Fulfillment & Operations
Operations and logistics terms including 3PL, shipping strategies, inventory management, and order fulfillment optimization.
The metrics that decide whether your brand scales.
Fulfillment costs are the silent killer of DTC margins. Every operator knows their COGS, but very few know their true fulfillment cost per order — pick fees, pack fees, dimensional weight surcharges, returns processing — until they sit down and add it all up.
The terms in this category cover the operational vocabulary that determines whether your contribution margin is what you think it is: 3PL vs in-house, dim weight, on-time delivery rate, returns rate, restock fees, and the warehouse metrics that drive your real per-order economics.
Get fluent here before you negotiate your next 3PL contract or change your shipping zones — these terms are the leverage points.
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Showing 19 of 19 terms in Fulfillment & Operations
SKU
Stock Keeping Unit - a unique alphanumeric code identifying and tracking individual products.
Safety Stock
Extra inventory kept as a buffer against unexpected demand spikes or supply disruptions.
Dead Stock
Inventory that hasn't sold and is unlikely to sell, tying up capital.
Inventory Turnover
A ratio measuring how many times inventory is sold and replaced over a given period.
Reorder Point
The inventory level that triggers a new purchase order from suppliers.
Days of Inventory
The average number of days inventory sits in stock before selling.
Stockout
When inventory reaches zero and products become unavailable for purchase.
Backorder
Accepting orders for out-of-stock items with extended fulfillment timelines.
3PL
Third-Party Logistics - outsourcing warehousing, picking, packing, and shipping to external providers.
Dropshipping
A fulfillment model where products ship directly from manufacturer to customer.
FBA
Fulfillment by Amazon - sellers ship inventory to Amazon warehouses for storage and fulfillment.
FBM
Fulfillment by Merchant - sellers handle their own fulfillment for marketplace orders.
Dimensional Weight
A pricing method where carriers charge based on package volume rather than actual weight.
Lead Time
Total time between placing a purchase order and receiving goods in inventory.
Landed Cost
Total cost to bring a product to your warehouse, including product cost, shipping, and duties.
RMA
Return Merchandise Authorization - a numbered authorization initiating the return process.
Return Rate
Percentage of orders resulting in returns. Industry averages range from 15-30% for ecommerce.
Pick and Pack
The warehouse process of selecting ordered items and packaging them for shipment.
Kitting
Combining multiple individual SKUs into a single package or bundle before shipping.
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