How fulfillment provides a reduction in logistics costs

Product services are an increasingly common way to attract consumers to your brand. A sizable portion of them do not want to pay a large sum of money for an item at one time, and prefer to take advantage of the monthly subscription financing option. In exchange for the fee, they get access to content or items that are at their disposal for a certain period of time. The same is true of fulfillment, which is a comprehensive service that helps run an online store.

What is fulfillment?

We covered it in the simplest terms in the introduction, now it’s time for a little more explanation. Fulfillment, so to speak, is the transfer of a large part of the responsibilities of an online store owner to an external subcontractor. This one can outsource, first of all, the warehousing of his products, as well as order picking and shipping. Some companies also offer complete customer service from the moment the order is placed. Thus, we are talking here not only about order picking and shipping, but also about accepting returns and complaints.

The key to the success of fulfillment is that the price of such a service depends primarily on the turnover of the entity. If the amount of shipped and stored goods is small, also the price of fulfillment service will not be high – because you pay for the time spent and the warehouse space occupied. This allows you to shift from the shoulders of the owner of the online store the responsibility for hiring warehouse workers, their recruitment, as well as supervision of the entire logistics process.

Fulfillment is a saving?

The answer to this question can be basically in one word: of course! First of all, the entrepreneur incurs logistics costs proportional to how his business prospers. Thus, he does not need to maintain employees and rent warehouse space all year round, if in principle he would only need the help of others for a certain period of time. Fulfillment makes it possible to change fixed costs to proportional turnover, giving greater financial stability.

Indirect savings are also brought by the mere fact that the entrepreneur can significantly relieve the burden by transferring logistics processes to a subcontractor. By doing so, he will benefit himself in many ways, including by allocating free time to create a further strategy for the company’s development or its marketing activities.

That’s why fulfillment is a cheaper solution

The very principle of fulfillment and cost competitiveness of such a solution is extremely simple. A huge logistics center with dozens of employees and advanced equipment provides specialized services to several or even dozens of entities. They all, in the cost of the service, contribute to the maintenance of the entire facility, as well as earnings for the owner.

In opposition to this is, of course, the independent maintenance of employees and warehouse by the owner of, for example, an online store. However, this one can make a lot of mistakes, especially in the initial phase of his business. Large companies have specialized employees in their ranks, who have the relevant know-how. This is especially lacking for beginners, especially these days, where opening an online store is basically a dozen minutes of clicking on the screen.