You have created a product, a website, marketed your product, and now you want to grow, or you have grown to the point that you want to simplify your operations. You have controlled every aspect of your company from startup, so you have legitimate concerns that it can all go wrong. How can you trust a third party logistics provider to take care of the most important part of your business, actually putting your products in the hands of your customers.
Should You Outsource Your Order Fulfillment Services?
Outsourcing Fulfillment May Be One of The Most Important Decisions You Will Make
Handled correctly, you can reduce order processing and warehousing costs, get bigger shipping discounts, cut back on employees, and spend more of your time marketing your products, growing more profitable with each sale, and you will be better prepared for the future.
Handled incorrectly, and you will have complaints from your customers, no idea how much inventory you have, and you will spend your time trying to sort out a very complicated mess.
Focus on vertical and horizontal markets.
A good fulfillment company will reduce your expenses. They will be able to more efficiently and accurately process your orders, for much less than it would cost you to do it yourself. Don't be intimidated by the per order and per item fees. Compared to your expenses, they are minimal.
Fulfillment companies understand shipping. A good one will make suggestions that will save you even more money.
Save money on packaging. Fulfillment companies purchase massive quantities of packaging. They should be willing to let you share in the savings.
Deeper shipping discounts. Depending on your order volume, and shipping methods, you should be able to negotiate for a deeper discount.
Labor is no longer your concern. Fulfillment providers will handle all of the staffing related to seasonal peaks, lay-offs, etc.
Focus on marketing and growing your business.
Maintain control of customer service
You will be depending on someone else to take care of the shipping, handling, and receiving of your products.
You will give up some control.
How do you choose the right fulfillment service partner?
The selection process is critical. Be sure to qualify the fulfillment companies.
If you are willing, provide them with a file of recent shipping activity. They should be able to provide you with detail of what they would’ve charged you to ship those same packages.
You want to know what you will pay today, but, what happens when your volume increases? What happens if your volume should drop? They should be able to give you this information.
Some fulfillment providers will limit you to only one carrier.
How much do they know about what happens during package processing? Ask them some hard questions. Ask the sales staff about the order fulfillment / management system, billing, etc.
Are there packaging fees?
Are there receiving fees?
Are storage fees reasonable?
What happens when a fulfillment company incorrectly ships one of your orders?
Do you need returns processing?
How user friendly is the order management software?
The big question, is how much money can a fulfillment house save you?
How Much Money Can An Order Fulfillment Center Save You?
All fulfillment service providers will warehouse your inventory, and ship your goods. However, all of them will handle and process your orders differently. It’s how they differ that makes your decision so important. Don’t always be scared away by the basic per order and per item numbers. Some fulfillment companies hide their fees with vague wording, combine them with other fees (double dipping) up charging shipping rates and more. At Xpert Fulfillment Services we are transparent with your costs by providing detailed per order invoicing.
What Shipping Carriers Do They Use?
More often than not, the carriers will negotiate with fulfillment service centers based on the percentage of business that the fulfillment company will give them. Therefore, chances are that a fulfillment center with a primary carrier, will be able to give you a better discount, because they have a large enough shipping margin to pass one on to you. However, a good fulfillment service uses all of 3 of the major carriers to effectively cater to a multitude of customers needs, whether it be next day shipping, ground or a deferred low cost shipping option.
Provide Accurate Information
Be honest with the fulfillment companies that you are dealing with. The more detail you provide about your shipping habits, then the more accurately they will be able to quote your rates. Some key points of interest to fulfillment companies, are the percentage of orders that you ship express, how heavy or bulky your product is, how much storage is required, how many unique SKU’s you offer and overall shipping volume.
How Flexible Are They?
When trying to decide what fulfillment house is right for you, it’s also important to consider flexibility. You may want to cancel an order last minute, are they willing to pull it out off the floor for you? Are they willing to audit your inventory, do assembly & kitting for you or process returns?
At Xpert, we realize that we are an extension of your company and strive to treat your customers like you would. This is why we are willing to go that extra mile, because our business is your business.
How creative are the fulfillment companies that you are having quote on your business? Do they care about your business goals, and desire to help you get to that point? Keep in mind, that they can only be successful, if you are. If they gouge you on fees, and over charge you on shipping, it will limit you. Remember that fulfillment companies are a great resource of information in the worlds of marketing, and business development. Typically, they have seen business models for a variety of companies. A good fulfillment company will make suggestions for helping you cut costs, and they will try to find ways help you grow.
Inventory Check in. This is commonly called “dock to shelf time” and it’s the amount of time that goes by between when your goods arrive on the fulfillment company’s dock, and when they are “checked in”, on the shelf, and ready to ship. Times can range from a few hours to days, so be sure to check what the average is at the companies you’re considering. Also a great question to ask references.
Information reporting. What information do they provide to you after an order as shipped? Does it satisfy your needs? Can you get information on the internet, or do you have to call. Can you search for an order by name or order number? Can you track packages to see if they’ve been delivered? The more information you have at your fingertips, the easier it will be for you to deal with inquiries.