How To Choose the Right Fulfillment Service for Your Brand

by Jaidyn Farar

Consumers expect online shopping to be convenient. When they make a purchase, they want to be able to track their package, have it arrive on time, and get exactly what they ordered—no more, no less. 

To provide a delivery experience that keeps consumers coming back, you need to have an airtight order fulfillment process. While many businesses handle these fulfillment themselves, others work with external partners that provide fulfillment services. These partners, known as third-party logistics providers (3PLs), use their established logistics infrastructures to handle fulfillment for many businesses at once. 

If you want to understand how fulfillment services work and how to choose the right 3PL for your business, you’re in the right place! This article will review the different fulfillment services available, list some factors to consider when choosing a 3PL, and recommend some of the best fulfillment service providers out there.

Note: If you want to keep fulfillment in-house, check out the EasyPost Enterprise suite of shipping solutions to save money on shipping, automate manual processes, and eliminate data entry errors.

What are fulfillment services?

Order fulfillment includes all the processes needed to ship products to customers, including warehousing, inventory management, picking, packing, shipping, and returns. When these tasks are handled by third-party logistics providers (3PLs) on behalf of businesses, they’re known as fulfillment services. 

Fulfillment service providers partner with multiple businesses to process and ship their customer orders. They receive and store inventory, pick and pack orders, coordinate package delivery, and sometimes perform specialized tasks. Because these 3PLs own and operate fulfillment centers spread strategically across the country or world, they can offer fast, affordable delivery to most geographic areas. 

By leveraging outsourced fulfillment services through an external provider, businesses can scale more efficiently, reduce costs, and focus on core business activities like product development, marketing, and customer acquisition.

How to fulfill an ecommerce order

Before moving on, let’s back up for a second. Is working with a 3PL the only way to ship customer orders? The short answer is no. The long answer is that you can leverage four types of fulfillment: in-house, third-party (3PL), dropshipping, and hybrid. 

While this article will focus mainly on the fulfillment services provided by a 3PL, we’ll briefly review the differences between the four fulfillment types, as well as some pros and cons of each. 

In-house (self-fulfillment)

Self-fulfillment involves managing the entire order fulfillment process in-house, from receiving orders to shipping them out to customers. When an order is received, your team manually processes the order, picks products from inventory, packs them into shipping boxes or poly mailers, and prepares them for shipment. You also handle returns processing, ensuring that customers can easily create a return label and ship their product back to you.

Self-fulfillment provides businesses with direct control over the fulfillment process but requires significant time, labor, and infrastructure investment to manage efficiently. 

For smaller businesses, in-house fulfillment is almost always the most cost-effective option. As businesses scale, 3PL fulfillment becomes more financially viable. Still, many large businesses keep fulfillment in-house in order to maintain more control over the customer experience. 

In addition to using advanced warehouse technology, these enterprises use shipping software like EasyPost Enterprise to automate shipping, eliminate errors, and save money. 

Learn how EasyPost Enterprise makes in-house fulfillment more efficient and cost-effective.

Third-party fulfillment (3PL)

When you use a 3PL for fulfillment, you outsource warehousing, picking, packing, and shipping to a specialized logistics provider. When an order is received, it’s automatically sent to the 3PL's system. Their team processes the order, picks the items from the warehouse, packs them, and ships them out to customers.

3PLs are popular fulfillment options because they have the expertise, infrastructure, and technology to optimize the fulfillment process. This gives businesses more time to focus on activities that fuel growth, such as marketing and product development. While outsourcing your fulfillment may require a sacrifice of control, it also offers scalability and flexibility.

In the section “Key ecommerce fulfillment services,” we’ll dive deeper into the value a 3PL can bring to your logistics operations.

Dropshipping

Dropshipping is a fulfillment method where the business doesn’t hold inventory, instead partnering with suppliers who directly ship products to customers. When a customer places an order on the ecommerce platform, the order details are forwarded to the dropshipping supplier, which then picks, packs, and ships the products directly to the customer's address. 

Dropshipping eliminates the need for inventory management and upfront investment in stock; however, it can also result in lower profit margins and less control over product quality and shipping times.

Hybrid

Hybrid fulfillment uses a combination of different methods to fulfill customer orders. This often looks like using both in-house fulfillment and third-party fulfillment. Hybrid fulfillment is flexible, and you can set things up in the way that works best based on your shipping volume and the location of your customers. For example, consider the following options:

• Use different methods for different SKUs. Let’s say you ship some low-volume but high-value products and some high-volume but low-value products. You might decide to handle the more expensive products yourself (to maximize the chances of safe shipping) and use a 3PL to fulfill the remaining orders. 
• Use different methods for the same SKUs. You might divide up the country into geographic areas, handling orders yourself for a certain region and having your 3PL cover the remaining regions.

As part of an omnichannel strategy, hybrid fulfillment can also consist of a combination of in-house fulfillment and dropshipping. 

