With the rapid development of online commerce, many entrepreneurs are faced with the question of how to effectively organize the logistics of their online business. Renting premises, hiring staff, managing inventory – all of this requires significant costs. Fortunately, there is a solution to avoid these complications – fullfillment for an online store.
What is fullfillment?
Fullfillment is a set of logistics services that includes receiving, storing, processing, packing and shipping products to customers. In fact, fullfillment implies outsourcing all warehousing and logistics operations to a specialized firm – a fullfillment operator.
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An online store delivers its products to the warehouse of a full-field provider.
When an order is placed on the store’s website, this information is passed on to the warehouse owner.
The employees find the necessary goods, complete the orders, pack them and hand them over to the delivery service.
Thus, the entire process takes place without your participation. Fullfillment gives online retailers the opportunity to concentrate on their core business – sales and promotion – and delegate all the “rough” work to professionals. This is especially important for small and growing companies that find it unprofitable to keep their own warehouse and logistics staff.
Why do you need fullfillment for an online store?
This set of services provides online retailers with a host of benefits. In particular, it:
Saves time. By outsourcing routine tasks, you free up time for more important tasks. While the outsourcer handles logistics, you can focus on marketing, assortment management, sales analysis and scaling. Delegating logistics to professionals is an opportunity to channel energy into brand development and audience engagement.
Reduces operating costs. Such centers serve many people at once, which helps them optimize costs for rent, equipment and staff. You only pay for the actual services rendered, and the economies of scale only make the cost more favorable compared to organizing logistics in-house.
Expands the geography of sales. Working under this scheme will help you quickly and cost-effectively start selling products in other regions and countries. By locating your warehouse closer to your customers, you will be able to reduce the time and cost of transportation.
Improves the quality of service. Modern full-field centers use WMS, barcoding, scanners and other technologies for fast and error-free operation. This minimizes the risks of oversorting, damage or loss of products while orders are being generated. And integration with your website gives you access to up-to-date stock data and shipment status for each order in real time.
Increases the speed of delivery. Such warehouses are often located in close proximity to sorting centers and transport hubs. Some even cooperate directly with courier services by locating post offices on their premises. This gives them the opportunity to transfer orders for shipment as quickly as possible and reduce the transportation time to 1-2 days.
Gives you the ability to easily scale your business. When you handle your own logistics, growing orders can be a real challenge. Finding lost parcels, packing, dealing with claims – all of this takes up a lot of time and energy that could be spent on growth. Whether you have 10 new orders a day or 1000, your “partner” can handle any volume without loss of quality. Our professional team and fine-tuned approach allow us to quickly handle even peak loads during the sales season or before the holidays.
Available to businesses of any size. In the past, fullfillment was considered the privilege of large companies with large turnovers. But today this service is available to small companies and even sellers of single goods. Modern fullfillment centers work on the principle of “you only pay for what you use”. This means that the cost is directly related to the amount of stored goods and shipped deliveries. This model makes it possible to use fullfillment even with small volumes (if, of course, the product margin allows). This means that practically any online store can outsource part of its tasks.
Are there any downsides to working with a full-field operator?
Less control. By outsourcing logistics, you partially delegate control over the entire process of interaction with the client. If your partner makes a mistake or delays delivery, the claims will in any case be addressed to you as a seller. To prevent this, you should choose a reliable partner with a good reputation and clearly specify the areas of responsibility in the contract.
Risk of loss or damage to property. When stock is transferred to a third party, there is always the possibility of damage or loss. However, serious fullfillment companies try to minimize such risks through strict quality control, automation and cargo insurance.
Additional costs. You will have to pay for services, and these costs should be taken into account in pricing. In addition to basic operations, there may be separate charges for additional services such as labeling goods, sending SMS notifications to the customer about the status of the order, etc. Carefully study the price list and calculate the economics to make the costs worthwhile
In what instances does fullfillment work well?
When starting a project. If you are just starting online sales, it is quite difficult to predict demand and the volume of work. In these circumstances, it is too risky and costly to rent premises, hire staff and build all the processes from scratch. It is more sensible to entrust it to professionals who will take care of all your worries.
When scaling up a business. Entering new regions and countries is always fraught with logistical difficulties. Looking for warehouses, recruiting a team, setting up everything from scratch – long and costly. A full-field operator already has all the necessary infrastructure and will quickly integrate your online store into its work.
With high turnover. The more customers a company has, the more profitable it is for it to outsource control over logistics. Thus, you will not have to worry about overloading the logistics department when the number of sales increases. In addition, when you work with a full-field service, you only pay for processed orders.
