Fulfillment house

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Fulfillment house and fulfillment center (Commonwealth English: fulfilment house and fulfilment centre) are modern terms for a packing warehouse. The terms were coined in the middle of the 1990s: "fulfillment center" usually refers to 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 packing 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" (FHDDS) was included in sections 48 to 59 of the Finance Bill 2017, introduced into the UK Parliament in September 2017. [6] Fulfilment business legislation was adopted within Part 3 of the Finance (No. 2) Act 2017, [7] with secondary legislation, the Fulfilment Businesses Regulations 2018 (SI 326/2018) covering the fulfilment business approval process, obligations of approved businesses, and penalties for non-compliance. [8] Approved businesses are listed online by HM Revenue and Customs (HMRC) so that overseas traders can check whether businesses who store their goods for UK distribution have complied with the registration law. [9]

Related Research Articles

E-commerce refers to commercial activities including the electronic buying or selling products and services which are conducted on online platforms 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 the 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., doing business as Amazon, is an American multinational technology company engaged in e-commerce, cloud computing, online advertising, digital streaming, and artificial intelligence. Founded in 1994 by Jeff Bezos in Bellevue, Washington, the company originally started as an online marketplace for books but gradually expanded its offerings to include a wide range of product categories, referred to as "The Everything Store". Today, Amazon is considered one of the Big Five American technology companies, the other four being Alphabet, Apple, Meta, and Microsoft.

<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.

<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.

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.

Amazon Marketplace is an e-commerce platform owned and operated by Amazon that enables third-party sellers to sell new or used products directly to consumers on a fixed-price online marketplace alongside Amazon's regular offerings. Using Amazon Marketplace, third-party sellers gain access to Amazon's customer base, and Amazon expands the offerings on its site without having to invest in additional inventory.

<span class="mw-page-title-main">Order fulfillment</span> Response to a customer order in terms of design, manufacture and delivery

Order fulfilment is in the most general sense the complete process from point of sales enquiry to delivery of a product to the customer. Sometimes, it describes the more narrow act of distribution or the logistics function. In the broader sense, it refers to the way firms respond to customer orders.

<span class="mw-page-title-main">PFSweb</span> American provider of eCommerce services

PFSweb, Inc. is an eCommerce fulfillment and logistics 3PL service provider for business-to-business and direct-to-consumer companies. Its corporate headquarters were relocated from Allen, Texas to Irving, Texas in 2022. As of 2023, the company had 2.2 million square feet of warehouse space, and distribution centers in the U.S., the UK, Belgium, and Canada.

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”.

Thomas Joseph Petters is a former American businessman and chairman and CEO of Petters Group Worldwide, a company which stole over $2 billion in a Ponzi scheme. He was convicted of massive business fraud in 2009 and was imprisoned at the United States Penitentiary, Leavenworth. Amid mounting criminal investigations, Petters resigned as his company's CEO on September 29, 2008. He was convicted of numerous federal crimes for operating Petters Group Worldwide as a $3.65 billion Ponzi scheme and received a 50-year federal sentence.

Amazon's tax behaviours have been investigated in China, Germany, Poland, Sweden, South Korea, France, Japan, Ireland, Singapore, Luxembourg, Italy, Spain, United Kingdom, multiple states in the United States, and Portugal. According to a report released by Fair Tax Mark in 2019, Amazon is the best actor of tax avoidance, having paid a 12% effective tax rate between 2010 and 2018, in contrast with 35% corporate tax rate in the US during the same period. Amazon countered that it had an 24% effective tax rate during the same period.

Pension Led Funding (PLF) is a financial services product offered in the United Kingdom (UK) that raises funds for businesses based upon the use of pension benefits accrued by owners or directors of the business they control. The money can then be used for the provision of a secured commercial loan, the purchase of commercial property, *the purchase of intellectual property assets, or the purchase of share capital.

<span class="mw-page-title-main">Global Fashion Group</span> Singaporean e-commerce holding group

Global Fashion Group (GFG) is an international online fashion and lifestyle retailer headquartered in Luxembourg. The company was founded in 2011 as a joint venture between Rocket Internet and Kinnevik. It serves as an umbrella organization for multiple regional e-commerce platforms specializing in fashion, including Zalora in Southeast Asia, Dafiti in Latin America, and The Iconic in Australia and New Zealand.

Quiet Logistics is a third-party logistics (3PL) company headquartered in Devens, Massachusetts. Quiet specializes in providing order fulfillment and returns management services to e-commerce retailers. In November 2021, American Eagle Outfitters announced that it would acquire Quiet Logistics for $350 million in cash.

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 is a print on demand company that was founded in California in 2013. The company was co-founded by Lauris Liberts and Davis Siksnans.

References

  1. ↑ "This Is What It Looks Like Inside an Amazon Warehouse". All Things Digital. 23 December 2013. Retrieved 4 January 2016.
  2. ↑ "Alamy; Stock Photo - Amazon fulfillment centre (warehouse) in Peterborough Cambridgeshire" . Retrieved 4 January 2016.
  3. ↑ Amazon: Fulfillment by Amazon Linked 2016-01-04
  4. ↑ "Federated's Fingerhut Fiasco". Businessweek Archives. 17 December 2000. Retrieved 7 May 2015.
  5. ↑ Fulfillment House Due Diligence Scheme: Summary of Responses [ permanent dead link ], December 2016, accessed 16 October 2017]
  6. ↑ Finance Bill, accessed 16 October 2017
  7. ↑ UK Legislation, Finance (No. 2) Act 2017, Part 3, accessed on 3 July 2024
  8. ↑ UK Legislation, The Fulfilment Businesses Regulations 2018: Explanatory Note, published on 7 March 2018, accessed on 7 July 2024
  9. ↑ HMRC, Fulfilment House Due Diligence Scheme registered businesses list, updated on 24 May 2024, accessed on 7 July 2024

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