Ecommerce And Fulfillment Companies
Ecommerce was the solution to rising consumer prices, taking the retail world and changing it forever. In the traditional model, costs covered by the sale of each product involved the actual cost of manufacture and wholesale, as well as the physical necessities of each sale that included the building rent of the store and employee paychecks. Before a profit was shown, all these costs needed to be covered, thus driving up the cost of each and every item sold to consumers. Through the adoption of ecommerce, the physical space and staff necessary to sell items was reduced significantly, actually being brought down to a website and minimal customer service staff necessary to answer sales questions. The only physical aspects that remained necessary to this process were the post-sale fulfillment ones, the warehouse and staff that would pull orders from inventory and pack them for shipment to customers. Now, a new type of business is reducing costs of sale even further.
Fulfillment companies are specialized third party businesses that essentially take the responsibility for all the necessary steps post sale, removing the necessity of a merchant to operate their own warehouses and staff. The way it works is simple, the inventory necessary to sell to customers is shipped to the warehouses of the fulfillment company, who store the inventory in a dedicated space. Because the customer is not paying for an entire warehouse and instead is only paying for space used within a cooperative environment, there is generally a significant savings on warehousing alone. The staff of the fulfillment company receive the orders that are placed on the website via a software that connects the fulfillment company with the shopping cart system, allowing for a real time transfer of order information directly to the people who will be fulfilling the order. The staff of the fulfillment company then process each order and arrange for transportation to the customer using the method specified by the client. The fees paid from the company to the fulfillment company include processing fees per order and the stated warehousing fee. These fees generally offer a significant savings over the attempt to operate an individual warehouse and employ a dedicated staff. These savings can be offered to the customer in the form of lowered prices while still maintaining the profit margin, or added to the bottom line. The next success story in ecommerce will involve fulfillment companies, and the customers as well as the businesses will benefit from them.