Ecommerce Fulfillment: Services & Beginner Guide
The secret revenue driver of the world’s top ecommerce brands.
Ecommerce fulfillment is absolutely crucial to delighting your customers and preserving your bottom line. Read on to discover what ecommerce fulfillment is, how it works, and how ShipBob can help your brand optimize its fulfillment strategy.
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How ShipBob sets the fulfillment center standard
Fulfillment centers are at the core of any ecommerce fulfillment strategy. Their location, square footage, and amenities will directly impact your shipping costs, capabilities, and scalability.
Get the ball rolling with ShipBob’s fulfillment centers
ShipBob is an ecommerce enablement platform that has fulfillment centers all over the world, including dozens across the continental US.
Ecommerce brands can leverage this network to strategically distribute their inventory to be closer to end customers. This not only reduces transit times, but also minimizes shipping costs to help your brand save money and delight customers at the same time.
You can start by storing your inventory and fulfilling orders from just one ShipBob fulfillment center. As your business grows to reach new audiences in new regions, you can strategically allocate inventory to additional fulfillment centers based on your order history to reach more customers more efficiently.
The best part? All of ShipBob’s fulfillment centers are powered by the same proprietary WMS, so you can achieve the same quality, tech-enabled order fulfillment, warehousing, and inventory management solutions across your entire network.
ShipBob serves ecommerce businesses from all over!
Once you’re ready to conquer global markets, you can send inventory to ShipBob’s fulfillment centers in the United Kingdom, Europe, Australia, and Canada, and store it locally within those countries. This reduces cross-border complexities, and helps you give all customers the same fast and affordable delivery experience.
How PetLab Co. Runs a $100M+ Business With ShipBob
Fulfillment only gets more complicated as your ecommerce brand grows, so it’s important to find a fulfillment provider that can support your operations at scale.
As one of the leading pet vitamin and supplement brands, PetLab Co. was already shipping thousands of orders a week to customers in multiple countries as well as retailers. But with just 6 people on their operations team, they knew that to keep growing, they would need to outsource fulfillment to an expert.
In ShipBob, PetLab Co. found the flexible, hands-off fulfillment solution they wanted. With ShipBob powering their DTC, B2B, and international fulfillment, PetLab Co. has grown into a 9-figure business that:
- Ships 100,000+ DTC and B2B orders per month
- Leverages 5 ShipBob fulfillment centers in the US
- Achieves 2-3 delivery on the majority of orders
- Enjoyed a 40% increase in orders YoY
“The network and team that ShipBob has are incredible. We’re able to leverage a vast network of domestic fulfillment centers, save time, and provide better experiences for our customers.”
Stephanie Lee, COO at PetLab
How ShipBob works
- Connect your store and send us your products.
- We store your inventory securely in our fulfillment centers.
- Your customer places an order on your store.
- We pick, pack, and ship the order to your customer fast.
ShipBob is a leading global fulfillment and supply chain platform designed for SMB and Mid-Market ecommerce brands, and offers both outsourced and in-house fulfillment solutions.
If you’re looking to outsource fulfillment, you can send their inventory to one or more of ShipBob’s fulfillment centers, where our experts will receive and stow it for you. Once you integrate ShipBob’s software with your ecommerce platform, orders are automatically sent to our warehouses and are picked, packed, and shipped on your behalf.
If you’d prefer to keep fulfillment in-house, ShipBob enables brands to improve the operations in their own facilities with ShipBob WMS (ShipBob’s proprietary warehouse management system).
Both solutions give you access to ShipBob’s dashboard, which delivers a single view of your business and customers across sales channels. Through a single portal, you can manage products, inventory, orders, and shipments, leverage real-time analytics and reporting, and connect your entire tech stack to build a seamless delivery experience for your customers.
ShipBob goes from your online store to your customer’s door
1. Connect
Connect your store, import your products, then send us your inventory.
2. Store
We store your inventory in any combination of our fulfillment centers.
3. Ship
As soon as a customer places an order, we ship it from the nearest fulfillment center.
What is ecommerce fulfillment?
Ecommerce fulfillment refers to the entire process of getting an order delivered to a customer after they order it online. This includes all of the supply chain functions and activities involved in that process, such as receiving and storing inventory, processing orders, picking items, packing boxes, and transporting the items to the customer’s shipping destination.
Brands can pay an ecommerce fulfillment provider to perform these tasks for them. Partnering with an expert fulfillment solution can be particularly helpful for brands that:
- Are looking to start selling in new channels, markets, and/or locations
- Don’t own or operate their own physical storage or fulfillment facilities
- Need time back to focus on other strategic priorities
- Want to build more scalable logistics
Why revenue relies on fulfillment
Ecommerce fulfillment is at the core of meeting today’s customer expectations. Customers want their deliveries to be:
- Fast: Delivered within 2 days (popularized by ecommerce giants like Amazon)
- Accurate: The correct, undamaged items sent to the right address
- Affordable: Shipping that is free or inexpensive
To meet these expectations, all the activities involved in warehousing and fulfillment (such as inventory management, picking, packing, kitting, labeling, and even last-mile delivery) must run seamlessly. If they don’t, customers will be disappointed, and may leave not purchase from the brand again (or even dissuade others from doing so).
