When you are generating a steady volume of sales in eCommerce, it’s time to scale your business. This is where Fulfillment companies come into the picture to take care of your inventory, customer service.
You can concentrate on growing your business and outsource fulfillment to the experts. But with multiple fulfillment companies vying for your attention, how do you select the right service for your business?
Here are 9 essentials to look for when choosing a fulfillment company:
A lot of businesses focus on the features advertised by the fulfillment company while deciding on which one to choose. While it’s not entirely wrong to look at the features, the first thing that you need to focus on is your data and the status of your business.
What type of products are you selling? How many SKUS do you have? What is the size (dimensions) of the product? Your choice of the fulfillment company should be based on how fast you can fulfill and how cost-effective it is.
For instance, if you have multiple SKUS, but are on a shoestring budget, it makes more sense to fulfill at the origin. If you are sourcing from China, look for a fulfillment company in China. This will help you stock only what’s required, save money on inventory and streamline the fulfillment process.
But if you have lesser SKUs, and large-sized inventory, then it will be more cost effective to stock inventory in domestic warehouses near your target market, as fulfilling these from China will be more expensive.
A fulfillment company’s pricing structure can either be simple enough to figure out at one glance or a complex maze that takes a team of financial experts to decipher. It’s obvious that the latter will make things confusing.
It’s also one of the ways in which some companies sneak in hidden and unwarranted charges. So, look for a simple pricing structure. For instance, a single charge for fulfillment, and one for storage. This means, you need to total product cost + fulfillment cost + storage cost + shipping cost for sending inventory to the fulfillment center.
This makes it easier to calculate your actual cost and hence, decide on a markup percentage to get a decent ROI.
On the contrary, some companies have separate charges for every touchpoint. There’s one charge for receiving inventory, one for storage, one for pick and pack, one for setup, one for packaging and so on. Now imagine trying to calculate your acquisition cost by adding up each and every one of these charges.
The invoice can baffle you and take hours to figure out.
Regardless of whether you are fulfilling at origin or fulfilling domestically, your goal should be to offer the fastest delivery times at the lowest costs. Large ecommerce brands like Amazon and Walmart with their sophisticated logistics networks have made 2-day and overnight shipping a reality.
This has only made it tougher for smaller businesses to compete by offering faster shipping. But you can still offer customers multiple options for faster delivery without breaking the bank.
For instance, you can also look at intra-region fulfillment within North America if you work with a fulfillment company that has domestic warehouses.
This will reduce shipping costs significantly and ensure that your products reach the customer in the same timespan as the biggies. You can also offer flat-rate or free shipping with minimum purchase requirements to encourage customers to buy more inventory at one time.
That segues into our next point.
A fulfillment company can either have a national or international warehouse network. Multiple domestic warehouses are always advantageous because they allow you to distribute inventory intelligently and reduce the cost of shipping significantly.
For instance, if you have warehouses in New Jersey and another in California, your customers on the west coast will see faster shipping times than those who live on the east coast.
This also ensures that it’s business as usual even when there is a natural disaster or some other situation that interrupts the supply chain. In such a scenario, you can continue to ship from your other warehouses without any interruption.
We suggest that you look for one that offers both, as this will ensure faster delivery times and reduced shipping costs. You can use both networks to optimize your fulfillment strategy to meet customer expectations and increase sales.
Let’s say you are not looking to target Europe at the moment. Don’t discount the possibility of doing so in the future. If you have a fulfillment company with European warehouses, you can easily take advantage of this and start shipping to Europe once your operations in the current market is well-established.
Every fulfillment company will have their own cloud-based software to manage and track inventory, orders and shipping. Your store and inventory will be synced with this software in the backend.
So, you will be using it on an everyday basis, as will your team members. It is imperative that it is easy to use. You should be able to connect with the system easily, track KPIs, make changes, edit details, manage orders and work on custom reports that help speed up decision-making.
The software should also integrate well with the eCommerce platform you are using to power your online store.
The software should offer low-price multi-channel fulfillment solutions without the need for custom integrations. This enables you to fulfill different channels like Amazon, eBay, Shopify and Magento all from one place. Moreover, it should also allow you to make shipments via multiple carriers.
The idea is to make eCommerce fulfillment management easy. Not to overwhelm you with complex workflows that eat into your work hours.
One of the easiest ways to scale an eCommerce business is to build your own brand with your own label. This gives you full control on the supply chain and customer experience. You can control the pricing, build brand loyalty and reduce inventory costs by stocking in bulk.
Your fulfillment partner should be able to offer this as a service, as well as help you with design and packaging for your products. But not all fulfillment services offer this option.
Some of them may allow marketing inserts, wherein they will add marketing material to the package during packaging. But beyond that, they may not offer any branding services.
Sourcingbro offers complete private label services including conceptualization, design, manufacture as well as logo and other branding services. We have helped multiple clients transition from a standard dropshipping business to a private label brand.
If you are generating a steady volume of sales already, then you should have a fulfillment partner that can help you build your brand. This will be one of the biggest levers for scalability and also enable faster growth in your business.
Not every fulfillment service will be a good fit for your business. There can be numerous reasons for this too. Sometimes, the onboarding process is too tedious. After onboarding, you may realize that the editing workflows are not efficient enough, or the pick and pack processes don’t work for you. Don’t be afraid to walk away if they don’t fit your needs.
You need to choose a fulfillment services provider that allows you to cancel at any time rather than locking you into a long-term contract. Of course, there are exceptions but you should have an option to terminate the relationship if it is not working out for your business.
One of the mainstays of any fulfillment service is customer service. Be sure to pick a fulfillment company that has multiple communication channels in a timezone that works for you.
These include phone support, email support and online chat services, in case you need advice or help at odd hours or when it is not feasible to call or email.
You should also be able to escalate urgent requests to a dedicated account manager, who will follow up on the request immediately.
The ability to reach out for help at any time of day or night is very reassuring when you are running an eCommerce business that has growing sales volume. A dedicated account manager can also help you figure problems and offer fast resolutions for urgent situations like lost and damaged packages.
Lost and damaged packages will have an irate customer breathing down your neck and they will expect you to make things right as quickly as possible.
While these situations are beyond your control, you can at least give them an urgent resolution if you have a dedicated account manager willing to work on the issue. This is exactly what customers look for in overall eCommerce shopping experience.
It is estimated that eCommerce return rates can be as high as 20%. So, it is imperative that the fulfillment company handles returns and refunds for you. That said, very few companies actually do this.
Most companies will not process returns, or will consider it as a value-added service that will be charged extra. Some companies will charge you for inspecting the product, whether the claims of the customer, that of damage is accurate.
Based on their assessment, you may choose to approve or refund the customer’s money. However, this is a chargeable service. Some fulfillment centers also charge you for disposing a damaged product.
So before you sign up with a 3pl fulfillment service provider, be sure to read their returns and refunds policy first.
We hope that this helps you find the perfect fulfillment service based on your shipping and ecom needs. Remember, you may not really need a big ticket branded service to scale.
One on one attention and flexible contractual terms are the key while finding a fulfillment partner that can take the load off your shoulders allowing you to focus on your core skills.