Extrans Global - What is Fulfillment Service?

🔹What is fulfillment service

Fulfillment service is a logistics outsourcing service that typically involves a logistics specialist handling various processes such as receiving, sorting, storage, inventory management, order processing, pick and pack, labeling, packaging, shipping, and even product exchange and refund services.

Orders are received through online stores or other sales channels, and logistics specialists take charge of the entire logistics process based on the received order information.

A prominent example is Amazon's FBA (Fulfillment By Amazon) service, offered by the world's largest e-commerce company. Amazon introduced the concept of fulfillment services in 2006.

In South Korea, Coupang introduced its service with Rocket Delivery in 2014, and Market Kurly, SSG.com, and eBay Korea also provide similar services.

Extrans Global too, provides global fulfilment services for multinational companies. We strive to provide the efficiency and reliability that will meet our client's expectations.

🔹Fulfillment Procedure

1. Product in

Cargoes are inbound via air, sea, truck and train.

6. Customized service

Preparing for shipping - (semi-cooked / Product breakdown / Pallet building etc.)

2. Good Receiving

Goods are received in the fulfillment warehouse.

7. Pick

Pick the product corresponding to the order.

3. Sorting

Sorting products

8. Check and Pack

Check and pack the products corresponding to the order.

4. Managing inventory

Inventory management of goods received

9. Product out

The order is shipped out

5. Order placed

Check the customer's orders that have been placed.

🔹Why do we need the fulfillment service?

The emergence of fulfillment services began with the rapid growth of e-commerce.

Along with this, consumers started expecting fast shipping, accurate order processing, and hassle-free returns. To provide these services, sellers started engaging in fierce competition and sought solutions through logistics specialists with expertise in logistics networks.

▪ Focus on core activities

Fulfillment services, through logistics specialists, simplify and outsource the logistics operations related to order management for sellers. This allows them to focus on core activities such as marketing, product development, and customer service.

▪ Cost Effective

Logistics specialists providing fulfillment services already have the necessary infrastructure, equipment, and expertise. Sellers do not need to invest in warehouses, inventory management systems, packaging materials, or shipping management. This leads to significant cost savings, especially for small and medium-sized enterprises.

▪ Expertise and efficiency

Logistics specialists offering fulfillment services excel in order processing and logistics. They possess the experience, knowledge, and systems to process orders quickly and accurately. They efficiently categorize, package, and ship products, ensuring timely delivery and customer satisfaction. Sellers can leverage this expertise to increase process efficiency and reduce errors.

Additionally, logistics specialists often have multiple fulfillment centers located in different regions or countries. This allows sellers to expand their customer base (e.g., domestic➡international) and enter new markets without the need to establish their own distribution networks.

🔹What are the types of fulfillment?

There are several types of fulfillment services that cater to different business needs and requirements. And below 3 types is the most common Ecommerce Fulfillment Models.

▪ In House Fulfillment

In this type, Seller handles their own fulfillment operations internally. They manage their own inventory, warehouse facilities, order processing, packaging and shipping using their own resources and infrastructure. This approach provides businesses with full control over the fulfillment process but requires significant investment in infrastructure, labor and technology.

▪ Third-party logistics (3PL) fulfillment

Sellers outsource their fulfillment operations to third-party logistics providers. These providers have established infrastructure, resources and specialize in logistics which can offer a range of services, including warehousing, inventory management, order processing, packaging, and shipping. By partnering with a 3PL provider, businesses can benefit from their existing network, technology, and operational efficiency. It allows sellers to focus on core competencies.

▪ Dropshipping

The retailer does not keep inventory in stock. Instead, when a customer places an order, the retailer transfers the order details to a supplier or manufacturer who directly ships the product to the customer. Therefore, it eliminates the need for inventory management and upfront investment in stock. However, they may have less control over product quality, stock availability, and shipping times.

We hope this information has been helpful ! 📖

And as always, Extrans is here to provide all your complex logistical needs.

See you next week!

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