So in order to keep customers coming back, it’s absolutely critical to have the right fulfillment strategy in place. With a good fulfillment partner, your brand can achieve high-quality fulfillment and shipping that delights your customers, drives more sales, and even delivers cost-savings.
Common misconceptions about ecommerce fulfillment services
Many ecommerce brands approach fulfillment with common, preconceived notions about what the best strategies are – but some aren’t actually true. Here are some of the most misunderstood order fulfillment concepts, as well as fulfillment tips you can trust.
Myth: I need a fulfillment center close to home.
Fact: Your fulfillment center(s) should be close to your customers. Rather than choosing a fulfillment center location because of its proximity to you (or choosing a fulfillment partner because they have a facility close to you), it’s best to use data to analyze where your customers are, and place your inventory nearby customer hubs.
This data may include:
- Shipping destination zip codes from your order history
- The shipping zones your orders are going to
- Your average shipping cost by zone
- Your average time in transit
With this information, you can better understand where most of your orders originate from. If you can fulfill orders from facilities nearby more customers, you can optimize for quicker deliveries and lower shipping costs.
Myth: Warehousing and ecommerce fulfillment centers are the same thing.
Fact: While warehousing is one element of ecommerce fulfillment, fulfillment centers are designed to turn inventory over quickly — not for long-term storage. If you need space to hold a lot of products that won’t sell for a while, a traditional warehouse, storage unit, or on-demand warehousing solution may be best.
If your products are selling fast, a fulfillment center can store them and get them shipped out quickly. Fulfillment companies charge a separate storage fee for each item and are more expensive than a storage-only center, but they also provide picking, packing, and shipping services.
Myth: It’s cheaper to fulfill ecommerce orders myself.
Fact: Sometimes it is, but not always.
If you are just getting started with your ecommerce business or have a low order volume (e.g., around 50 orders per month), you will absolutely save money if you handle ecommerce fulfillment yourself. You can likely manage packing boxes and running to the post office yourself, and still have time to work on other tasks.
But as your business keeps growing, there will come a point where fulfilling orders yourself is more expensive. If you find you’re spending all of your time on ecommerce fulfillment, have to hire others to help pack boxes, or have no time to focus on growing your business, you will probably save more money, time, and effort by outsourcing to a retail fulfillment company.
Brands may return to self-fulfillment later on when they have enough capital to purchase land, lease a large warehouse, and get a warehouse management system. This can be beneficial, but it can also come with hidden costs. Whether it’s higher shipping costs from a small geographic footprint, inefficiencies from outdated technology, or time spent juggling a patchwork of tools, running your own warehouse can be even more expensive than outsourcing.
Myth: You have to be a really big brand to outsource.
Fact: Brands of any size can outsource their fulfillment operations effectively. In fact, outsourcing often benefits smaller brands in particular! The transition to outsourcing can be challenging for bigger brands, especially if they’re already invested in technology, equipment, and personnel. By finding a fulfillment and logistics partner early on that can scale with your brand as it grows, you’ll save yourself a lot of time and headaches in the long-term.
Myth: I need a different 3PL in each country.
Fact: If you have the right fulfillment partner, you shouldn’t have to have a fulfillment partner in every country you sell in.
Juggling multiple providers (each with their own rules, procedures, and costs) is confusing and time-consuming, so it’s much better to go with a fulfillment partner that has an international presence and can store inventory and fulfill orders in the countries currently service (as well as those you plan to enter in the future). This will streamline your cross-border logistics, minimize your costs, and make it a lot easier for you to handle and scale global fulfillment down the road.
Myth: I need a different 3PL for DTC and B2B.
Fact: Not necessarily. Certain fulfillment partners can handle both DTC and B2B fulfillment. As long as your partner can fulfill both DTC and B2B orders accurately, in a timely manner, and in accordance with all EDI regulations, relying on one fulfillment partner for all your sales channels can simplify your operations and even provide omnichannel visibility.
Myth: I can just use label generation software in my warehouse.
Fact: Label generation is just one aspect of fulfillment. A professional fulfillment partner’s solutions and capabilities are designed to optimize many critical processes, including picking, packing, inventory management — not just shipping.
If you run your own warehouse, you need a warehouse management system (WMS) that lets you manage inventory, orders, and shipments across channels in real time, while monitoring warehouse productivity. Check out ShipBob WMS here.
Myth: The cheapest 3PL is what’s best for me.
Fact: Maybe – but probably not. While a partner’s pricing may seem like a great deal off the bat, some providers tack on hidden fees once you start using their services. Cheaper providers also may not offer certain services, capabilities, or technology you need to scale.
Because fulfillment is so crucial to retaining customers and generating revenue, it’s a worthwhile investment to research and select a quality fulfillment provider that meets your needs, even if it is at a premium.
Types of ecommerce fulfillment services
“Ecommerce fulfillment” is really the sum of many individual services and workflows. Below we define each step and related function, and explain the differences between similar terms.
Order management and fulfillment services
Order management is the broad concept of overseeing all purchases your customers make, and involves receiving, tracking, and fulfilling customer orders across sales channels. Order fulfillment, at the simplest level, refers to the act of picking, packing, and shipping orders to customers.
