How to Choose an Order Fulfillment Center in China?

China fulfillment center can help you distribute products directly from your factory to customers all over the world.

In this article, we list the leading Shenzhen and Hongkong-based fulfillment centers, including chinadivision.

we cover the following:

  1. Potential tax issues with cross border e-commerce fulfillment
  2. When does it make sense to use a fulfillment center in Hong Kong or shenzhen China?
  3. Should you select a fulfillment center in Hong Kong or shenzhen city China?

What is a fulfillment center?
Fulfillment center offers e-commerce merchants warehousing and shipping services, that allows online businesses to operate without owning their own warehouse or physical storage space.

Sellers or e-commerce merchants can directly send their inventory to the fulfillment center from where it is shipped to their customers.

Most fulfillment centers are integrated with e-commerce platforms(like Amazon, Shopify, and eBay), making it easier for merchants to manage inventory and delivery products.

These are the top reasons of choosing fulfillment center:

  1. You can get closer to foreign markets. If you are based in the United States and want to sell in Europe, it’s way easier to send your goods to a fulfillment center in the EU – compared to setting up your own warehouse or sending products from the US.
  2. It’s often cheaper to use a fulfillment center to store and pack your products, compared to renting a warehouse and hiring employees.
  3. Your international customers get receive the product in only a few days, rather than waiting for more than a week.

In most cases, fulfillment centers go through the following process:

  1. E-commerce merchants (or the supplier in China) send their products to the warehouse
  2. The center stores the products in the warehouse
  3. The customer makes a purchase and orders from the merchant’s website
  4. The fulfillment center picks & packs products
  5. The fulfillment center ships products to each individual customers

ChinaDivision is a leading Shenzhen-based fulfillment service provider, that offers a wide range of fulfillment services. These services include:

Storage
Picking & packing
QC and inspection
Shipment management
Returns handling
Other value-added services
It is a subsidiary of CNstorm Co., Ltd, which was founded in 2011 The head office and the warehouse of the ChinaDivision are based in Shenzhen.

It also offers easy integration with all major e-commerce platforms and offers dedicated service for Amazon, by the name of “Amazon China fulfillment Service”.

How dose 3PL work?

How dose 3PL work

Third-party logistics(3PL) providers typically specialize in integrated operations of warehousing and transportation services that can be scaled and customized to customers’ needs, based on market conditions, to meet the demands and delivery service requirements for their products. Services often extend beyond logistics to include value-added services related to the production or procurement of goods, such as services that integrate parts of the supply chain. A provider of such integrated services is referenced as a third-party supply chain management provider (3PSCM), or as a supply chain management service provider (SCMSP). 3PL targets particular functions within supply management, such as warehousing, transportation, or raw material provision.

The global 3PL market reached $75 billion in 2014, and grew to $157 billion in the US; demand growth for 3PL services in the US (7.4% YoY) outpaced the growth of the US economy in 2014. As of 2014, 80 percent of all Fortune 500 companies and 96 percent of Fortune 100 used some form of 3PL services.

Third-party logistics providers include freight forwarders, courier companies, and other companies integrating & offering subcontracted logistics and transportation services. Hertz and Alfredsson (2003) describe four categories of 3PL providers:

Standard 3PL Provider: this is the most basic form of a 3PL provider. They would perform activities such as, pick and pack, warehousing, and distribution (business) – the most basic functions of logistics. For a majority of these firms, the 3PL function is not quite their main activity.
Service Developer: this type of 3PL provider will offer their customers advanced value-added services such as: tracking and tracing, cross-docking, specific packaging, or providing a unique security system. A solid IT foundation and a focus on economies of scale and scope will enable this type of 3PL provider to perform these types of tasks.
The Customer Adapter: this type of 3PL provider comes in at the request of the customer and essentially takes over complete control of the company’s logistics activities. The 3PL provider improves the logistics dramatically, but does not develop a new service. The customer base for this type of 3PL provider is typically quite small.
The Customer Developer: this is the highest level that a 3PL provider can attain with respect to its processes and activities. This occurs when the 3PL provider integrates itself with the customer and takes over their entire logistics function. These providers will have few customers, but will perform extensive and detailed tasks for them.[4]
Outsourcing may involve a subset of an operation’s logistics, leaving some products or operating steps untouched because the in-house logistics is able to do the work better or cheaper than an external provider.[5] Another important point is the customer orientation of the 3PL provider. The provider has to fit to the structures and the requirements of the company. This fit is more important than the pure cost savings, like a survey of 3PL providers shows clearly: The customer orientation in form of adaptability to changing customer needs, reliability and the flexibility of third-party logistics provider were mentioned as much more important than pure cost savings.

First party logistics providers (1PL) are single service providers in a specific geographic area that specialize in certain goods or shipping methods. Examples are: carrying companies, port operators, depot companies. The logistics department of a producing firm can also be a first party logistics provider if they have own transport assets and warehouses.

