Can fulfillment services, which lower barriers to e-commerce entry through efficiency, become a catalyst for business revitalization?

The e-commerce market has been thriving in recent years, driven by the COVID-19 pandemic and the rise in smartphone users. That said, competition has intensified, and it's not uncommon to hear business owners express how difficult it is to succeed or even enter this space. One service that significantly lowers these barriers to e-commerce entry is "fulfillment services," which handle complex e-commerce operations comprehensively. Here, we explore the value and significance of utilizing fulfillment services from the perspective of "Can fulfillment services, which support the growth of the e-commerce market, become a catalyst for business revitalization?"

From order processing to after-sales support, fulfillment services provide seamless e-commerce support

Amazon announced it would open its high-tech brick-and-mortar store, "Amazon Style," in late 2022, generating significant buzz. Customers can scan QR codes on displayed clothing using a smartphone app to check sizes and colors, and pressing the payment button completes the purchase. If customers want to try something on, tapping a button delivers the item to a fitting room within minutes. Inside the fitting room, touch panels on the walls allow for additional shopping. Naturally, the system also links to the e-commerce site, enabling customers to have items ordered online delivered to the store for fitting.

This unprecedented shopping experience leverages technology from Amazon's logistics hubs, known as "fulfillment centers." Fulfillment encompasses the entire process in mail-order and e-commerce, from inventory management and order processing to packaging, shipping, delivery, handling complaints, and after-sales support. Amazon offers its fulfillment system, built using cutting-edge technology for its own operations, as a service to other companies. Fulfillment services handle this entire process from order receipt to after-sales support, providing seamless e-commerce assistance. Similarly, major Japanese logistics companies and large e-commerce firms offer various fulfillment services, leveraging the expertise and technology they have cultivated.

Fulfillment services contribute to improved customer satisfaction through one-stop solutions

Fulfillment services emerged as the e-commerce market grew more active. So why are they gaining attention now? Here, we explain the background and differences from traditional logistics outsourcing.

In recent years, alongside the expansion of the e-commerce market, many businesses seem to be considering new market entry. However, it's also true that setting up warehouses, call centers, and systems to launch an e-commerce business entirely in-house presents a high barrier. Recently, settlement methods have diversified, making payment processing and management extremely complex. As online shopping has become established, customer expectations have also risen. Businesses must respond carefully to inquiries, return requests, and various customer feedback. Handling all e-commerce operations in-house therefore requires significant costs and personnel. Furthermore, with intensifying competition, e-commerce businesses need to develop higher-value-added products while simultaneously reducing costs and enhancing customer satisfaction. Fulfillment services have gained attention and expanded usage as a solution to these challenges.

Incidentally, even before fulfillment services emerged, there was "3PL" (Third Party Logistics), which outsourced logistics operations. More recently, the term "4PL" (Fourth Party Logistics) has also gained traction, referring to 3PL enhanced with consulting elements like logistics strategy planning. However, fundamentally, 3PL and 4PL are services specialized in logistics. Fulfillment services, on the other hand, provide a one-stop solution for all back-end operations related to e-commerce, encompassing not just logistics but also order processing, packaging, payment handling, and customer support. Put simply, utilizing fulfillment services means businesses can start an e-commerce venture immediately, needing only to provide the products. For companies already manufacturing or selling goods, this enables business expansion with minimal initial investment.

Furthermore, utilizing fulfillment services reduces the human burden and errors associated with e-commerce operations while enhancing customer satisfaction. This is because tasks that significantly impact a company's credibility—such as complex payment processing, inquiries, returns handling, and complaint resolution—can be entrusted to professionals with accumulated expertise in each area.

Moreover, services like Amazon Fulfillment pursue extreme optimization and efficiency through cutting-edge technology, while also reducing logistics costs through economies of scale. This means you can launch your e-commerce business at a lower cost than maintaining your own warehouses or call centers. Consequently, companies that previously avoided e-commerce, those unfamiliar with e-commerce operations, and those with limited capital can now more easily enter the e-commerce market.

In other words, the growing number of companies considering new e-commerce ventures and the increasing complexity of e-commerce-related operations are factors driving attention toward fulfillment services. Utilizing fulfillment services enables companies to provide higher-quality services more efficiently, thereby enhancing customer satisfaction.

Outsourcing complex operations allows companies to focus on their core value

The value of fulfillment services, as introduced so far, stems from the ability to outsource complex operations entirely to an external provider. By thoroughly streamlining back-office operations, companies can concentrate their resources on developing higher-value-added products, improving customer satisfaction, and other core competencies unique to them.

The trend toward "thorough efficiency" and "one-stop solutions through centralized management," as seen in fulfillment services, is occurring across all industries, not just e-commerce. In business, services handling all aspects of marketing or security-related tasks under one roof are emerging. For consumers, services handling moving-related procedures in a one-stop manner are expanding. Furthermore, administrative procedures that once required visiting government offices to submit forms one by one are increasingly being streamlined into digital one-stop solutions. The need to "bundle complex tasks together for efficient handling" will likely remain a major trend.

While fulfillment services are gaining attention amid this trend, they naturally have drawbacks. For instance, outsourcing the entire process—from order placement to after-sales follow-up—reduces direct customer contact. Handling complaints and providing customer support are crucial for hearing authentic customer feedback and deepening relationships. The inability to do this could hinder business growth.

However, these drawbacks can be mitigated with strategic approaches. Utilizing social media or website survey features to gather customer feedback is one solution. Alternatively, creating new touchpoints through innovative communication methods like live commerce or events can establish different forms of customer engagement. Another option is to use fulfillment services while handling critical customer interactions in-house.

Furthermore, using fulfillment services can incur significant fees and prevent the accumulation of in-house expertise in back-office operations, which are also potential drawbacks. Therefore, when considering implementation, it's essential to carefully assess where to focus internal resources and where to prioritize efficiency, while thoroughly evaluating the future scale and approach for your e-commerce business.

Conversely, from a business strategy perspective, outsourcing the "defensive" back-end operations of e-commerce to fulfillment services can free up resources to focus on "offensive" activities. This allows you to dedicate your resources to attracting customers through product planning, advertising strategies, and customer communication. In essence, by focusing on the core areas of management and honing your company's core value, you can aim for further business growth. This is precisely the effective use of fulfillment services and represents their significant value.

While fulfillment services lower the barriers to entering e-commerce, careful consideration is needed when implementing them to discern where to invest effort and where to streamline. Doing so should reveal more effective implementation methods. Furthermore, introducing outsourced services that centrally manage and streamline complex operations can do more than just optimize specific tasks; it can revitalize the business itself and become a catalyst for company growth.

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