Fulfilment centres: Everything you need to know incl. costs and benefits
In this article, you will learn how Fulfilment Centres in the UK operate and whether it is worthwhile to outsource your logistics.
Imagine your online shop in the UK is experiencing significant growth, with an increasing influx of orders. The packages are starting to accumulate, and you realize that managing the shipping process alongside your daily operations is becoming overwhelming. You and your team are already working extra hours to dispatch all the packages as quickly as possible. The order volume is no longer just a blessing; it has become a challenging bottleneck.
If you find yourself in a similar situation, considering a Fulfillment Centre in the UK could be the solution to provide much-needed support. Discover everything you need to know about Fulfillment Centres and how they can benefit your business in the UK!
- What is fulfilment & what are (3PL) fulfilment providers?
- What is a fulfilment centre?
- Here’s what a fulfilment centre will do
- What's the difference between a warehouse and a fulfilment centre?
- How does a fulfilment centre work?
- The benefits of using a fulfilment centre
- How much does using a fulfilment centre cost?
What is Fulfilment and what are Fulfilment providers?
- The term "fulfilment" refers to the completion of all steps that occur after an order is placed in an online shop. This includes the entire order processing, including logistical steps such as order acceptance, storage, packaging, shipping, and returns management for e-commerce companies.
- A fulfilment provider with its own fulfilment centres takes on precisely these tasks and functions as a dynamic warehouse that processes thousands of orders daily.
Their main goal is to relieve you of all logistical worries so that you can focus on your core business, which is marketing your products. The more your business grows, the more it makes sense to outsource your fulfilment. As the order volume increases, so does the effort required on your part, while the cost-benefit factor improves by utilizing a fulfilment centre.
What is a fulfilment centre?
A fulfilment centre, or fulfillment center, is the central hub in logistics that facilitates the movement of goods from merchants to their customers. These warehouses are specifically designed to take over the logistics processes of e-commerce retailers and efficiently deliver products to customers.
In a fulfilment centre, orders are received, processed, packaged, and ultimately shipped to the customers. Modern fulfilment centres employ automation extensively, saving valuable time and resources and alleviating the workload on companies.
Some logistics service providers opt to utilize external fulfilment centres to handle fulfilment operations for their customers. However, there are fulfilment providers like LOGSTA that operate their own warehouse in the UK, functioning as dedicated fulfilment centres. This approach ensures consistent quality in logistics services across multiple countries. LOGSTA offers 8 proprietary fulfilment locations, forming the core of our global logistics network.
How a state-of-the-art fulfilment centre works
Scenarios in which a fulfilment centre can support you:
- Your online store is growing and the order volume is increasing. The packages are stacking up and the pressure is mounting. Ultimately, you want your customers to receive their orders as quickly as possible so that they are satisfied with your service.
- You'll need to rent additional storage space and hire staff purely to handle the shipping of your products. This entails salaries, insurance, regulations,
- Organising packaging materials and pick-ups and managing returns is very time-consuming and costly.
- You no longer get round to developing new ideas and taking care of your marketing channels, or you have less time and energy for enquiries from your customers.
Here’s what a fulfilment centre will do:
Your products will be received and stored professionally.
Orders will automatically arrive in the fulfilment centre and will be processed.
Orders will be picked – that is, put together and packed – by employees.
Labelled parcels will be handed over to shipping service providers:
Returns: returned parcels will be checked, classified and managed appropriately according to customer requirements.
Fulfilment providers like LOGSTA with their own transport department will also take care of the pallet transport of goods for companies on request – whether from the production site to the customer or to the fulfilment centre.
What's the difference between a warehouse and a fulfilment centre?
Fulfilment centres serve as a flexible hub where goods enter and exit again relatively quickly. The purpose of a fulfilment centre is to process orders from companies’ customers as quickly as possible. It is not designed to store goods on a long-term basis. Thus, the shorter amount of time the products are in the fulfilment centre the better, because this only costs unnecessary storage space. What’s more, a large number of logistical processes take place here that do not take place in a warehouse, such as the packaging and shipping of products.
Conventional warehouses are more static and specialise in the long-term storage of goods. The logistics processes are usually limited to the storage or retrieval of goods and the management of goods.
How does a fulfilment centre work?
The goal of a fulfilment centre is to get online orders from the customers of a webshop to their doorstep as quickly as possible. This requires various processes that intertwine in a fulfilment centre:
- The systems are connected to each other so that the so-called order fulfilment functions and orders are automatically sent from the webshop to the fulfilment centre. Fulfilment providers use modern logistics management tools that continuously synchronise the data.
