Fulfillment is the process of storing, packaging, and shipping ecommerce products. Shopify Fulfillment could simply mean how you fulfill items sold through your Shopify store. However, the Shopify Fulfillment Network is a completely different service that's offered by Shopify to replace any third-party logistics you have in place.
Whenever you sell an item online it must go through this fulfillment system so that your inventory is stored properly, it has the right packaging, and your customers receive the items in a reasonable amount of time. In addition, your method of fulfillment decides how much it'll cost your business to get those products to your customers after checkout.
Shopify fulfillment isn't much different from the general definition of fulfillment, except that it's implying that your business is being run through the Shopify platform. Because of this, you have several integrated options that help you fulfill products on a regular basis.
In short, Shopify fulfillment is the regular practice of product fulfillment, with the added benefit of integrating with your Shopify store.
A fulfillment integration with your Shopify store has the following benefits:
- You don't have to utilize multiple software elements to fulfill your products.
- Product orders and inventory updates are synced with and sent to your suppliers.
- You often receive discounted shipping rates when fulfilling through Shopify or Shopify partners.
- Much of the research for fulfillment options is done for you. Shopify has already vetted a wide range of fulfillment options and provided the top-rated fulfillment providers in its App Store.
The Shopify Fulfillment App/Service
On the other hand, some people may be referring to the actual service offered by Shopify, named Shopify Fulfillment. This fulfillment option falls under the category of a third-party logistics company, where your products are stored, packaged, and shipped by someone besides your own employees. Along with third-party fulfillment companies like ShipBob, ShipStation, and ShipMonk, Shopify Fulfillment provides these offerings for a fee.
There are several benefits behind the Shopify Fulfillment service:
- An app is available for you to download and link to your inventory for instant fulfillment.
- Shopify keeps the pricing of fulfillment as low as possible.
- You can keep your operations under one system, as opposed to branching out to another fulfillment company.
The Shopify Fulfillment service and app is available through application only.
Go to this page to apply for the Shopify Fulfillment program.
The application process requires you to log into your current Shopify store then fill in information about how you plan on using the Shopify Fulfillment Program and what's required.
You can also send them a message for more information if you're only curious about Shopify Fulfillment and not necessarily trying to sign up for it right now.
The Step-by-step Fulfillment Process
To give you a better idea of the logistics of fulfillment, and Shopify Fulfillment, in particular, we'll walk through the primary steps required to move your products from the supplier to the customer.
Step 1 in Shopify Fulfillment: Partner with a Fulfillment Company
We'll talk about the Shopify fulfillment methods below, but in general, all online stores require a fulfillment partner. Whether this is Shopify itself, an app for the fulfillment, or a supplier and your own warehouse for self-fulfillment, it's required to reach out to build a relationship.
Step 2: Store Your Products
Sometimes this means storing the products in your apartment, garage, or your mom's house. Other times, the storage of items involves you paying for a warehouse in the area. As fulfillment methods evolve, we're finding that it's often more economical to partner with a fulfillment company or supplier that stores the products for you. These companies have large warehouses and employees who remove the products from shelves when a customer purchases them.
A configuration like this has the benefit of keeping costs low on your own warehouse rentals and using a company that has a network of warehouses, resulting in faster shipping to your customers (since only shipping from one warehouse makes for slower shipping times to other locations).
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Step 3 in Shopify Fulfillment: Packaging the Product
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Fulfillment also involves pulling the items from shelves, packing them in suitable boxes, taping them up, adding postage, and including any branding that you'd like to show customers.
With self-fulfillment, all of this is done in your own warehouse or home. That means that you pay for the materials, pack the products yourself, and go to UPS or the post office to send out the items.
Most Shopify fulfillment methods are done through third-party companies, where your products are already being stored in their warehouses. Your Shopify store notifies the fulfillment provider of a purchase, then sends an employee to grab the item for packaging and sending.
The benefits of third-party fulfillment include the fact that you don't have to pay for every piece of tape, boxes, and employees who handle the items. These elements are typically tied into your fulfillment costs, but they generally remain at a lower fixed monthly cost. You also don't have to worry about dropping a large container of shipments at the UPS store. All of this is done for you with a Shopify third-party fulfillment arrangement.
Step 4: Shipping to the Customer
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Once the product is in a box, taped, and branded, it's ready for shipment. Every shipping service, from USPS to UPS, and FedEx to DHL, offers discounted pricing for businesses–especially those sending large quantities on a regular basis.
