Warehouse is a place that keeps and stores your inventory and distributes the merchandise to the designate retail/store. In today market, warehouse function has been evolving from traditional way to multifunctional add on service and it called “Fulfillment warehouse”.
What is Fulfillment warehouse?
Fulfillment warehouse are typically used by companies to store items, take orders, build orders, and ship orders to customers. Companies such as Amazon and eBay employ fulfillment to process their online order.
Once the order has received, fulfillment staff will pick and pack the item, arrange shipping to customer by using small parcel courier service such as Fedex or UPS. Sometimes Fulfillment warehouse can simply describe as the act of distribution or the shipping function on behalf of seller.
According to JOC report, theUS largest home improvement supplier Home Depot will be trying to use fulfillment strategy this year. Because of Home Depot products is different, the fulfillment process may vary in somewhat. With the same concept, consumer place the order online, orders will be process and shipped directly from fulfillment warehouse to customer’s address or construction side. The delivery method will be different as home improvement material usually packs in pallet or crate. Therefore, it only can be deliver by LTL service provider. That’s good news for LTL carriers as Home Depot reroute from store deliveries to directly deliver from centralize fulfillment warehouse. As a result, it cut the cost and time from by distribute from warehouse to retail then delivery to customer.
Many new businesses start out performing their own order fulfillment process while the business is small, as this can be cost-effective and a good choice early on when few orders are being handled. As the business grows, the amount of time that the fulfillment process takes for the company and its employees may become too great, and less cost effective. When business has reached a point where company could make more profit focusing on other aspects of the business, like product research and development, or sales and marketing, it may be a time to outsourcing the work to fulfillment warehouse to handle the massive volume of orders.
The Advantage of Fulfillment warehouse:
Fulfillment warehouse typically have thousands of square feet of warehouse space. Companies that store their own inventory have additional expenses, such as staff and utilities. A fulfillment company distributes this expense through storage fees to multiple clients. This usually results in a storage fee that is less than an individual company would pay to do it in-house. Storage fees vary by Fulfillment Company, but normally charge per item fees, per pallet fees, or dimensional storage fees based on volume required.
The disadvantage of fulfillment warehouse:
Fulfillment warehouse act as the shipping center for client companies. If there is an error in shipping process or poor handling procedures, the client company receives the bad reputation, not the fulfillment warehouse.