what is a fulfilment house?

A fulfilment house, or sometimes known as a fulfilment centre, is a modern day term for a pick and pack warehouse. 

Back in the 80’s and 90’s it was a term used to describe a company that provided a range of direct marketing services such as direct mail, warehousing, response handling, even list building (remember that?). It was a generic term really for all of those activities. 

But these days a fulfilment house or fulfilment centre is the term used for product fulfilment or order fulfilment, more often in relation to online selling.

What does a fulfilment house actually do?

A fulfilment house is a company that provides order fulfilment services on behalf of other businesses. 

Some large businesses, like Amazon, do their own fulfilment and also offer their services to online sellers. 

Many major retailers do their own fulfilment and do not offer their services to third parties.  This is usually because their systems are bespoke for their product range and would be costly to adapt for different products.

Most fulfilment companies exist to serve businesses who need storage, pick and pack services for their products.usually offer a pick and pack service, storage of products plus other related services such as Returns processing, Kit collations, sometimes Customer Services including telephone and email management on behalf of their clients.

Types of Fulfilment Houses

Some fulfilment companies will specialise in B2C, so they're literally delivering orders to consumers at their home address. Orders tend to be single item or a handful and are delivered by post or courier

Whilst other fulfilment houses exclusively focus on B2B, so that tends to be more wholesaling where they deliveries are made to other warehouses and/or high street shops. These orders tend to be many boxes or even pallets at a time and require different courier companies who specialise in larger and heavier gods handling.

Drop shipping is a term used where sellers create a website and sell products from their suppliers. The orders are then passed directly to the supplier for fulfilment. This not only saves on storage and fulfilment costs but also means they are only charged by the supplier on a per order basis.

The supplier either has their own in-house fulfilment service or outsources this to a fulfilment house.

Anything else?

One other factor to bear in mind is that fulfilment companies tend to offer their services to either large businesses that generate significant volumes, or smaller sellers who generate far fewer orders. You will never find a fulfilment company serving both industries, despite what their sales people tell you!

The reason for this distinction is the method of operation is very different.  Processing handfuls of orders for each client is very different to sending a team of people to pick 10,000 orders.  Also, the client company will typically need account management and support services that small sellers don’t need and are not willing to pay for.

And finally, there are some companies who specialise in serving online sellers with low order volumes (like myWarehouse and Amazon).  Nearly all fulfilment houses cannot cope with very low order volumes because they need volume to obtain economies of scale and operate efficiently. But the systems employed by myWarehouse and Amazon achieve maximum efficiency by picking all orders all the time, not on a client by client basis.

So if you need to outsource the order fulfilment for your online business be sure to choose a fulfilment house that specialises in your industry size and does not simply say yes to every question you ask of them.