T fulfillment company you partner with handles the postage and shipping. It depends on the fulfillment provider, but the postage and shipping costs are often highly-discounted and provided with your subscription fee. A fulfillment company already has partnerships set in place because of their high shipping frequencies and quantities. That savings is passed on to you, allowing for a faster, less expensive shipping solution.
It's also worth mentioning that Shopify fulfillment companies usually accept returns. Your customer support team will most likely have to answer return-based questions, but it makes the most sense to send those returns to the warehouse they came from, placing them back on the shelf to be sent out for the next order fulfillment.
Choosing a Shopify Fulfillment Option
As a Shopify merchant, you have a few options when it comes to your product fulfillment:
- Self-fulfillment – Storing, packaging, and shipping everything yourself, whether it be in your home or with a warehouse you own.
- Third-party logistics – Partnering with a fulfillment company through a Shopify app or the Shopify Fulfillment Network. This method requires a fee, but then most of, or all of, the fulfillment process is managed by another company.
- Dropshipping – You can learn more about dropshipping here. It's a newer method where you, the merchant, never even sees the product. The item is shipped directly to the customer from the supplier's warehouse. Keep in mind, there's lots of unrealistic hype about dropshipping online. So, make sure you proceed with caution and understand that dropshipping is not a way to get rich quick, but rather another ordinary fulfillment solution.
Read our comparison to learn more about the three primary fulfillment options.
Since this article is focusing on the Shopify Fulfillment Program, it makes sense to concentrate more on which category of fulfillment that falls into.
As mentioned before, the actual Shopify Fulfillment Program (offered by Shopify – not as one of the many third-party fulfillment apps) actually falls under the third-party logistics category.
It's more consolidated under one platform than a standard third-party logistics operation, but you are, in fact, turning over your entire fulfillment process to a third-party company–in this case, Shopify.
Going With the Shopify Fulfillment Network
The Shopify Fulfillment Network is the same thing as the Shopify Fulfillment Program. Earlier, we talked a bit about Shopify's fulfillment in general, from dropshipping apps to third-party logistics.
The Shopify Fulfillment Network is different.
It's provided by the Shopify brand to help you with sourcing, storage, packing, and shipping.
As with all quality third-party fulfillment companies, Shopify provides a network of fulfillment centers, suppliers, and warehouses so that you can utilize the ones that make the most sense for your business.
The big question is, why would you consider the Shopify Fulfillment Network over the many other established fulfillment companies, or the shipping partners you've already worked with in the past?
That's a great question! For some businesses, it makes no sense to convert to the Shopify Fulfillment Network, especially if it would cost too much money to make the switch.
Yet, for other brands, the Shopify Fulfillment Program is an incredible opportunity to not only bring all of your fulfillment under one dashboard, but to save money in the process.
The Benefits of the Shopify Fulfillment Network
There are plenty of reasons to consider some sort of third-party fulfillment when taking orders from customers. But what are the benefits of the Shopify Fulfillment Network? How does it compare to other fulfillment solutions like third-party logistics and dropshipping?
Your Operation Remains Under One System
Your website, orders, sourcing, and shipment elements are consolidated into one dashboard. Shopify already provides excellent site-building and online selling tools, so for some companies, it makes sense to keep all of those logistical steps in one area.
Your Company is the Star, Not Your Fulfillment Company
Your branding is maintained throughout the entire fulfillment process. You get to place branding on packaging, insert slips, and receipts, whereas other fulfillment options often don't allow branding on or inside the packaging.
Overall, a quality fulfillment company makes your brand the star, instead of promoting their own services or sending out completely blank boxes and receipts.
The worst offender of “brand-stripping” is Amazon. It's nice to reach an audience through Amazon, but boy, they really love promoting Amazon, and only Amazon. Your logo isn't on the boxing, it's the Amazon Smile logo. The emails sent out are Amazon's, and many of the other communications with your customers eliminate your own logo and brand colors to make way for Amazon's.
The Shopify Fulfillment Network seems to do a good job of making your business the primary focus. You gain access to a customer experience representative who asks what needs to be printed on your packaging, what goes inside each box, and whatever other branding elements you need.
You Maintain Control with the Shopify Fulfillment Network
This is an end-to-end solution, meaning there's more control since you know who to contact when problems arise. This type of configuration also ensures that you're not in the dark when it comes to packaging, shipping, or customer returns.