Every ecommerce business is responsible for its own order management. A brand should be able to manage all orders in one place, from the moment an order is confirmed to the moment it’s shipped. This helps you track the individual status of any order (such as processing, on-hold, delivered, etc.), order trends over time (including changes in volume, customers’ buying behaviors, preferences, and locations), returned orders, orders with mistakes, and if orders can’t be fulfilled because of insufficient inventory levels.
Similarly, every ecommerce business must figure out how to fulfill orders — whether they self-fulfill orders or work with a fulfillment company. Outsourcing your fulfillment to a service like ShipBob can turn your fulfillment into a revenue driver.
“We literally would not have been able to expand this year without ShipBob. In the past six months, we’ve quadrupled the number of orders that we’re shipping out. You might expect that that jump in volume would cause issues – but fulfillment has only gotten faster and better. That’s not how it typically works! ShipBob’s solutions have been game-changing for our brand.”
Matt Crane, Co-Founder and Chief Science Officer at Semaine Health
Inventory management
Inventory management is the process of monitoring and tracking an ecommerce business’s stocked goods. Storing inventory, ordering and restocking inventory, and inventory forecasting are among the most crucial aspects of inventory management.
One of the most nuanced parts of inventory management is figuring out how much inventory you should have on hand. There is a delicate balance between having too much inventory (where you risk poor cash flow, paying too much for storage, and having outdated products) and too little (where you risk running out of inventory, failing to meet customer demand, and missing out on potential sales).
At any point in time, you should be able to check how much inventory you have on hand and how many units are sold per day. Properly managing inventory also means proactively reordering the right inventory quantity to prevent stockouts and backorders.
In order to effectively oversee and manage their inventory, ecommerce brands should leverage inventory management software (IMS). Using an intuitive IMS can help you identify which fulfillment centers are low on inventory, allow you to set reorder points so you never run out of stock, gain visibility into inventory movement and turnover, and access real-time inventory data.
Ecommerce shipping
Ecommerce shipping is the process of sending the products shoppers order online. This transfer happens from a retailer or seller to a consumer via shipping carrier. The goal of ecommerce shipping is to provide a fast, efficient, and cost-effective shipping experience for the customer. But that’s often easier said than done.
There are various factors that come into play when you begin vetting ecommerce shipping options. The capabilities and services you choose will depend on:
- Where you’re shipping from and where your customers are located (the distance between the two are known as shipping zones)
- The type of products you sell (e.g., heavier and larger items will be more expensive, HAZMAT products must use ground shipping, etc.)
- The delivery speeds you want to offer to customers (e.g., expedited shipping, 2-day shipping, international shipping, free shipping, etc.)
- The technology and resources you have at your disposal, among other factors
Ecommerce businesses that fulfill their own orders may load their vehicles with packages and drive to the post office or local UPS Store to ship them out. While this is the default ecommerce shipping option for many brands in their infancy, it isn’t a scalable option. In order to achieve sustained success, it’s important for brands to partner with a fulfillment provider. By outsourcing fulfillment to experts, you’re able to guarantee faster shipping because 3PLs have the technology, infrastructure, and team to efficiently pick, pack, and ship orders.
Additionally, fulfillment providers have relationships with carriers thanks to their high shipping volume. So by leveraging a professional, those shipping rates get passed onto you. Fulfillment companies provide bulk discounted rates, so ecommerce businesses can offer the fastest, most affordable shipping. Fulfillment companies also have shipping carriers pick up packages from their fulfillment centers daily.
Warehousing
Warehousing is the storage of physical goods or inventory in a storage facility before orders need to be fulfilled. Warehouses safely and securely store items in an organized manner so they can be easily and quickly located and prepared for shipping once orders are placed. Typically, warehousing is reserved for storing inventory for an extended period of time and other services aren’t included (e.g., order fulfillment). However, when you use an ecommerce fulfillment provider, all of the steps in the fulfillment process occur, including warehousing and order fulfillment.
For small or new ecommerce businesses, ecommerce warehousing may be done from the owner’s garage, basement, or apartment until they outgrow the space. At that point, an ecommerce business will have to rent storage space, lease a warehouse, or outsource logistics to a third-party and store inventory in their fulfillment center.
If brands choose to operate their own warehouse, they will need a warehouse management system (WMS) to help them navigate and streamline their operations. A. WMS helps manage inventory and orders, create an efficient picking, packing, and shipping process, and allow for seamless scalability.
Returns management
Returns in ecommerce fulfillment involves receiving, assessing, and processing returned items back into the available stock. The returns management process (sometimes also known as “reverse logistics”) includes a customer initiating a return, sending the product back, receiving and processing the returned product, and issuing the customer a refund or exchange for the product. This can be a clunky process for both the consumer and the brand’s operations teams if not set up properly.
When working with a fulfillment provider, it’s important to understand their returns process and know exactly what is required to ensure customers send returned products to the fulfilment center so they can be reinjected into the facility. Additionally, consider a fulfillment partner that integrates with popular ecommerce returns and exchange platforms (e.g., Happy Returns, Loop, etc.) for an even more seamless return and exchange process.
Many fulfillment services provide prepaid return labels, share return tracking information, support integrations that will automatically text return and refund updates to customers, and even let returns be sent to the ecommerce business rather than the fulfillment center.
With a solid returns management strategy and process, your brand can retain customers, improve customer satisfaction, and reclaim revenue.
