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Fulfillment centers play a critical role in e-commerce, which represents a growing share of the global economy. Yet many people do not understand how fulfillment centers work. Learn more below about fulfillment centers and how borderless™ improves the payment process for companies in the fulfillment industry!
What is a fulfillment center?
Fulfillment centers are third-party logistics (3PL) warehouses that receive, process, and fulfill orders from companies that wish to outsource the fulfillment process.
In plain terms, fulfillment centers exist to get online orders to customers, as opposed to customers purchasing goods in-person at brick-and-mortar stores.
Many companies, especially those that rely on e-commerce to do business, use fulfillment centers to expedite the fulfillment process of getting their products to their consumers. These centers can help make shipping faster, simplify the returns process, and allow companies to focus less on warehouse management and more on running their business and making sales.
How do fulfillment centers work?
Fulfillment centers store companies’ inventory in an efficient way so that when the company receives an order from a consumer online, the employees of the fulfillment center pick out inventory, pack boxes, and label them for shipment.
The fulfillment process involves various technological factors, including electronic accounting of inventory, robotic transportation equipment, and computer systems that ensure the process runs smoothly.
These centers can process both business-to-business (B2B) and consumer-to-business e-commerce orders. Once the inventory is picked out, boxed, and labelled, fulfillment centers then ship them to the desired location, which generally occurs via trucks or planes.
How much does outsourcing fulfillment cost?
While outsourcing the fulfillment process to a fulfillment center has the potential to reduce overhead costs, while simultaneously improving delivery speed, accuracy, and overall efficiency, it does come with a cost.
The cost of a company outsourcing fulfillment depends on the company’s industry, inventory size, and overall situation.
However, there are various fees that are common to the cost of most fulfillment centers. This list includes initial setup fees, receiving and intake fees, storage fees, order fulfillment charges, shipping charges, kitting and return fees, and account management fees.
Below is a chart from eFulfillment Service that details two sample fulfillment center pricing models:
Depending on what kind of product your business sells, the ideal fulfillment center or 3PL solution for your business may vary. For example, if your business specializes in large, heavy products, it is optimal for you to find a fulfillment center that has the proper equipment to move and transport large packages. You may want to also focus on storage vs pick and pack costs.
If your company conducts business across large swaths of territory, or internationally, your 3PL provider should have multiple warehouses to reduce waiting times for your clients.
If your company is more focused on B2C e-commerce rather than B2B e-commerce you may want to consider the pack and pick cost as opposed to storage as you may have more volume of orders.
There are a number of additional factors that your business should consider when choosing a 3PL or fulfillment center, including the size of the warehouse, the location of the warehouse(s), reviews from other companies about the efficiency and performance of the center, and the potential for easy integration with your payment process.
How do I charge/collect payments for fulfillment services?
As a third-party logistics (3PL) or fulfillment provider, understanding how to charge companies for your fulfillment services is a key aspect of your business.
Our Industry Page on the Logistics & Fulfillment industry highlights several aspects of the current state of affairs of payments in this space.
Despite the negative effects on cash flow and liquidity that credit cards and wire transfers present, they still are the dominant payment methods for the logistics & fulfillment industry. Although these are the most common methods of accepting payments, they are not the most efficient, affordable, or simple for your business.
Are there better tools? How can you reduce payment processing fees? Find out how your fulfillment company can collect payments more efficiently.
Alternative Payment Methods, Direct Debit, and the Fulfillment Industry
Instead, alternative payment methods (APMs) are gaining traction in the fulfillment industry and beyond due to their benefits compared to traditional payment methods.
One of these APMs that is on the rise is direct debit, which is an authorized payment instruction to your bank where funds can be debited from your bank account. Simply put, it’s simplified ACH payments.
Direct debit has many benefits for logistics and fulfillment providers. In an industry in which speed and efficiency are key, direct debit transfer eliminates middlemen and holding accounts, and allows companies to receive payments in 2-3 business days, improving cash flow.
In addition to the efficient transfer of funds that direct debit entails, collecting payments via this method also is more affordable. B2B fulfillment companies that process large volumes transactions can save thousands of dollars a year.
As the coronavirus pandemic accelerates the transition to adopting e-commerce as the dominant business model of the 21st century, finding the optimal payment processor in this industry is all the more important.
The Best Solution For Your Fulfillment Center
borderless™ leverages all the benefits of direct debit and offers many additional features that are designed to work for companies in the fulfillment industry. Below we present several of these features and explain how they apply to this key industry:
Simple Online Payments
With our online direct debit solution, your clients pay with their bank online in seconds, saving you up to 90% on payment processing fees. Get notified of their payment immediately via email or webhooks.
Our intuitive dashboard makes it easy for you to manage your payments all in one place, avoiding the hassle of paper invoices that burdens the logistics & fulfillment industry.
Ideal Pricing for the Fulfillment Industry
With Pay-as-you-go pricing, you only pay when you get paid. Our B2B rates as low as 0.1% with capped fees, with a max fee of $5 for payments up to $2,000, can save you thousands a year on payment processing.
There are no setup, monthly or hidden fees. See our Pricing page for more information!
Secure, Private, and Trackable Payments
All borderless™ users are verified and you never share sensitive banking information, keeping it secure & private. With our bank-grade security, you can trust that your payments are safe and we keep your money in your bank where it belongs.
For peace of mind, you can track your payments in real-time, which is a vital feature that is quite relevant to the fulfillment industry.
Automated Fulfillment Payments
borderless™ can automate bank to bank payments via direct debit. If you have clients who need to fill their fulfillment credits every month, borderless can process low and high value payments for a fraction of the cost of credit cards. Our recurring payments feature can save you hours of admin time, improve your cash flow and elevate your customer service.
Ready for smarter fulfillment payments? Get started with borderless™ today! Sign up with code GETBORDERLESS20 or contact our team to book a demo to learn more – Ask our team about your first few payments on us for a free trial.