The Shopify Fulfillment Network Offers Inventory Distribution
A strength behind third-party fulfillment is how these companies are able to manage warehouse and shipping networks at a far lower cost to your company. If you were to pay for your own warehouse, it would cost more, and you'd be at a disadvantage when it came to shipping speed.
In short, a fulfillment partner provides warehousing and shipping centers in several locations. If you sell a product to someone in Wisconsin, the Wisconsin shipping center is called upon to fulfill the order. If a Shopify order is needed in California, hopefully you have some of your inventory in a Los Angeles, or nearby, center to get that order to the customer as fast as possible.
And that's the trick: figuring out where to store your products in the network. The Shopify Fulfillment Network has a solution that recommends inventory distribution based on past sales and where your customers are located. Smart suggestions are sent to you so that you can decide to put maybe 100 units in the Nebraska warehouse, 40 units in the Florida warehouse, and 10 units in the Texas warehouse.
Fulfillment is becoming smarter with machine learning, and Shopify is taking full advantage of that. There's no reason for you to have all of your inventory in one location anymore, and that bodes well for your customers and your brand.
All Orders are Shipped by Shopify Fulfillment
It doesn't matter the sales channel, the Shopify Fulfillment Network is there to ship to all customers.
As you may be aware, Shopify links to a wide range of sales channels, such as:
- Your Shopify online store.
- Facebook.
- Amazon.
- Etsy.
- eBay.
- Many more.
Instead of segmenting your shipments based on the channel, the Shopify Fulfillment Network provides shipping services for all of these customers, no matter which channel they shop from.
Shopify Fulfillment Has a Plan to Pass Costs to Merchants
As you'll learn in the following section, the cost of the Shopify Fulfillment Network varies for all businesses. However, Shopify has made it clear that the pricing is meant to keep costs low on a regular basis.
This is done by offering a robotics-driven fulfillment service, strong partnerships with shipping services, and a streamlined system through the Shopify dashboard.
It appears that much of the Shopify Fulfillment process is automated, similar to Amazon's. However, Shopify also has employees working with robotics to ensure quality control and to locate and package items the right way.
For instance, there may be a converter belt that organizes, labels, and ships all of the boxes, but there's a good chance that a person stocked the warehouse with your inventory, potentially placed it in the box, and ensured that your branding slip was included in the box.
It seems like a nice combination of automation for cost-cutting with human support for quality-control.
You Maintain Control Over Your Data and Products
You're not signing over anything to Shopify. Far too often we see platforms like Facebook and Amazon mining the data collected by merchants, then reselling that data for their own purposes.
Shopify has a system where your company owns all inventory, customer, and sales data, along with your website and the selling that goes through that website.
A Dedicated Customer Team
The fulfillment journey takes your product through several steps.
It's like completing a double play in baseball. While watching in the moment, a double play appears to be fast and simple. But the ball must be fielded cleanly, thrown accurately to second base, caught at second base, then thrown to first base, and finally caught at first base. Not to mention, the fielders have to avoid distractions and collisions with baserunners.
All of those links in the process must be close to perfect in order to end with the desired result.
Most people don't think much about a package ending up at their door. If anything, we've come to take a delivered packaged for granted. But it's an incredible feat every time.
Problems arise with the process on a regular basis, so that's why merchants need actual support reps to speak with.
Is your customer complaining about a late delivery? You need someone to call at your fulfillment company.
Are you getting reports of low product quality or broken boxes? Again, you need a person to speak with.
If it's difficult to get a person on the phone from your fulfillment company, you have a big problem.
Luckily, Shopify has been known for top-notch customer support, and it appears that this type of merchant assistance is bleeding over into the Fulfillment Program.
The Shopify Fulfillment Cost
All fulfillment options have differing pricing, so you'll have to contact the dropshipper, warehouse, or third-party logistics company you plan on partnering with.
As for the Shopify Fulfillment Program, pricing is dependant on your needs. Therefore, we can't give you concrete numbers right here, but it shouldn't take long to get some pricing specifics after you contact Shopify and tell them you're interested in the Fulfillment Program.
Here's what we do know about the Shopify Fulfillment cost:
All pricing plans for Shopify Fulfilmment are based on your business' unique needs.
Getting a quote is as simple as applying for the program and waiting for a response. From our experience, it doesn't take long to start communicating with a representative and receive an idea for how much it's going to cost you. What's nice is that you can also cut some of the fulfillment elements if you'd like to save money early on.