For trading on marketplaces. If you place goods on marketplaces, you simply do not need your own logistics. It is much easier to use services built into the platform or to work with third-party operators who are already integrated with the site.
For selling uncomplicated products. Fullfillment is perfect for trading items that do not require special storage conditions, pre-sale preparation or other preparation. If your assortment is clothing, accessories, household appliances, cosmetics or stationery, feel free to outsource logistics.
What kind of fullfillment models do online retailers use?
Own logistics. In this case, the online store organizes the delivery of products to the client using its own resources. This approach is suitable for small projects with a limited number of orders, or for large companies that already have all the processes in place. On marketplaces, this scheme is called DBS (Delivery by Seller) – when the seller himself brings his products to the site’s warehouse.
Delegation of logistics to an operator. Here, all order control functions are delegated to a specialized operator. The products are delivered to the contractor by the seller itself or its suppliers, and then the operator takes over further processing. On marketplaces, this model is called FBO (Fulfillment by Operator).
Partial fullfillment. Some online sellers use a hybrid scheme, where they take over part of the logistics operations and outsource part of them. For example, they pick and pack their customers’ purchases themselves, while the delivery is handled by a full-fillment operator. This approach is called FBS (Fulfillment by Seller).
Combination model. This is the best option if you need to apply different channels of communication with your customers, or if you sell different product categories. Here, each product group or direction is handled according to its own model – FBS, FBO or your own courier service. For example, you deliver large items yourself, while small items are sent to a full-field operator.
What services does a fullfillment service for an online store typically include?
It is a complex service that includes several separate processes. Next, let’s break down the main tasks of fullfilment, which are usually delegated to the operator.
To ensure the quality of product acceptance, the full-field partner allocates specially trained staff. These specialists carefully check each shipment for compliance with the delivery notes, control its integrity and verify the actual number of items received against the declared quantity in the documents. If any discrepancies or damage is found, the goods are not accepted until the situation is clarified with the supplier.
Acceptance can take a considerable amount of time, as each item is checked individually, regardless of the volume of delivery. This is necessary to ensure accurate accounting and quality control. Each item is labeled with a unique barcode to track its movement and location in the warehouse.
Storage of goods
After receipt, the products must be properly placed and provided with proper storage conditions. Special pallets (pallets) are used for this purpose. Storage fees are usually charged based on the number of pallet spaces occupied.
Before transferring to storage, it is important to take into account that there are legal restrictions on the remote sale of certain types of products – tobacco products, alcohol, medicines, some jewelry. Therefore, they also cannot be stored in the operators’ warehouse.
As for foodstuffs, they can be stored, but provided that they have individual packaging and quality certificates. At the same time, food that requires packaging and accurate weighing is usually not accepted.
Order picking
The warehouse staff collects the goods for each order received, packs them and prepares them for shipment. If necessary, they can also carry out additional picking from other warehouses. The cost in this case is calculated based on the number of items to be processed.
The presence of barcodes applied during acceptance significantly speeds up the process, increases its accuracy and reduces the probability of error. If there is a need for additional verification of goods for their performance and integrity, the fee is charged separately.
At the request of the owner of the online store, the operator can also add to the parcels of various bonuses for customers, including product samples, booklets, discount coupons, etc.
Delivery
Often, fullfillment services cooperate with large delivery services. In Ukraine, these are usually “Novaya Pochta” and “Ukrposhta”. The operator’s courier service picks up the prepared orders and transports them to the terminal of the transportation company for further shipment.
This scheme helps online stores to speed up the transportation process for customers and get rid of the need to stand in line at the postal operator’s office to hand over the goods and receive money.
Accepting payments
Often, full-field operators become payment agents, and the money received from customers is first credited to their current account. On the one hand, this frees you from the need to use online cash registers and simplifies payment acceptance. On the other hand, it can take quite a long time for money to be transferred from the full-field operator to your account.
Some service providers make such transfers only 1-2 times a month, which can create cash gaps (especially if you do not have a lot of working capital to purchase new products).
Acceptance of payment usually follows the following scheme – a fullfillment company accepts money as a payment agent, then deducts the cost of its services from the received amount and transfers the remaining proceeds to the store’s account.
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Serious operators have their own accounting department, which will be able not only to prepare reports for state authorities, but also to provide detailed financial reports for you.
Accepting returns
Often the list of full-field services for online stores includes the acceptance of returns. Depending on the contract with the operator, the products may be sent back to you or directly to the contractor’s warehouse.