Fulfillment software
Ecommerce fulfillment software automates inventory and order management as well as picking, packing, shipping, and delivery processes. It’s the technology that connects ecommerce stores to the fulfillment center associates who are working in the facilities to provide real-time ecommerce order tracking information, visibility into inventory levels, and forecasting projections.
When you leverage multiple fulfillment centers offered by a provider, their fulfillment software routes each order to the fulfillment center that is closest to the customer, resulting in faster and cheaper shipping.
Brands can connect their sales channels, tools, and platforms to ShipBob’s fulfillment software to build a customized tech stack that helps grow their business. With our turnkey integrations and Developer API, brands can gain control over their fulfillment process, gain even more nuanced data, and create a truly unique tech stack.
In addition to powering its network of global fulfillment centers, ShipBob’s proprietary software provides merchants with real-time data about inventory and orders, and advanced reporting and analytics – all from one platform.
International & DDP shipping
International shipping is the process of fulfilling and shipping orders to customers who live in countries outside of where your ecommerce business is based.
While online shopping opens your brand up for being discovered by customers all over the world, international shipping presents a set of entirely new challenges. Different countries have various regulations, tariffs, duties, taxes, and requirements for incoming shipments, making it difficult to navigate the international landscape on your own.
Working with an experienced fulfillment expert can help you easily expand your international shipping capabilities and understand all the logistics costs involved before you begin shipping. ShipBob can ship to over 250+ destinations around the globe.
International shipping can not only be challenging for ecommerce brands to navigate, but it can create a negative customer experience. Cross-border shipping usually requires longer shipping times and extra fees associated with being imported from a different country. In order to avoid to improve your customers’ experience, you can offer expedited shipping options and delivered duties paid (DDP) shipping.
DPP shipping is a delivery agreement in which the seller takes on the risks and responsibilities of sending international shipments to customers abroad. When buyers are not liable for these shipping costs, sellers are more likely to convert international customers. Along with some of the industry’s most reliable partners, ShipBob offers DDP shipping options to provide a frictionless international shipping experience.
Pick and pack fulfillment
Pick-pack fulfillment is the traditional operations model in a 3PL’s fulfillment center. In this process, customer orders are picked from where they are being stored within the fulfillment center and packed so they’re ready for transit. While it sounds straightforward, pick and pack fulfillment has various nuances to ensure accuracy and efficiency.
There are several methods to when it comes to warehouse picking. Business category, number of SKUs, order volume, and warehouse space can help determine which strategy is best. Fulfillment centers use a variety of picking methods, depending on the situation. For example, cluster picking is an example of a picking strategy that works well for high-volume facilities. Cluster picking allows associates to pick many orders at once as they move through the warehouse. However, if many duplicate orders come through (e.g., if a product has gone viral and it has been ordered hundreds of times), they’re likely to use batch picking in order to boost productivity.
Once picked, orders are brought to packing stations where packers prepare the item for transit and adhere a shipping label to the package so it’s ready to be shipped to the customer.
Packing the orders may seem like the easy part but precautions should be taken to ensure products are packed securely and aren’t damaged in transit. When choosing packing materials, considering the product’s size, weight, and sturdiness (among other factors) is important. Common packing materials include poly mailers, bubble mailers, boxes, and tubes. Additionally, adequate dunnage should be added in to support the products during transit.
Outsourcing fulfillment and leveraging a partner for this process can not only save you time, but help you streamline your operations.
If brands with their own warehouses choose to implement this fulfillment strategy, utilizing a WMS can help you optimize processes, gain visibility and real-time data, and boost efficiency.
Kitting, customization, and bundling
The moment a customer unboxes their order is the only time you can guarantee a 100% open rate. Creating a unique branded experience using kitting, customization, and bundling is the best way to wow customers and encourage them to shop with you again and again.
The process of kitting refers to the specific arrangement of items in an order when it deviates from the normal process. There are several different use cases for kitting. Whether it’s constructing a branded box or placing multiple SKUs within a kit, ShipBob can accommodate your specific needs so your orders are shipped to the customer the way in which you envisioned them.
Bundling, not to be confused with kitting, is the process of creating a collection of products that are sold and shipped together. If you sell a kit of products on your site (e.g., a bundle of best-sellers or a “get started” kit), you can ensure those items are picked, packed and shipped together so the customer receives them at one package.
Customization at scale can be difficult for growing brands. ShipBob offers a Customization Suite that allows you to create a branded unboxing experience, no matter your order volume. Incorporate branded packaging, marketing inserts (for marketing or promotional purposes), custom gift notes with your logo to delight customers and make your brand stand out from the competition.
B2B/wholesale and EDI-compliant fulfillment for retail
B2B fulfillment, which can include wholesale and retail fulfillment, is the process of preparing inventory to ship to another business or on behalf of other businesses. Some fulfillment companies offer both ecommerce fulfillment and B2B fulfillment (like ShipBob), but most fulfillment centers specialize in one or the other.
This is because B2B orders typically require significant storage space and rigorous compliance to business-specific rules. Additionally, the EDI compliance required for B2B orders is complex and strict. B2B fulfillment is also more expensive than ecommerce fulfillment because you need to prepare a large quantity of product at once for freight shipping, with the additional effort leading to higher picking fees and labor costs. ShipBob partners with the best-in-class EDI providers to offer EDI fulfillment for B2B orders.