Second-party logistics providers (2PL) are service providers which provide their specialized logistics services in a larger (national) geographical area than the 1PL do. Often there are frame contracts between the 2PL and the customer, which regulate the conditions for the transport duties that are mostly placed short term. 2PLs provide own and external logistics resources like trucks, forklifts, warehouses etc. for transport, handling of cargo or warehouse management activities.Second-party logistics arose in the course of the globalization and the uprising trend of lean management when the companies began to outsource their logistics activities to focus on their own core companies. Examples are courier, express and parcel services; ocean carriers, freight forwarders and transshipment providers.

The most significant difference between a second party logistics provider and a third-party logistics provider is the fact that a 3PL provider is always integrated into the customer’s system. The 2PL is not integrated; in contrast to the 3PL, it is only an outsourced logistics provider with no system integration. A 2PL works often on call (e.g. express parcel services) whereas a 3PL is almost every time informed about the workload of the near future. As technology progresses, the methodology for notifying a 3PL of inbound workload usually falls on API integrations that connect, for example, an E-commerce store with a fulfilment center. Another point that differs 2 and 3PL is the specification and customizing of services. A 2PL normally only provides standardized services, whereas 3PLs often provide services that are customized and specialized to the needs of their customer. This is possible due to long term contracts that are usual in the third-party logistics market. Cost-effectiveness of a third-party logistics provider is only given over long periods of time with stable contract and profits. In contrast to that second party logistics services can’t be customized, concerning to the fluctuating market with hard competition and a price battle on a low level. And there we have another distinguishing point between 2PL and 3PL: Durability of contracts. 3PL contracts are long term contracts, whereas 2PL contracts are of low durability so that the customer is flexible in responding to market and price changes.

With companies operating globally, the need to increase supply chain visibility and reduce risk, improve velocity and reduce costs – all at the same time – requires a common technological solution.[10] Non-asset based providers perform functions such as consultation on packaging and transportation, freight quoting, financial settlement, auditing, tracking, customer service and issue resolution.[11] However, they do not employ any truck drivers or warehouse personnel, and they don’t own any physical freight distribution assets of their own – no trucks, no storage trailers, no pallets, and no warehousing. A non-assets based provider consists of a team of domain experts with accumulated freight industry expertise and information technology assets. They fill a role similar to freight agents or brokers but maintain a significantly greater degree of “hands-on” involvement in the transportation of products. These providers are 4PL and 5PL services.

A fourth party logistics provider has no owned transport assets or warehouse capacity. They have an allocative and integration function within a supply chain with the aim of increasing the efficiency of it. The idea of a fourth-party logistics provider was born in the seventies by the consulting company Accenture. Firms are outsourcing their selection of third-party logistics provider and the optimization process of the integration of these to a PL as an intermediary. That reduces costs and the 4PL have to have an overview of the whole logistics market to choose the ideal 3PL for all operative logistic activities. For being able to provide such an ideal solution fourth-party logistics providers need a good knowledge of the logistics branch and a good IT infrastructure. A fourth party logistics provider selects the 3PL providers from the market which are most suitable for the logistical issues of their customer. Unlike the allocative function of a 4PL in the supply chain, the core competence of a 3PL provider is the operative logistics.[12]

Fifth party logistics providers (5PL) provide supply chain management and offer system-oriented consulting and supply chain management services to their customers. Advancements in technology and the associated increases in supply chain visibility and inter-company communications have given rise to a relatively new model for third-party logistics operations – the “non-asset based logistics provider.

ChinaDivision’s Smarter 3PL improves ecommerce fulfillment

Retail has never been more competitive and complex. Ecommerce needs to be viewed in concert with all your retail strategies: brick and mortar, third party marketplaces like Amazon, and your own online store. ChinaDivision’s experience as an omni-channel provider means we understand the entire retail landscape, making us uniquely qualified to help you manage the challenges of selling across all retail platforms. ChinaDivision helps you navigate the complexities that are unique to ecommerce. Let our experienced team help design a Direct-to-Consumer solution that is right for your brand.

Our distribution centers are integrated with customized warehouse management systems, radio frequency handheld scanning, and labor management systems that allow us to manage all warehouse operations in the most efficient and cost-effective manner possible.

We seamlessly integrate order processing, inventory and shipping data with all ecommerce platforms, ensuring fulfillment speed and data accuracy. Timely access to all your data with powerful, customized reporting tools ensures you receive business intelligence that informs strategy and decision making.

What is Transportation-Based 3PL

Specialize in the transportation between locations. For example, they might transport inventory between your factory and warehouse or you and your retail buyer. Consider the following when weighing a parcel transportation provider:

1. Origin location

2. Destination location

3. Timeframes

4. Shipping methods

5. Service levels

6. Pricing and discounts


Remember to consider import/export taxes and duties if you transport freight globally.

Traditional parcel transportation providers include DHL, FedEx, UPS, and the USPS. Same-day delivery is normally handled by local couriers like Postmates and UberRush. Transportation marketplaces like Flexport, Freightos, and GrandJunction connect buyers and sellers.