How is your Fulfillment Fee Decided?
A quote is provided to individual stores based on the following:
- Transportation needs.
- Packaging requirements.
- Storage requirements.
- Special projects.
Shopify provides a general cost that you'll have to pay as an ongoing fee. However, some of your rates are calculated on a daily or “by-order” basis.
For instance:
- Special project fees – These are often one-off or short projects where new fees are calculated into your monthly fulfillment rate. These might include projects for seasonal bundles, inventory validation, and more.
- Transportation fees – Shopify calculates the best rate for shipping out every single one of your orders. To do so, there's an automated process that factors in the size of your package, how long it will take to ship, and which services provide the best rates.
- Storage fees – This is set every day based on the number of items you have stored in each facility and how much space your inventory takes up. Therefore, a jewelry store wouldn't have to pay as much money as a TV seller, considering TVs are bigger than necklaces and earrings.
One Bill for All Shopify Services
Another benefit to consider is how you continue paying one bill to Shopify, along with the fees for your website and whatever apps you're using.
We like this for a few reasons. First of all, you don't have to worry about managing multiple bills from other sources every month. It's also nice to know that Shopify doesn't sneak in hidden fees. You're able to predict your costs to the penny every month.
Your business and Shopify decide on the rate before starting the Fulfillment Program. After that, you have the option to add on services or special fees, but nothing changes on your monthly bill until you decide to add or remove something.
The Discounted Shipping Rates
As with most third-party logistics services, Shopify is already partnered with USPS and UPS. Because of this, you're only going to get the cheapest rates possible when transporting your products from the warehouse to your customers.
It's rather unlikely that any self-fulfillment operation would be able to get shipping prices as low as they can get with Shopify or other fulfillment services.
What are the Requirements to Join the Shopify Fulfillment Network?
The Shopify Fulfillment Network is growing rapidly, but as of right now, there are some limitations to which types of merchants can join.
Shopify Fulfillment is right for the following business:
- Those selling in the United States. You can still ship elsewhere, but anything going through Shopify Fulfillment must be in the US. We're assuming this will expand in the future, but the current facilities are scattered throughout the US.
- You can have a maximum of 2,000 SKUs.
- There's a requirement to ship between 10 and 10,000 orders each day. This opens up the Shopify Fulfillment Program to many businesses, but you're out of luck if you can only sell five products per day or if you're growing so rapidly that the 10,000 per day maximum isn't enough.
- You can't sell any perishable or regulated products. You'll have to speak with Shopify to ensure that your products aren't perishable or regulated. Some examples of perishables include produce or meats, while regulated items often fall under the gambling, firearms, or drug categories.
Shopify Fulfillment with the CHUCK Robot
If you're curious about how robotics plays a role in your potential fulfillment with Shopify, take a look at the CHUCK system being implemented by the Shopify Fulfillment Network.
CHUCK is a robotics product created by a company called 6 River Systems. Shopify acquired the company to incorporate the CHUCK robot into its fulfillment program.
CHUCK is:
- A collaborative robot that assists in the picking and organizing of products in warehouses.
- The robot is a self-driving, autonomous carrying device. It looks similar to a heavy-duty shopping cart or a wheeled luggage rack you'd see at a hotel.
- They pick items and do much of the walking work typically required by employees.
- Counting, picking, putting away, replenishment, and sorting is all done by CHUCK.
- Employees no longer have to push around heavy trolleys or carry packages.
- CHUCK has made fulfillment 2-3 times more efficient than human fulfillers.
Is Shopify Fulfillment Right for Your Online Store?
To answer this question, start by running through the basic requirements of the Shopify Fulfillment Program. For instance, if you sell regulated items outside of the US, you can't use Shopify Fulfillment.
If you're able to get accepted into the program, it's a good idea to apply and get a custom quote for how much it's going to cost you.
For mature businesses, the quote provides a concrete number to compare with your past fulfillment costs. For newer merchants, the quote can be compared with quotes from other third-party logistics companies.
Also, take into consideration the many benefits that the Shopify Fulfillment Network offers over other fulfillment options. With robotics, fast shipping, and low pricing, it looks like a quality choice for many ecommerce stores.
If you have any questions about the Shopify Fulfillment Network, let us know in the comments below. Also, share your thoughts about the program if you have experience with it!
The post Shopify Fulfillment Review (2020): A Network for Fast, Low-Cost Shipping With Superior Merchant Branding appeared first on Ecommerce Platforms.
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