With ShipBob as your omnifulfillment partner, you can fulfill orders through all of your retail channels to reach your customers wherever they shop. ShipBob can fulfill orders for retail distribution, retail dropshipping, and online marketplaces (like Amazon and Walmart).
Cross-border expansion and global fulfillment
Global fulfillment is the process of fulfilling orders outside the country in which your business is located, but from the country in which the customer is based. Opposed to international shipping where brands ship orders from one country to another, global fulfilment allows brands to offer faster and cheaper shipping by fulfilling orders in-country while bypassing local import taxes and duties.
ShipBob has a global network of over 50 fulfillment centers in the United States, Canada, Mexico (for Section 321 fulfillment), the UK, Europe, and Australia. These strategically placed fulfillment centers help brands reach customers in and around the world’s largest markets.
If your brand sells high-tariff items in the US, you can leverage a fulfillment center that offers Section 321 fulfillment. ShipBob has fulfillment centers in Canada and Mexico that provide Section 321 fulfillment so brands can bypass costly taxes and duties associated with importing goods into the United States. By utilizing Section 321, brands can maximize revenue by importing goods to Mexico and/or Canada and fulfilling orders directly to US customers.
Distributed inventory
Distributing inventory is the process of splitting inventory across multiple fulfillment centers in different locations or geographic regions. This is done to place products closer to end customers, reducing the distance a package travels in transit (therefore reducing the number of shipping zones), resulting in cheaper, faster shipping.
Some fulfillment partners, like ShipBob, offer programs that manage inventory distribution on your behalf. ShipBob’s Inventory Placement Program (IPP) automates the process of splitting and rebalancing customers’ inventory across the network of fulfillment centers in the US.
When brands use IPP, they send inventory to a single ShipBob fulfillment center and then ShipBob distributes it across the network based on the brand’s unique customer mix and order history. Then, we ship each order from the most optimal fulfillment center to facilitate quick and cost-effective shipping.
Leveraging IPP allows brands to seamlessly distribute, manage, and replenish inventory, allowing them to unlock an overall supply chain ‘easy button’ for efficient and effective operations.
Startup fulfillment services
Instead of fulfilling orders from their home, some ecommerce businesses may choose to have a fulfillment company lined up in advance of their launch. Leveraging a fulfillment partner is especially helpful when ecommerce brands don’t have space to store their physical inventory, have a big launch plan, have gone viral on social media, or is a celebrity or influencer backed brand. While demand can be difficult to predict from scratch, using a fulfillment partner can help you manage operations if you experience an influx in order volume.
Even if you’re not anticipating a major launch or thousands of orders right away, that doesn’t mean you can’t leverage ShipBob’s fulfillment solution. ShipBob’s Growth Plan is designed to help pre-launch startups and young brands grow their business. With the Growth Plan, you get full access to ShipBob’s proprietary software and tools, pick-and-pack fulfillment, and a Premium Onboarding Specialist that will guide you through account setup for seamless onboarding.
Subscription fulfillment
Subscription fulfillment refers to the process of shipping products from an ecommerce business to a customer on a recurring, predetermined basis. Subscription orders can be the same each month (e.g., razor cartridge refills or skin care) or a different selection of curated products (e.g., magazines or novelty snack boxes).
When subscriptions vary each month, they are much more complex and are often best fulfilled in-house or assembled before shipping them to a fulfillment company.
The right technology must be in place for recurring orders so that the order is fulfilled at the same time each month, unlike the trigger for fulfilling a regular one-time ecommerce order as soon as it’s placed.
Don’t get bogged down by ecommerce fulfillment costs
Your ecommerce fulfillment costs will vary significantly depending on whether you fulfill orders yourself, or outsource to an expert partner. Here are some of the costs to consider when selecting your fulfillment strategy.
The true cost of fulfilling orders yourself
Fulfilling orders yourself may not always be as cost-effective as you think. When your ecommerce business is small and handling ecommerce fulfillment in-house, there are several non-obvious costs outside of paying for shipping to consider, like:
- Tools and packing supplies (packing tape, dunnage, bubble wrap, packing peanuts, air pillows, boxes, poly mailers, envelopes, labels, paper, printers, ink).
- Transportation costs (gas, mileage on your car, or even pickup fees for carriers to come to you).
- Inefficiencies (expensive rates due to low volume or only shipping from one location, or wasted time due to lack of integrated technology and automation).
- Dealing with unhappy customers (customer service tickets, and jeopardizing future business from making your customers wait).
- Opportunity costs of completing higher value, revenue-generating tasks.
Fulfillment provider costs simplified
While most fulfillment providers will have their own unique pricing structures, common fulfillment service fees or line items include:
- Onboarding or implementation
- Receiving inventory (the counting, checking, and stowing of incoming product)
- Storage costs for the space your inventory takes up (per-SKU or a fixed fee for each bin, shelf, or pallet used)
- Pick and pack (a fee to physically select each item included in an order, and place it in packaging)
- Packing materials and boxes (sometimes plain, standard packing materials are free of cost, but you may have to pay for storing custom branded boxes)
- Kitting (assembling items ordered in a special way)
- Shipping and postage
Fulfillment partner vs. self-fulfillment: where do you go from here?
