The industry behind the button
Fulfillment services has come to be known as the "industry behind the button." Have you ever wondered what happens when you click on one of those "Submit Order" buttons when you're web-shopping?
For most of your orders, the company you ordered from will "fulfill" that order for products, samples, or information right from their own warehouses. These warehouses can be located anywhere. Big online marketers (like amazon.com, for example) have warehouses all over the country to make it easy and fast to fulfill your order.
However, many online companies don't have their own warehouses...for a number of reasons. One company may be too small to justify having its own warehouse space. Another may be a startup that simply wants a way to test the market for its products economically and with low risk. These companies want to concentrate on the marketing and selling of their products, not on production, distribution, or administration associated with running their businesses.
Larger companies that already have the warehouse space don't want to waste it on what are called "non-core" items. These are items that are not the main products of the business, but are essential for marketing or sales purposes (informational kits, samples, promotional items ---pens, keychains etc). Other large companies sell "intangible" products and services (e.g., insurance, investments, phone services). They are not set up to deliver "stuff." Yet they need to get their message across with informational literature that you request from them. So, when you request items like these, they often do not come directly from that company's warehouses.
Enter fulfillment services
Peter Drucker, the famed management theorist, says, "Companies are achieving better results organizationally by outsourcing business processes where possible." Each business creates a "value chain," along which it takes an idea, materializes it, and provides a product or service that customers find valuable. There are many processes that take place in order to do this. As consumers, we see only the final product or service. We don't see everything that goes into producing and delivering it.
To run a bakery, you would have to invest in retail space, ovens, counters. Then you would buy flour, sugar, and whatever else you needed to produce breads and cakes. Some of these tasks you can do yourself. Others you'd need help from companies that specialize in that area. For what is not your core business (i.e., baking bread), you would "outsource" those needs. It makes sense because you want to spend your time doing what you do best.
Fulfillment services represents a piece of the value chain for businesses. For a small company (an importer, a webstore, a local company that wants to expand its reach), fulfillment services offers the opportunity to outsource the whole "back end" of its business. The back end includes a whole batch of services. Let's say you are a small company with a few products, and you want to outsource the fulfillment part of your business. What will the fulfillment services company do for you?
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First, they will receive, verify, and catalog your inventory. Then they'll enter it into an inventory system that will actually be "real time," and it will be available on the internet. This means when your customer orders something on the internet, the inventory count will always be correct. This is important for you so that you'll know when to re-order your items. (Your inventory can also be "valuated," so you can figure out your true cost of goods sold.)
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Next, they will help you set up your ordering system. Who will order these items? Dealers? People browsing your site? Registered users? This depends on what your marketing efforts are aimed at. Orders typically can be received by phone, fax, or email. But the most efficient method all around is web ordering. When your customer orders by using the internet at your website, you have all the advantages of a "lights out" ordering system (i.e., no one needs to be there to take the order). Your fulfillment services company will make sure that they help you design just the right order method and shopping cart that works for your company.
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Finally, they will pick, pack, and ship your orders.
These are the nuts-and-bolts aspects of fulfillment services companies. But there's more.
What are the benefits of using fulfillment services?
Fulfillment service companies are professional 3rd party distributors. Outsourcing this part of your business, whether it's your actual product or a non-core piece of literature can offer many benefits.
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If you're outsourcing the ordering and distributing of your main product line, you get to spend more time working on bringing in business. You can concentrate on product innovation, marketing, and sales; and leave the order fulfillment to professionals who will seamlessly integrate it with the rest of your business. Your customers will see it all as one company.
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If you're outsourcing fulfillment of customers' requests for items that contain a "message" about your business (literature, kits, samples, promotionals), you can devote your time to the design of these items without needing to worry about delivering them.
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Your inventory will be accurate and up to date.
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Your orders will go out quickly and accurately.
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You can decide to have email notification for anyone in the process when any inventory or ordering event occurs. For example, if you need to be notified when inventory is received, you will be sent an email whenever this occurs. If your customers need to be notified when an order is shipped, they will be sent emails when this happens.
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Most importantly, it is simply more economical for many companies to outsource fulfillment than it is for them to do it themselves. Fulfillment service companies operate efficiently, use powerful industry software, and often have good relations with shipping partners. All of these economies are passed along to you.
Read more...
- Take a look around the rest of the website. See what other kinds of people are interested in fulfillment services. Who knows? Maybe you'll see an opportunity for yourself.
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