Fulfillment service or… how to ensure a “direct route” of goods from the warehouse to the client

Fulfillment services is a set of actions that are performed by a third-party company to process orders from online stores or brands. Fulfillment includes the entire logistics cycle, from receiving goods to the warehouse to delivery to the customer, as well as after-sales service support. This allows a business to outsource all or part of the tasks involved in logistics, packaging and delivery, while focusing on marketing and sales.

Main stages of fulfillment:

• reception and storage of goods: A fulfillment operator receives goods from the seller and places them in their own warehouse. It is important that goods are stored in the correct conditions, especially if they are perishable or fragile items.
• order completion: When an order arrives, the fulfillment operator collects the necessary goods, checks them and prepares them for shipment.
• package: Fulfillment services often include custom packaging to match the brand. Operators can offer branded packaging, product protection and other solutions to improve customer experience.
• shipping and delivery: Fulfillment partners work with courier services and postal operators to send packages to customers. They can offer different shipping options: standard shipping, express shipping, and international shipping.
• returns processing: Fulfillment operators are responsible for receiving, checking and refunding returned goods. This is an important part of the service, which increases convenience for buyers and facilitates the work of the seller.

Advantages of fulfillment for business:

• reduction in logistics costs: with the help of fulfillment, you can save on warehouse rental, employee wages and operating costs.
• process optimization: fulfillment partners have established processes and technologies to quickly process orders, which helps minimize errors and speed up delivery.
• increased scalability: if order volumes increase sharply, the fulfillment partner helps cope with the load without the need to quickly hire new employees or expand the warehouse.

Fulfillment services are especially useful for online stores, startups, and brands that want to enter a new market or scale their business while maintaining high quality service and optimal delivery times.

Fulfillment becomes mandatory for a business when the company’s internal resources cannot cope with the tasks of storing, processing and delivering orders. Here are some examples of businesses for which fulfillment is especially important:

• online stores with high order frequency: Stores with large assortments, high traffic, and a steady stream of orders (e.g., electronics, cosmetics, home goods) often need fulfillment to meet delivery deadlines and standards.
• DTC (Direct-to-Consumer) brands: Brands that sell directly to the end consumer (e.g. cosmetics, clothing, accessories) often use fulfillment to maintain high delivery speeds and quality service, which is critical to customer loyalty.
• subscription services: Product subscription services (e.g. beauty boxes, craft kits, food) need a systematic process for storage, packaging and shipping to send completed kits to customers at a set time each month.
• companies with international delivery: businesses operating in several countries resort to the services of fulfillment partners to quickly deliver orders to different regions, complying with all the rules of international logistics and minimizing customs difficulties.
• marketplaces and multi-brand stores: Participants in marketplaces and multi-brand online platforms such as Amazon, OZON, Yandex.Market often use their fulfillment services, since marketplaces require strict adherence to delivery times and packaging standards.
• startups and young brands: Smaller companies looking to scale quickly can outsource fulfillment to save on warehouse rental and staffing costs. This is especially important for startups with inconsistent sales volumes, since fulfillment operators allow you to flexibly increase or decrease service volumes.
• businesses with large goods: Sellers of furniture, household appliances or sports equipment often need third-party storage and delivery, as such goods require specialized equipment and transportation, which is not always possible to organize in-house.

For these businesses, fulfillment provides stable quality of service, optimization of logistics processes and competitive delivery times.

Fulfillment — issue price

Fulfillment can indeed be expensive, but for many businesses it is a worthwhile investment. The cost of fulfillment depends on many factors:

• volume and frequency of orders: the more orders and the higher the frequency, the more profitable the fulfillment service is, as it allows for economies of scale and process automation.
• type of goods: storage and handling of fragile, large or perishable goods will cost more, as they require special conditions.
• delivery geography: International shipping and dealing with remote areas can significantly increase costs as logistics costs increase. But fulfillment partners often have agreements with courier services, which allows businesses to save money.
• the need for branded packaging and additional service: If you need custom packaging, personalization or after-sales service, this also increases the cost.
• selection of tariffs and conditions from different providers: Fulfillment companies offer different payment models—a flat rate per order, a percentage of the order total, or separate fees for warehouse, packaging, and shipping.

Cost justification

For businesses with a high load, constant traffic and large volumes of orders, fulfillment is justified. It avoids the costs of rent, employees and logistics processes by outsourcing these tasks to professionals. For small companies, startups and DTC brands, fulfillment is also beneficial because it allows you to focus on growth and marketing without investing resources in your own logistics processes.

In general, fulfillment allows you to minimize errors, speed up delivery and improve customer service, which pays off through increased repeat purchases and customer loyalty.