Key ecommerce fulfillment services

Your fulfillment services provider will help with every stage of the order fulfillment process, using their established systems and technology to help streamline your shipping and logistics. Let’s run through the stages of fulfillment, looking at how a 3PL can help with each one. 

Receiving 

In the receiving stage, 3PLs process incoming inventory shipments upon arrival at the warehouse. They unload goods, conduct inspections for any damage, and verify the received quantities against corresponding purchase orders. Then, leveraging technology such as barcode scanning and RFID systems, workers label each item, assign appropriate storage locations, and integrate them into the warehouse management system. 

Warehousing

Warehousing involves storing products until it’s time to send them to customers. Using fulfillment services allows you to access strategically located warehouses, which optimizes inventory distribution and reduces shipping costs and transit times. 

Third-party logistics providers help ensure that high-volume shippers have enough stock to fulfill orders promptly, even during peak demand periods. They do this by employing advanced systems that enable efficient inventory tracking and replenishment.

• Warehouse management system (WMS). A WMS increases the efficiency of warehouse operations, including inventory tracking, picking, packing, and shipping.
• Barcode and RFID Technology. Barcode and RFID (radio frequency identification) solutions improve inventory tracking accuracy and reduce picking errors.
• Warehouse robotics. Automation solutions such as automated guided vehicles (AGVs), sortation systems, and voice-to-pick systems streamline the movement of goods within warehouses, optimizing picking and replenishment processes.

Order management

By outsourcing order management to fulfillment services, high-volume shippers streamline the process of receiving, confirming, and preparing orders for shipment. This results in faster order turnaround times, fewer errors, and improved customer satisfaction. 

Choose a fulfillment partner that integrates with your order management system (OMS) so order information flows automatically to their warehouse systems. 

Inventory management

One of the biggest advantages of working with a 3PL is that they employ distributed inventory strategies. Your inventory is stored across multiple fulfillment centers, and the 3PL optimizes inventory levels based on demand patterns and geographic considerations. This allows you to ship quickly no matter where customers are located.

A 3PL can also help with inventory management. They use technology like real-time tracking systems and demand forecasting analytics to monitor inventory levels and reorder the right number of SKUs. By doing so, they avoid stockouts and overstocking, both of which negatively impact revenue.

Kitting

Kitting is a fulfillment service where individual items or components are grouped together to form a single package or kit. Because kitting is done before the products are ordered, it makes picking much simpler; pickers just grab the assembled kit rather than having to locate individual products.

This process is commonly used in ecommerce and retail environments to streamline order fulfillment, enhance efficiency, and improve customer experience. It’s especially useful for businesses with a subscription model; a fulfillment services provider specializing in subscription boxes might offer kitting for items like cosmetics, snacks, or grooming products curated to fit a specific theme or customer preference. 

Picking and packing

In the picking and packing stage, items are retrieved from their storage locations, packed into shipping containers, and prepared for outbound shipment. 

Warehouse staff—often with the help of automated systems—pick items from shelves or racks based on order requirements. The picked items are then brought to a packing station, where they’re carefully packed into boxes or envelopes. Finally, shipping labels are attached to the packages, which are handed over to shipping carriers for delivery to customers. 

Fulfillment service providers often invest in complex systems to perfect their picking and packing processes. While large businesses may be able to afford these systems in their own warehouses, many opt to work with a 3PL instead. Because the 3PL already has the infrastructure in place, the business reaps the benefits of automation without the upfront costs. 

Shipping and delivery

Shipping is one of the most crucial components of fulfillment because it directly impacts customer satisfaction and retention. Fulfillment service providers leverage their expertise and partnerships with shipping carriers to offer a range of shipping options, including standard, expedited, and international shipping. 

Outsourcing shipping and delivery tasks lets you benefit from discounted shipping rates and access to advanced shipping technologies. Fulfillment service providers often partner with shipping software like EasyPost to offer these solutions. 

• Shipping optimization. Shipping optimization algorithms analyze factors like package dimensions, weight, destination, carrier rates, and delivery times to determine the most cost-effective shipping method for each order.
• Tracking technology. Tracking systems provide real-time visibility into shipment status, allowing customers and businesses to monitor shipments' progress from order placement to delivery.

For high-volume shippers who prefer to operate their own distribution centers, enterprise shipping software provides similar benefits with more hands-on control of your fulfillment processes.

Returns management

Since 3PLs have lots of experience with returns, they’ve fine-tuned the returns process and can help minimize the costs and time associated with returns. 

Returns management involves processing returned items and managing the reverse logistics process. When customers initiate returns, they follow a procedure that usually involves requesting a return, receiving a return shipping label, and sending the items back to the warehouse. 

When returned items arrive at the warehouse, 3PL staff members inspect them to assess their condition and make a decision about what to do with them. If products are still in great condition, they can restock and sell them. For damaged products, they decide whether refurbishment is an option. 

Choosing the right fulfillment service

Interested in using a fulfillment service company to handle inventory management, warehousing, shipping, and more? In this section, we’ll list a few of our partners and walk you through some things to keep in mind when evaluating different fulfillment providers. 