The LOGSTA Connector, for example, connects all common webshop systems, such as Shopify, WooCommerce or Billbee, in no time at all through prepackaged interfaces. The entrepreneurs then only create the items that need to be stored in the logistics tool and can already deliver their products to the fulfilment centre.
- Of course, a company's inventory must first reach the fulfilment centre. Companies can have the goods delivered themselves or, for example, commission all-in-one fulfilment providers like LOGSTAto pick up their products and take them to the fulfilment centre.
- Employees receive the companies’ inventory and store it in a strategically favourable manner so that the subsequent picking of the products requires as little effort as possible. As soon as an order comes in, the prepared products are packaged and handed over to shipping service providers with their labels ready.
The advantages and disadvantages of using a fulfilment centre:
Fulfilment providers are strategic partners for companies due to their extensive experience and well-established processes, as they ship thousands of parcels every day.
A fulfilment centre can greatly accelerate the processing of your logistics since all processes in the warehouse are designed for maximum efficiency. This leads to greater customer satisfaction as orders are sent out immediately, which, in turn, strengthens your brand.
In addition, fulfilment centres are usually very flexible: whether during peak times around Christmas or during the silly season where nothing is going on – business remains the same. You don't have to hire any additional staff or worry about not keeping up. Your logistics are scalable and simply grow with you.
The disadvantage is that you have less control over the logistics procedures, since the processes in a fulfilment centre, which are often automated, vary depending on the service provider. Customised branding or personalisation of packages is carried out at an additional cost.
Every order that comes in is automatically forwarded, processed and dispatched. You no longer have to worry about anything being overlooked. The fulfilment centre will handle tim—consuming aspects such as:
- Inventory management in the warehouse
- Negotiating favourable rates with shipping service providers
- Packaging, labelling and shipping parcels
- Coordinating with shipping services and customs clearance
- Returns management, incl. classification
- Additional service at LOGSTA: B2B shipments
In the case of very low order volumes or large, bulky products, the entire process can be too laborious or will hardly pay off for you once all costs are factored in. In the case of returns, especially, consultation and precise coordination are often necessary, which can take quite some time.
Time is money. And a fulfilment centre gives you an enormous amount of time to focus on the essentials. Outsourcing your operational logistics means you can focus on marketing and growing your e-commerce store. This allows you to plan things more strategically and to take care of the things that only you and your employees can do. However, you keep a full overview of all your logistics processes.
The disadvantage with this: in the event of a very low order volume, outsourcing to a fulfilment centre can often be more expensive than shipping items oneself. In most cases, it is only worthwhile outsourcing a certain quantity of packages per month. It will depend on the individual case in question. Contact us – together we will find a suitable solution for you.
How much does using a fulfilment centre cost?
If you handle your logistics yourself, you will face various costs and obligations, which are often underestimated. Without taking into account the time involved, these would include:
- Renting storage space
- Using warehouse management software
- The salaries of (warehouse) employees
- Warehouse vehicles, equipment and insurance
- Boxes and packaging materials
- Postage and shipping costs
The fulfilment process itself is highly individual and depends on the products and shipping volume. One major advantage of fulfilment is its scalability. It grows with your business and the increasing order volume. By outsourcing your logistics, you can significantly reduce concerns and fully focus on the growth of your company.
In most cases, it is worthwhile to outsource your logistics as it saves you a lot of time and effort, while the fulfilment center effectively relieves you of the workload. It is best to clarify the specific details with your fulfilment provider.
Typically, as the shipping volume increases, your logistics become more cost-effective due to process optimization, resulting in reduced effort per package.
Fulfilment itself is a very individual process – it can sometimes be even more expensive for you to outsource things. Most of the time, however, it is worthwhile even in that case, because you can save a lot of time and effort, and the fulfilment centre can take a great deal off your hands. It is best to clarify the details with your particular fulfilment provider.
The more you ship, of course, the cheaper your logistics will become, because the optimisation of the processes will result in less outlay per package.
The rule of thumb is:
Aggregate all the logistics costs involved in shipping items yourself and compare these with the costs of using a fulfilment provider – if you arrive at approximately the same price, it is worth using a fulfilment centre.
At LOGSTA, there are no commitments, fixed costs or minimum volumes of parcels that you need to ship per month. What’s more, your goods will be stored at a very reasonable price, and you will only pay for what you use.
Write to us if you are looking for a fulfilment centre – we will find a flexible fulfilment solution that will pay off for you!
Page: What is a Fulfillment Center and why is it important?
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