Fulfilling all your orders from home isn’t a scalable solution for growing brands – so at some point, your ecommerce business will have to either invest in the infrastructure, facilities, equipment, and workforce to handle order fulfillment themselves, or partner with a fulfillment provider.
If your brand doesn’t have access to the capital needed to keep fulfillment in-house, outsourcing to a partner is the cost-effective choice. Brands can leverage their partner’s infrastructure for a fraction of the cost it would take to purchase land, lease a warehouse, buy equipment (including shelving units, pallet racks, forklifts, conveyors, technology, and packing supplies), invest in a WMS (which ShipBob sells as a standalone product) or pay operating costs (such as taxes, utilities, office supplies, staff wages, benefits, workers’ comp, liability insurance, and more).
But partnering with an expert provider isn’t just cost-effective; it’s also a great way to optimize your fulfillment. Ecommerce fulfillment partners have the expertise and best-practices to turn your fulfillment from a cost-center into a competitive advantage, and deliver return on your investment in the form of more efficient operations, better delivery experiences, and time back for you to focus on other strategic priorities.
That being said, you’ll want to be careful when selecting your partner. Switching providers is both expensive and a pain, so choose a partner that you won’t outgrow and that can scale with you across new channels and geographies.
Ecommerce fulfillment service models
There are many methods of fulfilling ecommerce orders across channels. Here are some of the most common strategies that ecommerce brands use to pick, pack, and ship orders to customers.
1. Self-fulfillment
Self-fulfillment, or in-house fulfillment, is when the seller fulfills orders themselves. This includes storing inventory and picking, packaging, and shipping products.
Self-fulfillment can come in many sizes, from a small business that fulfills orders out of the owner’s house and makes regular trips to the post office, to a large brand that’s invested in a warehouse of its own and hired a team of fulfillment associates.
2. Amazon FBA
Fulfillment by Amazon (FBA) is a fulfillment strategy in which an Amazon.com seller sends their products directly to Amazon fulfillment centers, where the products are stored and orders placed on that brand’s Amazon channel are fulfilled. FBA is only a fulfillment option for Amazon orders, and is the one of the more expensive order fulfillment service options for Amazon sellers.
Sellers that use FBA have their orders shipped out within two days in Amazon Prime packaging. Alternatives to FBA include Seller-Fulfilled Prime (SFP) and Fulfilled by Merchant (FBM), which involve a party other than Amazon (either the seller themselves or a seller’s logistics partner) fulfilling orders placed on Amazon’s marketplace.
3. Third-party fulfillment
Also known as outsourcing fulfillment, working with a third-party logistics provider means that a professional fulfillment company handles ecommerce fulfillment on your behalf. A fulfillment partner’s services typically include storing inventory for you within the provider’s fulfillment center(s), packing items in boxes or poly mailers, and shipping orders to customers.
Ecommerce businesses partner with fulfillment companies so they don’t have to:
- Create their own infrastructure (i.e., purchase land or rent warehousing space)
- Hire their own workforce
- Manage a large-scale operation
- Invest in equipment and technology
- Pay regular operational costs (such as workers’ comp, liability insurance, rent, and more).
- Become experts in supply chain and can instead focus on their brand.
4. Hybrid fulfillment
It used to be that ecommerce brands had two choices: keep fulfillment in-house, or outsource. Now, some fulfillment providers like ShipBob offer merchants a hybrid model. In this model, a brand can store inventory and fulfill orders from their own warehouse(s) while also leveraging their partner’s fulfillment centers.
ShipBob’s hybrid solution, for example, enables ecommerce businesses to use ShipBob’s warehouse management system (WMS) to power operations like inventory management and order fulfillment in the business’s own warehouse. At the same time, that business can also store inventory and fulfill orders from one or more of ShipBob’s dozens of fulfillment centers across the globe.
This hybrid model allows merchants to stay in control of their warehousing operations, while also taking advantage of their partner’s geographic footprint to split inventory and lower shipping costs and times.
“We wanted to outsource international fulfillment to alleviate the pressure put on our in-house team (and high costs and long transit times for our customers), while dialing in on making our own warehouse more efficient. We began vetting warehouse management systems that would provide structure and make our processes and workflows more efficient. I met with ShipBob and felt like they would be a good partner because they could offer all of the solutions we needed.” Jourdan Davis, Operations Manager at Pit Viper
5. Dropshipping
Dropshipping is a fulfillment strategy in which stock is not kept on hand, but rather skips middle-mile storage and is sent directly from the original holder to the customer.
Dropshipping happens in different forms. There is dropshipping from supplier to customer, in which a merchant’s supplier or manufacturer produces and stores inventory, picks and packs orders, and sends those orders directly to customers. The merchant acts as the middleman — connecting the customer to the product through the brand’s ecommerce website — but is never in possession of the products sold.
There is also retail dropshipping, in which a merchant sells their products on a retailer’s website (such as Walmart Marketplace or Target.com), but the retailer never actually holds the stock. Instead, online orders placed on the retailer’s website are forwarded straight to the merchant, who fulfills them from their own warehouse or fulfillment center.
“When we first got started, we were dropshipping. It was nice because we had no money tied up in inventory, but we also had no quality control. With no control over the customer experience and very poor shipping times, we quickly realized dropshipping was not a long-term solution. It was good for proving out an early concept, but we had to move to a professional fulfillment company.”
