Fulfillment house

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Fulfillment house and fulfillment center (in British English: fulfilment house and fulfilment centre) are modern terms for a packing warehouse. The terms were coined in the middle of the 1990s, and "fulfillment center" is usually used about an in-house packing warehouse, while "fulfillment house" tends to be used about companies that specialize in warehousing and packing for others.

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Origin of term

The usage of the word "'fulfillment" in relation to goods shipments comes from the terms "order fulfillment" and "product fulfillment", which were introduced by business management researchers who analysed supply chains in the late 1980s. This was soon picked up by PR people working for picking warehouse companies, who felt that "fulfillment centre" or "fulfillment house" sounded more positive and active than the old term "warehouse". The terms are still so new and unknown by people outside that industry that "warehouse" often is added in parentheses or used as an alternative word in the same text, in order to explain to laymen what "fulfillment centre" or "fulfillment house" actually means. [1] [2]

External or internal

Some companies, such as Amazon, have their own fulfillment centers, while many smaller e-commerce companies outsource their warehousing, picking, packaging and shipping to external fulfillment companies. These external fulfillment companies are known as third-party logistic providers. Many larger companies with their own fulfillment centers also handle warehousing and shipping for other sellers. Amazon itself is one such example, offering to handle warehousing and order fulfillment to third-party sellers. [3] Another, very early, example was Fingerhut, which in the 1990s expanded its own fulfillment center in order to take on fulfillment services for other companies, including the company that eventually acquired Fingerhut: Federated Department Stores. [4]

Types

There are multiple types of fulfillment houses. In the past, a fulfillment center was typically associated with filling larger commercial orders to a retailer or distributor. Today, with the growth of ecommerce, there are fulfillment centers that strictly focus on shipping small parcels direct-to-consumers (DTC). Additionally, some ecommerce fulfillment centers focus on a niche, such as small or large products, a specific type of product (for example - apparel), or they only with a certain number of stock keeping units (SKUs).[ citation needed ]

A subset of ecommerce known as drop shipping, a type of product fulfillment that occurs directly from manufacturers to consumers via 3rd party retail websites, utilizes the manufacturer's or a wholesaler's fulfillment centers to deliver goods to the customer. In drop shipping, the company that generates the sale never handles the physical product, but it does pass on fulfillment requirements to the fulfillment house so that customer demands like two-day shipping can be met.[ citation needed ]

Fulfillment House Due Diligence Scheme

The UK government believes that fulfillment houses are in a position to facilitate non-payment of VAT on goods imported into the UK. The government argues that this type of abuse is "enabled by misdeclaration and undervaluation of goods imported from outside the EU, and sometimes the abuse of reliefs that are designed to facilitate trade. This is followed by the onward sale of the goods to customers in the UK taking place without the correct amounts of UK VAT being paid" and believes that registering fulfillment houses and requiring due diligence and record-keeping is "part of the solution". [5]

Provision for this "Fulfillment House Due Diligence Scheme" is included in sections 48 to 59 of the Finance Bill 2017, introduced into the UK Parliament in September 2017. [6]

Related Research Articles

E-commerce is the activity of electronically buying or selling products on online services or over the Internet. E-commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. E-commerce is the largest sector of the electronics industry and is in turn driven by the technological advances of the semiconductor industry.

<span class="mw-page-title-main">Logistics</span> Management of the flow of resources

Logistics is a part of supply chain management that deals with the efficient forward and reverse flow of goods, services, and related information from the point of origin to the point of consumption according to the needs of customers. Logistics management is a component that holds the supply chain together. The resources managed in logistics may include tangible goods such as materials, equipment, and supplies, as well as food and other consumable items.

<span class="mw-page-title-main">Amazon (company)</span> American multinational technology company

Amazon.com, Inc. is an American multinational technology company focusing on e-commerce, cloud computing, online advertising, digital streaming, and artificial intelligence. It has been often referred to as "one of the most influential economic and cultural forces in the world", and is often regarded as one of the world's most valuable brands. It is considered to be one of the Big Five American technology companies, alongside Alphabet, Apple, Meta and Microsoft.

<span class="mw-page-title-main">Package delivery</span> Type of delivery service

Package delivery or parcel delivery is the delivery of shipping containers, parcels, or high value mail as single shipments. The service is provided by most postal systems, express mail, private courier companies, and less than truckload shipping carriers.

<span class="mw-page-title-main">Distribution (marketing)</span> Making products available to customers

Distribution is the process of making a product or service available for the consumer or business user who needs it, and a distributor is a business involved in the distribution stage of the value chain. Distribution can be done directly by the producer or service provider or by using indirect channels with distributors or intermediaries. Distribution is one of the four elements of the marketing mix: the other three elements being product, pricing, and promotion.

Discounts and allowances are reductions to a basic price of goods or services.

