At the 2019 Shopify Unite, Shopify's Chief Product Officer, Craig Miller, announced that the company would move into the fulfillment space. Per Miller, fulfillment by Shopify was made to address specific pain points that merchants experience when using large marketplaces, such as missed branding opportunities. Shopify's move underscores the need for a streamlined order fulfillment process for a business to remain afloat in the eCommerce retail space.
According to Avarto, 53% of shoppers value delivery speed when shopping online, while 25% had canceled their orders due to delivery speeds that were too slow to match their needs. Further, 54% of shoppers refrain from an online purchase because of costly shipping, while 83% considered free delivery the most crucial factor in online shopping. Because of this, fulfillment by Shopify may seem like a decent choice for the platform's merchants. But it won't work for everyone.
That's why Simpl Fulfillment can help you streamline your order fulfillment process. We integrate with all the major marketplaces and eCommerce platforms to manage your order, shipments, inventory, and returns. We also integrate with Shopify so that you can use our platform directly with your store to easily sync products and orders.
However, suppose you prefer to manage your business entirely with Shopify. In that case, this guide will explain what the Shopify Fulfillment Network is, its pros & cons, how it compares with Amazon FBA and other fulfillment services you can use if fulfillment by Shopify doesn't work for you.
What is the Shopify Fulfillment Network?
Fulfillment by Shopify a network of fulfillment centers in different geographical locations supported by powerful machine learning technology to enable intelligent demand forecasting, inventory allocation, and order routing, all of which can ensure faster order delivery. The Shopify fulfillment service offers the following features:
- Shipment products: With the Shopify fulfillment service, you get free custom packaging using your own branded material so that you can further enhance your brand identity.
- Shipping and tracking your customers' orders: The Shopify fulfillment network will pick, pack, and ship your products to your customers, as well as give them peace of mind with tracking information that's sent automatically after fulfillment.
- Inventory management: Fulfillment by Shopify helps you maintain full visibility of your inventory level with real-time updates across all Shopify channels, as well as receive inventory notifications so that you never run out of stock.
- Returns and reorder processing: Fulfillment by Shopify will handle returns and exchanges on your behalf. All returned, saleable items will be repackaged and added back to your active inventory.
How Does It Work?
It's easy to set up using these four steps:
1. Install the Shopify Fulfillment Network app from the Shopify App Store
2. Select the products you want to be shipped via the Shopify Fulfillment service
3. Review the cost per shipment and monthly storage cost
4. Send them your products
However, it's important to note that Shopify's fulfillment is only available to merchants based in the US. If you're in another country, you won't have access to the service, in which case, Simpl Fulfillment may be better able to manage your order fulfillment.
Pros & Cons of Using the Shopify Fulfillment Network
Shopify's decision to offer fulfillment was a power move by the platform to get in on the eCommerce fulfillment market. While it seems like an excellent service, there are, of course, a list of pros and cons that come with it. Here’s what you should know
- Sync inventory information: You can keep track of your stock in real-time across multiple selling platforms through integrated third-party accounts
- Manage all information on the same platform: Orders placed on other platforms like eBay and Amazon are forwarded to your Shopify account automatically. You will be able to process orders for dispatch, receive messages, and collect payment without having to monitor other accounts.
- Lower operation costs: You don't have to build your fulfillment center or develop a packaging system from scratch.
- Costs: Shopify is known for being reasonably expensive, charging $299 for a premium shop plan; its fulfillment by Shopify service will undoubtedly be similarly priced
- Less control due to third-party providers: Shopify integrates with many third-party fulfillment providers, so you don't know who actually has your products and is shipping your orders
- Less control over the fulfillment process: Since Shopify works with 3rd party providers and everything is done in the app; it's difficult to have control over your fulfillment processes.
- No Hands-On Support: You'll have to work with Shopify support to solve any issues, and as they aren't actually in the warehouse or near it, it may be difficult to get problems solved quickly.
Shopify Fulfillment Network vs. Amazon FBA
Fulfillment by Amazon (FBA) is a popular online order fulfillment service offered by Amazon to its sellers. Since Shopify is now competing directly with Amazon in the third-party fulfillment space through its Shopify Fulfillment Network, it’s worth comparing the two services.
- Both offer delivery within two days
- Both will likely use a similar pricing model and order fulfillment methods
- With Amazon FBA, you lose control of your brand identity; with fulfillment by Shopify, you can retain your brand identity with customizations
- Amazon FBA has a transparent pricing model; since the Shopify Fulfillment Network offers custom pricing, it’s hard to estimate how much you’ll pay
- Amazon has an extensive fulfillment network of 175 fulfillment centers worldwide compared to Shopify, which is still building its infrastructure.
- Amazon's expert shipping management practices are already established, while fulfillment by Shopify is still very new.
What about other Fulfillment Services?
One challenge with Shopify order fulfillment is still a work in progress. Plus, merchants have to ship between 10 and 10,000 each day to qualify for the Shopify order fulfillment. As such, many smaller merchants won’t be able to use the service. The opaque pricing policy can be of concern for smaller merchants who need to have real numbers to make sound business decisions.
If fulfillment by Shopify won't work for you, consider using Simpl Fulfillment. We integrate with Shopify, and you’ll always get exact pricing estimates for each shipment with our rates calculator. Our software helps you to automate your order fulfillment, inventory management, return management, and shipping.