In today’s e-commerce landscape, three core logistics models define how online retailers manage their supply chains: in-house logistics, drop-shipping and fulfillment. In-house logistics, where businesses handle their logistics internally, is favored by micro and small enterprises whose scale doesn’t justify outsourcing. Some large companies also adopt this model to leverage economies of scale and maintain control. Conversely, drop-shipping allows retailers to avoid warehousing altogether, with goods sent directly from a third-party warehouse (like a manufacturer) to the customer, reducing risks involved in holding stock. Fulfillment, however, takes logistics outsourcing to the next level, with third-party providers managing every step from warehousing to shipping and returns.
What is fulfillment?
Our definition would cover where an e-tailer’s inventory is stored in a third-party logistics provider’s warehouse, from which orders are processed and shipped. Fulfillment operators oversee inventory, pack shipments, handle sales documents (like invoices), prepare shipping labels and even assist with customs clearance. They offer full flexibility, adapting to their clients’ changing demands by scaling storage space or labor as needed. Many fulfillment providers also generate detailed performance reports for their clients, and some go a step further by repairing or refurbishing returned items.
Fulfillment services are provided by various entities, including logistics service providers, specialized fulfillment companies, marketplaces and other third-party operators. Our focus is on logistics service providers who see fulfillment as a complementary service to their core logistics offerings.
Fulfillment and traditional logistics providers
Historically, e-commerce wasn’t a priority for traditional logistics providers. The fragmented nature of e-commerce – requiring the preparation of small, diverse orders on short notice – made it unattractive. Instead, CEP (courier, express and parcel services) operators led the charge in e-commerce delivery, though it took time to adapt to its complexities. Today, however, more logistics providers are expanding into the e-commerce space, particularly to serve large clients, while small and medium-sized e-tailers remain underserved. This gap has increasingly been filled by CEP and postal operators, who now offer end-to-end logistics solutions for online merchants. By eliminating intermediaries, they can extend cut-off times and streamline the entire fulfillment process.
What’s next for fulfillment?
The future of fulfillment points to a broader range of services, such as product repair and renewal, financial services, loyalty programs and enhanced omnichannel capabilities. As retailers diversify their sales channels – offering products through websites, mobile apps and physical stores – fulfillment operators will play a critical role in supporting these multichannel strategies.
Additionally, international fulfillment providers, leveraging their own logistics networks and partnerships with local CEP services, are poised to offer competitive cross-border shipping solutions, particularly in and around the dynamic markets of Central and Eastern Europe.
About the author
Marek Różycki, managing partner at Last Mile Experts, is a leading CEP subject-matter expert. He brings fresh perspectives to relevant industry matters, shaping the future of last-mile delivery through Last Mile Prophets videos and consultancy at Last Mile Experts. He is a long-standing contributor to Parcel and Postal Technology International. Connect with him on LinkedIn.
Arkadiusz Kawa, partner at Last Mile Experts, professor at the Poznan School of Logistics. He advises clients on market research, industry analysis, and business strategy with focus on CEP and e-commerce. Connect with him on LinkedIn.