Low-Risk, Reliable, E-commerce Fulfillment from China

Consistent, reliable fulfillment is one of the cornerstones of any e-commerce business, but using traditional bulk ordering can cause fulfillment problems. E-commerce supply chains that rely on large volume, sea freight shipping are vulnerable to supply chain disruptions and lack the ability to quickly respond to consumer demand, making overstocking or selling out common. 
That’s why Hifida recommends direct-to-customer (DTC) China fulfillment to many of our e-commerce clients. We partner with EcommOps to provide the best DTC China fulfillment to our customers, and we all work together to create a flexible and resilient supply chain. 

How Does Traditional Fulfillment Work?

In a traditional supply chain, this is how e-commerce fulfillment looks:

• A business places a large volume order (usually several months of inventory) with a China factory.
• Products are then shipped (usually via sea freight) to a receiving port.
• The order then needs to clear customs and be reloaded with domestic freight partners.
• The order is delivered to a local warehouse, where products are added to inventory.
• Orders are then prepared to be shipped directly to customers.

For an e-commerce business, this can cause several issues, like:

• An inability to respond quickly to changing demand (since lead times from China. factories are exceptionally long), which is a particular issue during traditional busy seasons (like Q4) or when there are unusual supply chain disruptions (like during the COVID-19 pandemic).
• Exceptionally long shipping times to international customers which may prevent brands from breaking into new, untapped markets.

How Does DTC China Fulfillment Work?

When you use DTC China fulfillment, the process is much more efficient:

• Orders are placed with a China factory, but instead of months of inventory, it’s weeks of inventory.
• Inventory is shipped from the China factory to EcommOps fulfillment center, located in Shenzhen, China. 
• Customer orders are shipped directly from the Shenzhen fulfillment center, with shipping times usually sitting at 5-8 days.

The Benefits of DTC China Fulfillment

There are excellent benefits for e-commerce businesses that use both China factories and China fulfillment centers:

Lower Inventory Risk

Since businesses only need a few weeks of inventory instead of months worth, less capital is tied up with unsold inventory.

Adaptable to Demand

Should you experience a spike in demand, it’s easy to get more products from your suppliers. There’s only a few days of lead time from the factory to the fulfillment center, instead of weeks or months. It’s not uncommon for lead times to be 24 hours or less. 

Opens Doors to International Markets

Since freight shipping, clearing customs, and shipping to a local fulfillment center are removed from DTC China fulfillment, shipping times to international customers are slashed. The cost of shipping is also greatly reduced (sometimes 50% or more), allowing brands to enter new markets that traditional fulfillment from a local warehouse wouldn’t allow.

What is China fulfillment?

China fulfillment is a term that refers to using a China-based fulfillment center to fulfill orders. This is in contrast to traditional, local fulfillment, where a business would bulk order products, ship them to the U.S., clear customs, and use domestic freight partners to stock local warehouses before fulfilling customer orders. 

Do I have to use China fulfillment to partner with Hifida?

No. You do not have to use China fulfillment to partner with Hifida. China fulfillment may not be the right answer for all e-commerce businesses, and if your product isn’t consumer-oriented, it doesn’t make sense to use China fulfillment at all. 

When you decide to partner with Hifida to source products from China, we’ll make sure we create a plan that’s a perfect fit for your business needs and goals. If it makes sense to use China fulfillment, we’ll recommend that course of action. If it doesn’t make sense, we’ll create a different strategy that’s a better fit for what you need.

My business has invested a lot in local warehousing already. Does it make sense for me to pivot to China fulfillment?

Businesses don’t have to choose between China fulfillment or local fulfillment. Instead, many businesses use hybrid fulfillment, which makes use of both China and local fulfillment. Here’s a general idea of how that could work:

• You place a large volume order with a China supplier and have it shipped to a local warehouse for traditional fulfillment. 
• As local inventory depletes, you shift fulfillment to China while you place another large volume order to be shipped to your local warehouse.
• As inventory arrives at your local warehouse, fulfillment shifts away from China and back to your local warehouse. 

Another scenario you may use is to use your local warehouse to fulfill local orders, and to use China fulfillment to ship international orders. This way, your local customers get the fastest shipping times, while your international customers get good shipping times without having to pay high shipping rates. 

What’s the best location in China for a fulfillment center?

Generally, the best location for a fulfillment center in China will be in Shenzhen, which is considered the “e-commerce hub” of China. Shenzhen is in close proximity to several factories, to ports, and to many routes used to ship parcels (which will be important for DTC China fulfillment). 

How do I know if China fulfillment is a good fit for my business?