Gerard Ecker, Founder & CEO of Ocean & Co
How to choose an ecommerce fulfillment provider
With so many fulfillment providers available today, choosing the right partner for your business can be a daunting task. No matter if you’re choosing a partner for the first time or deciding to move your inventory to a new fulfillment company, there are many considerations to weigh before picking a 3PL.
Asking yourself the following questions might help determine if it’s the right time for your business to outsource fulfillment:
- Is order fulfillment currently a burden for my business?
- Am I able to fulfill more orders myself?
- Am I running out of space to store my inventory?
- Are my shipping margins too narrow?
- Do my customers want faster, cheaper shipping?
- Can I afford the infrastructure to bring fulfillment in-house (e.g., warehouses, equipment, labor, etc.)?
Top 4 best ecommerce fulfillment companies compared
Below we look at three of the top fulfillment companies for ecommerce businesses and how they compare on some of the most important offerings and services that help brands stay competitive today.
| Services | ShipBob | ShipMonk | Flexport Fulfillment (formerly Deliverr) | ShipHero |
| 2-day shipping network in the US | ✅ | ✅ | ✅ | |
| International fulfillment centers | ✅ (50+ in Canada, US, UK, EU, Australia, Mexico) | ✅ (12 in Canada, US, UK, EU, Mexico) | ❌ | ✅ (Canada + US) |
| DDP Shipping | ✅ | ❌ | ✅ | ❌ (DDU only) |
| EDI | ✅ (EDI agnostic) | ✅ (1 partner) | ✅ (1 partner) | ✅ (Only available for WMS users) |
| Inventory Placement | ✅ | ✅ | ❌ | ❌ |
| Integrations | ✅ (40+ direct integrations) | ✅ (manual integrations) | ✅ (<20 direct integrations) | |
| B2B | ✅ | ✅ | ✅ | ✅ (Manual B2B) |
| Customization | ✅ | ✅ | ✅ (limited capabilities) | ✅ |
Integrations bridge the fulfillment gap—check out ShipBob’s ecommerce partners
Your ecommerce tech stack is a crucial aspect of your business. The partners you choose have a huge impact on your shipping strategy – all the way from your ecommerce platform to your sales channels. As a leading ecommerce fulfillment platform, ShipBob integrates with the top platforms and sales channels ecommerce brands need to operate an efficient, profitable business. Our robust integrations streamline the flow of information and send important information back and forth between platforms so you have accurate, up-to-date information.
ShipBob has helped thousands of sellers with Shopify and Shopify Plus sites fulfill orders quickly and cost-effectively to meet customer expectations every day. Shopify seamlessly integrates with ShipBob’s software to automate fulfillment and inventory management, letting you focus on growing your business — not worrying about fulfillment.
Getting set up is a breeze! No developer work is needed to set up our Shopify integration. Link your Shopify store with ShipBob with a click of a button, import products and orders, and then you’re ready to go. Once connected, the systems are connected and will sync in real-time.
With our integrations, you can track how much stock you have available at ShipBob’s fulfillment centers, receive automatic alerts when you need to reorder inventory for your Shopify store, showcase 2-day shipping badging on your website, and more.
ShipBob helps ecommerce businesses on BigCommerce meet customer expectations with fast, affordable shipping. ShipBob’s order fulfillment company software integrates seamlessly with BigCommerce to automate ecommerce fulfillment and inventory management, letting you focus on growing and scaling your business.
In as little as a few clicks, you can connect your BigCommerce store with ShipBob. As soon as an order is placed on your BigCommerce store, it’s automatically pushed to ShipBob where it will be picked, packed, and shipped out to the customer.
ShipBob’s technology offers full transparency into every order on your BigCommerce store, from picking and packing through delivery. You can also forecast demand and prevent stockouts with real-time inventory tracking and forecasting for your BigCommerce store in the ShipBob dashboard.
ShipBob helps ecommerce businesses using WooCommerce exceed customer expectations with faster WooCommerce shipping. ShipBob’s ecommerce fulfillment software seamlessly integrates with WooCommerce to automate order fulfillment and inventory management for a more optimized supply chain.
ShipBob and WooCommerce seamlessly integrate, making it easy for you to connect your store with ShipBob’s fulfillment platform. Once connected, you can view the status of each order as it moves from processing to shipped.
Transparent, real-time inventory management, tracking, and forecasting in the ShipBob dashboard help prevent stockouts and predict demand.
Amazon fulfillment is the process of picking, packing, and shipping products ordered on Amazon’s platform.
ShipBob integrates with Amazon and offers multiple fulfillment services via Amazon.
ShipBob offers Fulfilled by Merchant (FBM) fulfillment services so brands can outsource Amazon orders for customers around the world.
Additionally, ShipBob merchants can leverage ShipBob’s Fulfillment by Amazon (FBA) prep services. ShipBob will prep orders with FBA labels and transfer inventory from ShipBob’s fulfillment center to an Amazon FBA facility. Using our FBA prep services, ecommerce brands can ensure compliance without manually preparing orders.
TikTok Shop is the fastest-growing sales channel right now, allowing merchants to unlock one of the largest social media platforms in the world as a new end-to-end sales channel. Leveraging FBT or “Fulfilled by TikTok” (which is powered by ShipBob), ShipBob can handle the entire post-purchase experience for you. If you’re not part of the FBT program, ShipBob can also fulfill TikTok Shop orders.
