Fulfillment describes nearly everything that happens outside of the actual taking of an order in retail sales, particularly in mail-order or ecommerce sales. A fulfillment partner is a company or third party that is responsible for carrying out these tasks on behalf of a seller.
When an item is sold on eBay, the general steps involved in the process are:
- An item to be sold exists somewhere in space. Depending on the seller and his or her business model, the location of the item varies, but in any case the item itself exists and takes up space somewhere, provided it is not a purely virtual item.
- A seller lists an item for sale. Whether it happens via Turbo Lister, GarageSale, an auction manager, or the good, old-fashioned eBay listing form, nothing is sold on eBay until a listing is created for it so that buyers can find it in search results or by browsing through eBay categories. As a part of this process photos may be taken, descriptions crafted, and prices set, but the basics remain the same.
- A buyer commits to buy the item. After searching for and finding the item that they'd like to buy, a buyer agrees to purchase the item. Depending on this listing format, this can occur through bidding or through the use of a "Buy It Now" button, some of which require immediate payment and some of which don't.
- The buyer submits payment. The buyer uses an accepted payment method (usually PayPal) to pay for the item that they have agreed to purchase. eBay makes a note of the fact that payment has been submitted and notifies all parties involved in the transaction that this is now the case.
- The item is packaged for shipment. Because most of the time on eBay the completion of a sale involves the movement of the sold item from its pre-sale location to an entirely different area, region, or even nation, it generally needs to be packaged for shipment via a shipping carrier.
- The item is shipped via a carrier. The now packaged item is taken by plane, truck, boat, or some combination of these to its new home, and delivered to the buyer.
The process or task known as "fulfillment" generally encompasses steps 1, 5, and 6. Fulfillment is the process of housing the product to be sold before the sale occurs, then packaging the item for shipment once payment has been received and actually shipping the item to its destination.
Because fulfillment is often one of the most expensive (i.e. overhead-incurring) and time-consumping parts of running an eBay business, it's important for sellers to have a great set of streamlined processes, easy-to-manage packing materials, office resources available to them, and to focus on the fulfillment component of eBay selling with an eye toward quality.
Using a Third Party for Fulfillment
The difficulty, cost, and inconvenience involved in fulfillment have also led to the emergence of companies or products that specialize in this process and even the use of companies that don't necessarily specialize in fulfillment for eBay sellers as resources for fulfillment. A company that warehouses items to be sold on behalf of a seller, then packages them and ships them to the buyer according to seller specifications once payment has been received is called a fulfillment partner if the company specializes in this series of tasks. Common businesses used for fulfillment in eBay selling include:
- Other retailers or liquidators (BestBuy.com, NewEgg.com, Overstock.com, and so on) used without their explicit knowledge in a drop-shipping capacity.
- So-called drop shipping companies whose entire business model is to act as a combined product source and fulfillment partner at the same time for eBay sellers.
- Selling platforms like Amazon.com that also offer the equivalent of fulfillment services for off-site sales.
- Fulfillment partner services like ShipWire and ENL Global that offer professional, cost-effective warehousing and shipping for online retailers.
Though the use of a third party for fulfillment may sound just a bit scary to a new or small seller, you don't have to be a big fish in the eBay pond to have someone else handle fulfillment for you. Many small-to-medium sellers use one or more of the businesses above as a part of their eBay business with great results, saving themselves the trouble of being responsible for packing and shipping and related tasks like sourcing packing materials, while often also avoiding sticky issues related to being a home business subject to residential zoning laws.
Generally speaking, the use of a fulfillment partner or of a third party to handle fulfillment of your sales for you provides the following benefits:
- Cheaper shipping. Fulfillment partners or third-party fulfillers often have a much higher total shipment volume than you do, and thus are stocked to the gills with packing materials, tools, and labor and get volume discounts on both packing materials and shipments with major carriersall of which reduce shipping costs.
- Better packaging. Because of their access to better materials and tools and the use of specialized general labor on the warehouse floor, the packaging done by third parties of this kind is often superior to what you can achieve on your own, particularly if you're a home-based business. The packages look better, appear to be more professionally packed, are more likely to survive intact, and often weight less than do home-packed items using materials from local shipping suppliers, the UPS Store, etc.
- Faster shipping. When using a fulfillment partner or third party, all that is needed to get an item packed and out the door is an indication that the item is to be shipped (and, in the case of third parties from which you are also sourcing the item, such as a drop shipping company or a larger online retailer, online payment for the goods). The result is often a same-day turnaround for orders that might have taken a completely independent small seller a day or even two or three to package, label, and ship.
- Less overhead. While it may seem that the use of a service of some kind implies its own overhead, and this is in fact true, the overhead incurred by using a fulfillment partner is often less than the overhead involved in outfitting and maintaining a shipping center in your own home or small business location, along with the overhead involved in spending time managing packaging, shipping, and interfacing with carriers.