Say you have a great idea and want to sell a product online, but don’t have a big enough garage (or permission from the spouse) to stock inventory, and leasing warehouse space is just a little too risky when just starting out. You need the help of a fulfillment service! Order fulfillment services stock your products, charging you monthly warehousing fees, and then pack and ship orders to your customers as needed.
- Start slow. No need to hire employees, lease a facility, or invest in supply chain management.
- Simplify. Most fulfillment services can integrate into your current order management. Simply click a button and send the order to be picked, packed, and shipped to your customer.
- Value-added features. Some e-fulfillment services also provide other services, such as call centers for phoned in orders, returns processing, and the ability to insert sales/marketing material into your boxes while being picked/packed.
- Location. You can choose fulfillment centers near your customers. Many fulfillment companies have multiple warehouses so you can pick the best location (or use all of them).
- Expensive. The biggest drawback to outsourced fulfillment is the cost. Paying someone else is always more expensive than just doing it yourself
- No control. You can’t control someone else’s facility, or their employees. This means you and your expensive inventory are at the mercy of your fulfillment company. Lost or damaged merchandise, delayed shipments, and errors are just some of the problems that can occur.
- Flexibility. If a customer calls at 5 PM and just has to have a product the next day, chances are you’re out of luck. If you have your inventory in a warehouse or the garage, you can make exceptions as long as UPS is still open, but by outsourcing you’re at the mercy of a third party. There are typically pretty early cutoff times for same-day shipping, and shipments can be delayed even more during the peak holiday season.
Tips for Choosing a Fulfillment Service
- Location – Find a location that’s centrally located, or use multiple locations to ensure all your customers are served equally.
- Price – Do some calculations based on your number of individual SKUs and your average number of orders to determine the approximate costs, and compare several fulfillment services. Some are better suited for small, uniform items (like books or electronics), while others can handle palletized products and irregularly shaped merchandise.
- Shipping Costs – Many fulfillment companies use shipping surcharges as a major profit center. Ask if you can use your shipper account numbers to charge actual shipping costs directly to your account. If not, make sure they pass at least some of their shipping savings onto you, as paying “counter” rates for shipping is very expensive!
- Proven Track Record – Ask for testimonials and a client list. Google their return shipping address to find other retailers using their service, and call them to get their opinion. Ask them if they are happy with their fulfillment service, ask them about the speed of both shipments and responses to inquiries.
- Insurance – Ask for proof of insurance, and ask about policies regarding damaged or stolen merchandise. Make sure you can request a full inventory at any time (even if there are costs involved).
- Turnaround Time – Get a guaranteed turnaround time for order processing and shipping.
Popular Fulfillment Services
ShipWire – Their simplified pricing structure makes outsourcing fulfillment easy, but means that they aren’t a good fit for all products.
Fulfillment by Amazon – Warehousing with Amazon has its benefits, like being able to sell on Amazon.com and offer “Prime” shipping to customers.
eFulfillmentService – A fairly small company, they’re more flexible and more likely to work with you if you have odd requests such as large or specialty products.