Best fulfillment services out there

EasyPost works with a variety of logistics businesses, including 3PLs, that meet our standards of excellence and technological development. Consider the 3PLs below if you’ve decided it’s time to outsource. 

• ShipBob. ShipBob offers comprehensive order fulfillment services with a remarkable 99.96% on-time delivery rate. With integration capabilities across major ecommerce platforms and a network of over 50 global fulfillment centers, they provide efficient inventory management and omnichannel solutions for businesses of all sizes.
• ShipMonk. ShipMonk provides ecommerce businesses poised for growth with a streamlined order fulfillment solution, integrating seamlessly with sales channels for stress-free scaling. Shipmonk has eight locations in the U.S. and four international locations.
• Allpack. Allpack offers expedited fulfillment shipping and cost-effective rates nationwide, empowering businesses to prioritize growth while entrusting their inventory management to capable professionals. They have nine locations in the U.S.
• Aero Fulfillment Services. Aero Fulfillment Servicesopen_in_new, strategically situated in Cincinnati, Ohio, offers reliable warehousing, fulfillment, and distribution solutions. With exceptional order and inventory accuracy rates, Aero Fulfillment Services delivers performance you can rely on.
• ODW Logistics. ODW Logistics open_in_newhas a vast network of distribution centers (31 in total), including specialized cold chain facilities. It provides scalable fulfillment services tailored to diverse needs, and it offers specialized services such as kitting, product testing, and more.

Things to consider when choosing a fulfillment partner

Answering the following questions can help you choose a fulfillment partner that aligns with your objectives, budget, and shipping requirements.

What are my specific fulfillment needs and goals?

When selecting a 3PL, you need to ensure that they can meet your business's unique needs. Take stock of those needs by reviewing your current logistics operations, including your monthly order volume, most common shipping destinations, and any specialized services you use (such as kitting).

If your industry has unique storage and shipping needs, consider those as well. Often, 3PLs will specialize in certain industries. By partnering with one of these organizations, you’ll know that the 3PL has hands-on experience meeting your requirements.

For example, if you have high order volumes and need international shipping capabilities, you'll want to prioritize a 3PL with experience in handling large-scale operations and international logistics. If you ship food, you’ll probably want to consider 3PLs that have temperature-controlled storage. 

What is my budget for fulfillment services?

Evaluating your budget constraints will help narrow down your options and choose a 3PL that you can afford to work with long-term. Consider not only the cost of basic fulfillment services but also any additional fees for value-added services, storage, or technology integration. 

And remember—while cost is important, you also need to weigh the value provided by the 3PL in terms of efficiency, reliability, and customer satisfaction. It’s all about finding the right balance of affordability and service.

How many distribution centers does the 3PL have, and where are they located?

The number and location of a fulfillment service provider’s distribution centers (DCs) impacts shipping times and costs, which in turn helps determine the customer experience. 

Before choosing a 3PL, map out the areas where your major customer bases are located and make sure your 3PL has locations that can ship to these customers. Consider whether the 3PL has multiple fulfillment centers to optimize inventory distribution and reach a broader customer audience.

What technology and systems does the 3PL utilize? 

Understanding a 3PL’s tech stack is essential, as you need to make sure their systems are compatible with your ecommerce platform and other software. Ask about their OMS, WMS, shipping software, data analytics software, and any other tools they use for inventory tracking, order processing, and reporting. 

If the 3PL’s systems are compatible with your systems, you’ll be able to integrate easily and synchronize your data. 

What is the 3PL's track record and reputation? 

Research the reputation and track record of potential partners, assessing their reliability, performance, and customer satisfaction levels. Look for reviews, testimonials, and case studies from other clients to get a sense of their experience. 

What is the inventory shrinkage allowance?

Inventory shrinkage happens when goods get lost or damaged, and the level of shrinkage is usually revealed during a physical inventory count. Most 3PLs include an inventory shrinkage allowance in their contracts that specifies the amount of inventory that can be misplaced before they have to reimburse you for it. While this gives them some leeway, it can be to your business’s detriment

Before choosing a 3PL, make sure you thoroughly understand the terms and conditions regarding inventory shrinkage, including how it's calculated, monitored, and addressed. You should also assess the 3PL's track record for minimizing shrinkage.

Fulfillment services made easy

When it comes to order fulfillment, high-volume shippers have a lot to consider. Are you struggling to meet customer demand? Do frequent demand fluctuations make it difficult to staff and maintain distribution centers? Are you unsure whether investing in warehouse technology is a good idea? If you’re facing any of these issues, working with a 3PL might be the key to simplifying your logistics.

If you’re looking for a fulfillment services provider, look no further! EasyPost has cultivated a diverse network of logistics partners, including some top-notch 3PLs. These 3PLs can take care of all your fulfillment needs, including receiving, warehousing, picking and packing, and shipping. And if you want to handle your own fulfillment, make sure you have the best shipping solution on the market—EasyPost Enterprise. 

Talk with one of our shipping experts to learn more about the right solution for you.