Businesses that will make the most out of using China fulfillment will:

• Partner (or already partner) with a factory in China
• Sell a product that is meant for consumer retail

While those are the strongest factors, there are others to consider. China fulfillment could be a good fit if any of the following apply to your business:

• You want to break into international markets more effectively
• Demand for your product is hard to predict (especially in Q4)
• You want to test a product that you aren’t sure is going to be successful for not

When you reach out to Hifida, we’ll examine your business needs and let you know if your business could successfully leverage China fulfillment. 

Can I test products using China fulfillment?

Yes! In fact, testing unproven products is one of the benefits of China fulfillment. For example, you can bring a new product quickly to market without needing to make a large investment in inventory that you may or may not make back. If the product fails, you’ve lost very little. If the product takes off, China fulfillment lets you quickly scale with demand to take advantage of the newfound success. 

As a product continues to prove itself, you may decide to pursue a hybrid fulfillment model, where you fulfill certain orders locally and certain orders from China. If demand is consistently high for your product, you may decide to forgo China fulfillment altogether and use traditional large volume ordering and local fulfillment for potentially better product pricing and faster shipping. 

What’s the difference between China fulfillment and dropshipping?

Dropshipping is a fulfillment method where customer orders are passed directly to factories who fulfill products directly to customers. China fulfillment is when customer orders are passed to a China fulfillment center, where customer orders are fulfilled directly. These two may seem similar, but they are vastly different strategies. 

Dropshipping is often used to test generic products or help a brand-new store get off the ground. There’s very little inventory risk (since the dropshipper doesn’t have to buy and hold inventory), but there’s huge drawbacks. Namely, dropshipping doesn’t allow for branding or product customization, and the shipping times are very unreliable. 

China fulfillment requires a business to have a relationship with a factory, and a warehouse to hold inventory. Products aren’t made on demand, but the lead times from factory to warehouse tends to be very short, which makes it easy for businesses to scale inventory with rising demand. 

Unlike dropshipping, China fulfillment will offer better pricing on products, the ability to brand products, consistent shipping times, and an overall better customer experience. 

Do I have to use EcommOps if I want to partner with Hifida for product sourcing but already have a China fulfillment partner?

While EcommOps is our preferred partner, you aren’t required to use them. If you already have an established relationship with a China fulfillment center, we’re happy to work with them in order to create a supply chain that works for you. 

Why is China fulfillment ideal for a world-wide customer base?

China fulfillment is ideal for a world-wide customer base because it simplifies fulfilling orders. For example, if you have a local warehouse in the United States, but want to ship orders to Europe, the process would traditionally look like:

• Making an order with a China factory
• Shipping that order from China to the U.S. warehouse
• Preparing inventory to be fulfilled to Europe
• Shipping products to Europe

This makes for a very long and expensive shipping experience. Businesses are often faced with whether they should eat the high shipping costs to try to break into new markets, or if they should try their luck and charge high shipping rates. They also have to consider if customers will tolerate the weeks long, sometimes months long, fulfillment times required. 

Compare that experience to using China fulfillment, which looks like:

• Making an order with a China factory
• Shipping that order to a China warehouse (which only takes a few days, sometimes even less than 24 hours)
• Preparing inventory to be shipped to Europe
• Shipping products to Europe

The total shipping time with China fulfillment is consistently low, usually 5-8 days. Since you don’t have to calculate the cost of shipping products from China to the U.S., businesses have the opportunity to offer very low shipping rates to international customers (sometimes, the price differential may be so low that businesses can offer free shipping to international customers). 

What are the weaknesses of China fulfillment?

While China fulfillment is an excellent opportunity for many e-commerce businesses, it is not without its weaknesses. Here are a few drawbacks to consider when using China fulfillment:

Higher Price-Per-Unit Pricing

For most products, large volume orders shipped via sea freight will still offer a lower price-per-unit than using China fulfillment alone (though keep in mind this is not true for all products). This is why many businesses follow a hybrid fulfillment strategy, where they can leverage the flexibility of China fulfillment and the cost-savings of bulk ordering and local fulfillment.

More Complex Fulfillment Systems

Businesses will have more complex fulfillment systems when using China fulfillment, especially if they are following a hybrid strategy. You’ll need to make sure that your backend systems understand when orders should be fulfilled from where, or you may end up double fulfilling or missing orders entirely. 

Potential Warehouse Management Difficulties

If you’re used to managing your own local warehouse, it may be difficult to have the same level of care over a warehouse in China. It’s a similar issue to working with a factory in China, which is why we encourage businesses who are interested in sourcing and fulfilling products from China to contact us for assistance.