<span class="mw-page-title-main">Warehouse</span> Building for storing goods and giving services

A warehouse is a building for storing goods. Warehouses are used by manufacturers, importers, exporters, wholesalers, transport businesses, customs, etc. They are usually large plain buildings in industrial parks on the outskirts of cities, towns, or villages.

An invoice, bill or tab is a commercial document issued by a seller to a buyer relating to a sale transaction and indicating the products, quantities, and agreed-upon prices for products or services the seller had provided the buyer.

<span class="mw-page-title-main">Receipt</span> Written acknowledgment that a person has received money or property in payment

A receipt is a document acknowledging that a person has received money or property in payment following a sale or other transfer of goods or provision of a service. All receipts must have the date of purchase on them. If the recipient of the payment is legally required to collect sales tax or VAT from the customer, the amount would be added to the receipt, and the collection would be deemed to have been on behalf of the relevant tax authority. In many countries, a retailer is required to include the sales tax or VAT in the displayed price of goods sold, from which the tax amount would be calculated at the point of sale and remitted to the tax authorities in due course. Similarly, amounts may be deducted from amounts payable, as in the case of taxes withheld from wages. On the other hand, tips or other gratuities that are given by a customer, for example in a restaurant, would not form part of the payment amount or appear on the receipt.

Drop shipping is a form of retail business in which the seller accepts customer orders without keeping stock on hand. Instead, in a form of supply chain management, the seller transfers the orders and their shipment details either to the manufacturer, a wholesaler, another retailer, or a fulfillment house, which then ships the goods directly to the customer.

<span class="mw-page-title-main">Distribution center</span> Building stocked with goods for delivery

A distribution center for a set of products is a warehouse or other specialized building, often with refrigeration or air conditioning, which is stocked with products (goods) to be redistributed to retailers, to wholesalers, or directly to consumers. A distribution center is a principal part, the order processing element, of the entire order fulfillment process. Distribution centers are usually thought of as being demand driven. A distribution center can also be called a warehouse, a DC, a fulfillment center, a cross-dock facility, a bulk break center, and a package handling center. The name by which the distribution center is known is commonly based on the purpose of the operation. For example, a "retail distribution center" normally distributes goods to retail stores, an "order fulfillment center" commonly distributes goods directly to consumers, and a cross-dock facility stores little or no product but distributes goods to other destinations.

VAT-free imports from the Channel Islands to the United Kingdom took place for a few years during the early 21st century as a result of low-value consignment relief (LVCR). This is a tax relief that applies to low-valued imports to the European Union, exempting them from value-added tax (VAT). Although the UK was a part of the EU from 1973 until Brexit in 2020, the Channel Islands were not and, unlike the UK, they did not charge VAT on purchases. The UK government applied LVCR to imports from the Channel Islands, resulting in the construction of distribution centres on the islands and the export of many low-valued goods from there to the UK. The practice was unilaterally brought to an end in April 2012 by HM Treasury, the finance department of the UK government.

Order processing is the process or work-flow associated with the picking, packing, and delivery of the packed items to a shipping carrier and is a key element of order fulfillment. Order processing operations or facilities are commonly called “distribution centers” or “DC 's”. There are wide variances in the level of automation associating to the “pick-pack-and-ship” process, ranging from completely manual and paper-driven to highly automated and completely mechanized; computer systems overseeing this process are generally referred to as Warehouse Management Systems or “WMS”.

Third-party logistics is an organization's long term commitment of outsourcing its distribution services to third-party logistics businesses.

There are many types of e-commerce models', based on market segmentation, that can be used to conducted business online. The 6 types of business models that can be used in e-commerce include: Business-to-Consumer (B2C), Consumer-to-Business (C2B), Business-to-Business (B2B), Consumer-to-Consumer (C2C), Business-to-Administration (B2A), and Consumer-to-Administration

Warehouse execution systems (WES) are computerized systems used in warehouses and distribution centers to manage and orchestrate the physical flow of products from receiving through shipping. Warehouses are storage facilities for raw materials and parts used in manufacturing operations; distribution centers (DCs) are facilities that store and distribute finished goods to retail locations, consumers, and other end customers.

Organic fulfilment is a form of order fulfillment widely recognized in the EU where the distribution center or warehouse holds organic certification to stores and despatched Organic products. The distribution centre or fulfilment house uses a range of comprehensive record keeping to show inventory figures, traceability of stock and of cleaning and hygiene measures to ensure organic standards of the certifying body are met. Standards for organic food are laid down by the European Union.

A transportation and warehouse management system (TWMS) is a software application that supports eCommerce, distribution, and third-party logistics (3PL) companies within supply chain management.

Printful, Inc. is a printing company that was founded in California in 2013. The company was co-founded by Lauris Liberts and Davis Siksnans. 

References

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