If returns are processed by a full-field company, its employees check the condition of the products, determine the reason for the return and decide on further actions (return to the shelf, sending to the supplier, markdown, etc.).
Top 6 best fullfillment operators in Ukraine
Below we have collected 6 most popular fullfillment services on the Ukrainian market with their advantages, disadvantages and terms of cooperation.
“Nova Pochta”
The fullfillment service from Ukraine’s leading postal service was launched back in 2022. In a short time, Novaya Pochta opened 5 fullfillment centers for online stores in different cities of the country. Among the main advantages:
Work 7 days a week without weekends;
Shipment on the day of receipt of the order if there is a branch of “New Post” in the city;
Personal support manager;
International freight transportation with no weight restrictions;
A wide list of additional services – product cancellation and disposal, labeling, rejection handling, etc.
NP takes care of the entire logistics process – from receiving (from you or directly from the supplier), to product storage and inventory. However, all property in the warehouse must have unique barcodes.
Among the significant disadvantages is the lack of integration with CRM systems, trading platforms and even website builders. All orders will have to be added to the system manually.
Rozetka
The Rozetka fullfillment service is aimed exclusively at sellers of the marketplace of the same name. All management here is carried out through the seller’s cabinet on the Rozetka website. Main features of the platform:
Available only for sellers trading on the marketplace itself;
Free delivery to all Rozetka delivery points in Ukraine;
Automatic shipment of orders immediately after receipt (without the need for manual confirmation);
The centralized warehouse is located in Brovary.
To start cooperation with Rozetka, the seller needs to deliver his goods to the company’s warehouse. However, the service also has some limitations:
It does not support working with other marketplaces or independent stores;
It is not possible to return goods from a customer to the Rozetka warehouse;
Not all product categories are suitable for fullfilment (do not take large appliances, furniture, fragile items, etc.).
“Unipost”
It is already an independent operator providing a full range of turnkey full-field services. Its own CRM-system “Unipost” is available for customers. Delivery of products from the warehouse is possible with the help of “New Post”, “Ukrposhta” and Rozetka Delivery services. The warehouse is located in Petropavlivske village, Kyiv region.
Kasta
One of the largest Ukrainian marketplaces in the fashion segment, which also provides full-field services for its sellers. Customers of the platform have access to:
Modern Class A warehouse space of over 20000 m², designed for online and offline trading in B2C and B2B segments;
Fast processing of requests – up to 20000 in 24 hours;
No subscription fees – the client pays only for the actual services rendered.
Thanks to the impressive capacity of its center, Kasta is ideal for online stores with a large assortment and number of orders. Smaller merchants will also benefit from the absence of monthly fees.
Sender
The service started in 2018. This is another company that provides a full list of services. Among its advantages are worth highlighting:
A convenient web-format cabinet and a separate application for smartphones, partially replacing CRM;
Good integration with “Good Shop” – for this CMS both automatic order receiving and updating of balances are supported;
Sending orders received before 16:00, the same day;
Cooperation with the main delivery services: “New Post”, “Ukrposhta”, Meest Express, Rozetka Delivery;
Own delivery service in Kiev;
A wide range of additional services – free labeling, SMS about order status for customers, work with returns, printing of receipts and warranty documents.
FLF
FLF is primarily focused on high speed of processing incoming orders. Thus, the website states that it takes no more than 15 minutes from receipt of an order to its transfer to delivery. This becomes possible due to the presence of the “NP” branch at the FLF warehouse in Vinnytsia region. The operator also boasts such advantages of cooperation:
Possible sales of goods from the warehouse directly through the social network TikTok (commission 10% of the sales amount);
Uninterrupted operation of the warehouse even during power and internet outages;
Printing of warranty cards;
Installation of anti-theft sensors.
How to choose a fullfillment operator for an online store?
Urgency of delivery. The sooner the buyer has the purchase, the better. Ask the operator about the average delivery time in your region and compare with competitors.
Pricing. All other things being equal, give preference to a full-field center with more favorable rates. However, do not chase the lowest price at the expense of service quality. Find the optimal balance.
Geographical location. It is highly desirable that the warehouses are located close to you. This will speed up deliveries to the warehouse and reduce your transportation costs. Find out if the fullfielder has a representative office directly in your region.
Money transfer schedule. When an operator becomes your payment agent, it is very important to find out how often he transfers money for finished orders. Ideally, if the transfers are made every day. Find out this point in advance.
Experience and reputation. Study reviews on the Internet, ask acquaintances. Negative feedback is a serious reason to consider whether it is worth contacting such a contractor.