Building a customized tech stack is a crucial aspect of a streamlined ecommerce operations. To help your brand create the unique tech stack needed to scale, ShipBob has developer tools that allow you to create custom integrations.
ShipBob’s Developer API allows anyone to integrate custom cards with our fulfillment technology and standardize the data flowing in and out of ShipBob’s system to ensure a seamless customer experience. Our REST API can be used to interface with your store(s), marketplaces, custom websites, ERPs, and more.
In August of 2018, Adobe acquired Magento to create Adobe Commerce: an AI-enabled ecommerce platform that enables merchants to power their B2C and B2B online channels.
ShipBob customers can now directly connect their Adobe Commerce store to ShipBob’s software from our App Store to sync real-time, critical data, all while increasing visibility and improving your team’s efficiency and productivity.
NetSuite ERP is an all-in-one cloud business management solution that helps organizations operate more effectively by automating core processes and providing real-time visibility into operational and financial performance. ShipBob integrates directly with NetSuite to give merchants a single source of truth and coordinate all their ecommerce operations.
Walmart Marketplace offers a unique opportunity for a curated community of professional sellers, where approved merchants can sell their products on Walmart.com. B2B Fulfillment Suite powers retail dropshipping and distribution for Walmart orders, so your brand can access millions of customers online and in-store more easily.
Squarespace integrates with ShipBob’s technology to automate order fulfillment. When you connect your Squarespace store with ShipBob and send your inventory to ShipBob’s fulfillment centers, your orders will automatically be routed to ShipBob to be picked, packed, and shipped to your customers. This integration streamlines fulfillment and lets you get back to what’s important: running your business.
You can easily connect your Wix store with ShipBob’s technology to streamline ecommerce order fulfillment. Outsourcing your brand’s Wix order fulfillment with ShipBob allows you to split inventory across ShipBob’s fulfillment center locations and automatically have orders placed be picked, packed, and shipped.
Brands that use Square’s platform can leverage ShipBob’s fulfillment solution and integrate directly with ShipBob’s technology. After integrating your store with ShipBob’s technology, any orders that are placed from your Square store will automatically be sent to ShipBob where a fulfillment expert will pick, pack, and ship orders on your behalf.
Ecommerce fulfillment FAQs
Choosing the right fulfillment partner for your ecommerce shop could be a game changer. Here are the questions we’re most often presented with:
What are fulfillment centers?
Fulfillment centers are physical warehouses in which ecommerce brands store their inventory and fulfill their online orders. Fulfillment centers house many of a brand’s logistical and operational functions, including:
- Inbound receiving, stowing, and putaway
- Cross-docking
- Order picking
- Order packing
- Shipping
- Returns processing
What is a fulfillment partner?
A fulfillment partner is a professional, third-party company that provides ecommerce fulfillment services, including order processing, warehousing, and shipping.
By leveraging a fulfillment partner like ShipBob, brands can forgo having to lease their own warehouse space, hire their own team, and handle the day-to-day of ecommerce fulfillment logistics. Fulfillment partners can boost efficiency by optimizing fulfillment operations for cost- and time-savings, and many offer value-adds such as technology and data analytics that brands can use to improve inventory and order management.
What do fulfillment centers cost?
The cost of running your own fulfillment center will vary, depending on your approach to fulfillment. Brands looking to build their fulfillment operations from scratch should expect to spend money to:
- Purchase land and pay construction costs (if the brand is building a new facility), or lease existing warehouse space
- Hire warehouse workers and fulfillment associates
- Invest in equipment (such as forklifts, pallets, shelving, bins, etc.)
- Invest in warehouse management software (or WMS)
- Cover operational costs (utilities, insurance, worker’s comp, etc.)
Alternatively, brands can partner with a fulfillment company and leverage their fulfillment center locations. The cost of working with a professional fulfillment provider can vary based on your SKU count (and product sizes and units), your order volume, the fulfillment services you need, the cost of shipping (depending on the shipping destination, service/speed, weight, dimensions, and more), and other potential fees that the provider charges.
What is direct order fulfillment?
Direct order fulfillment, or order fulfillment, is the process of packaging and shipping orders that were placed on a business’s ecommerce platform. Orders are sent directly from a business’s fulfillment center to the consumer’s home.
How do fulfillment centers work?
Fulfillment centers store your inventory and provide space for workers to pick the items in each order, pack them in a box or poly mailer, and have carriers pick them up for last-mile delivery.
Does ShipBob have a minimum for storage every month?
How many locations does ShipBob have?
ShipBob has dozens of fulfillment centers across the continental US, as well as locations in Canada, the UK, Europe, and Australia. ShipBob is also constantly adding new fulfillment centers to its network, so be sure to check here for the most up-to-date list.
How does ShipBob charge taxes?
ShipBob charges merchants different taxes based on the country in which their orders are being fulfilled. For instance, taxes on order fulfilled from the US will be different than the taxes charged on orders fulfilled from Australia. For more information on specific rates, you can check out our resources for shipping to Australia, Canada, the UK, Europe, and the US.
Which industries benefit from 3PLs?
There are many types of businesses that use fulfillment companies to help them scale. Here are a few common industries that often outsource ecommerce fulfillment.
