enough inventory before orders are placed.
Especially during flash sales, inventory must be sufficient in all situations when the number of orders suddenly surges at a given time. Running out of stock during Flash Sale will certainly bring unwanted experiences to all customers and cause great losses to the businesses involved. Therefore, the factors of storage time and order processing speed at fulfillment centers are very important.
Operating activities
Unlike traditional distribution warehouses, fulfillment centers manage more complex and diverse categories and SKUs. Therefore, the flow of goods in fulfillment centers is constantly moving and includes many complex processing activities and operations. Fulfillment center operators often provide a range of services in their order fulfillment centers, including: Receiving goods for storage, Processing orders, Labeling support, Packing, Shipping goods, etc.
In contrast, traditional distribution warehouses primarily focus on maintaining inventory to meet demand and distribute large B2B lots between partners in the supply chain.
If the goal of your business is to store and preserve goods for a long period of time, and at the same time, it has sufficient resources in terms of capital, land, personnel, etc. to manage inventory, then you should choose Warehouse.
If the business's operations need flexibility, such as fast inventory turnover, responding to orders for customers in many different locations at the same time, then consider the services provided by fulfillment centers/centers. This can also be a convenient option for shop owners who do not have a large capital, do not take much time to manage the storage of goods.
If you are racking your brains about the need to manage multiple different sales channels and do not have any experience in logistics management, order processing, warehouse, transportation, etc., especially in the operation of fulfillment center services, OCIMI will certainly be a valuable partner for you.
OCIMI is the consulting partner and exclusive implementation unit of VietFul in Vietnam. OCIMI is proud to have a team of professional staff with over 10 years of experience in the field, who can help your business optimize the fulfillment process in e-commerce in a comprehensive way.
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