Read more about what a fulfilment centre is, when it is used, and what you should consider if you want to store and manage goods through an external partner.
What is a fulfilment centre?
A fulfilment centre is a solution where you store your goods with an external partner instead of in your own warehouse. In practice, the term is often used for companies that provide warehouse space, and in many cases also management, so goods can be received, stored, and shipped on without being physically located with you.
A fulfilment centre is not the same as 3PL. While 3PL typically covers a broader logistics solution, a fulfilment centre more often points specifically to the warehouse part itself: storage, goods receipt, and in some cases picking, packing, and dispatch. If the fulfilment centre also manages the daily logistics operations, it may in practice resemble or form part of a 3PL solution.
A fulfilment centre is also not the same as dropshipping. With dropshipping, the goods are typically shipped directly from the supplier to the customer, whereas a fulfilment centre is used for goods that are stored with an external warehouse partner.
How does a fulfilment centre work?
When you use a fulfilment centre, your goods are typically sent to an external warehouse where they are received and stored. From there, orders can be managed on an ongoing basis, so goods are picked, packed, and shipped on when orders come in. In many setups, the fulfilment centre is connected to a webshop, ERP, or WMS, so order data can be transferred automatically and shipping can be created more efficiently.
If your setup also includes returns, a fulfilment centre can in some cases manage the receipt, registration, and further management of returned goods.
When is a fulfilment centre used?
A fulfilment centre is typically used when you no longer want, or are no longer able, to manage warehouse space and daily warehouse operations yourself.
There are many scenarios where it makes sense to use a fulfilment centre. Here are a few examples:
Example 1: When you outgrow your own warehouse
If your order volume increases, your current warehouse space can quickly become a limitation. A fulfilment centre can give you more space and make it easier to manage growth without having to invest in new premises, equipment, and staffing yourself.
Example 2: When you want more flexible warehouse operations
Some companies do not want to manage goods receipt, storage, and the daily management of goods themselves. In this case, a fulfilment centre can be relevant if you want to move the physical part of warehouse operations out of house while still maintaining an efficient order and shipping flow through integrations.
Example 3: When you work with multiple systems and markets
If you run e-commerce or B2B across several channels, markets, or locations, a fulfilment centre can be part of a setup where warehousing, order data, and shipping need to work together across systems. In this case, it is especially important that the fulfilment centre can be part of a system landscape with webshop, ERP, WMS, and relevant shipping flows.
Pros of a fulfilment centre
There are many good reasons to use a fulfilment centre. The typical benefits are that you can:
- Get access to external warehouse space without having to operate warehouse facilities yourself
- Make your warehouse operations more flexible when order volume and space requirements change
- Free up time and internal resources for sales, operations, and business development
- Create a more efficient setup if warehousing, orders, and shipping work together through integrations
- Make it easier to manage both outgoing orders and, in some cases, returns flows
For many companies, a fulfilment centre is therefore not just about storage, but about creating a more scalable foundation for daily operations.
Cons of a fulfilment centre
There can also be drawbacks to using a fulfilment centre, and these are important to understand before choosing a solution.
The typical drawbacks are that you:
- Do not have the same physical proximity to your goods as you would in your own warehouse
- Become more dependent on the partner’s processes, capacity, and workflows
- May have less direct control over picking, packing, and daily warehouse operations
- Become more dependent on integrations and data flows working reliably
- May find that the fulfilment centre becomes isolated from your business if you do not have sufficient insight into stock status, orders, and performance
This does not mean that a fulfilment centre is the wrong solution. But it does mean that the collaboration requires clear processes, transparency, and a setup where you still have an overview of data and operations.
Fulfilment centre or 3PL?
A fulfilment centre and a 3PL solution are often mentioned in the same context, but they are not the same. A fulfilment centre typically concerns external warehouse space and warehouse operations, while 3PL often covers a broader logistics model where an external partner can also manage picking, packing, distribution, and other parts of your logistics.
If you primarily need space and daily warehouse management, a fulfilment centre may be enough. If, on the other hand, you want a more complete setup around shipping, returns, integrations, and operational processes, your needs may move in the direction of a broader 3PL solution.
What should you consider when choosing a fulfilment centre?
If you are considering a fulfilment centre, it is a good idea to look at more than just warehouse space and location.
Among other things, it can be relevant to investigate whether the fulfilment centre can:
- Integrate with your webshop, ERP, or WMS
- Manage the goods types and workflows you work with, for example special requirements for labelling, return management, goods subject to customs, or dangerous goods
- Support your shipping needs and relevant carriers
- Manage returned goods and other processes around warehouse operations
- Give you sufficient insight into stock status, orders, and operations
For many companies, it is crucial that the fulfilment centre does not simply become a place where the goods are stored, but part of a setup where warehousing, orders, and shipping can work together efficiently.
Use a fulfilment centre and Shipmondo
If you use a fulfilment centre, or are considering working with one, it can be an advantage to choose a setup where shipping, data, and integrations are gathered in one place.
Shipmondo offers integrations with webshops and business systems, shipment booking across carriers, order management, return management with a return portal, and access to an API, which can be relevant in setups with external warehouses and WMS.
If your fulfilment centre works with Shipmondo, it can make it easier to bring together order data, shipping, and return management in a more connected setup across systems and markets.