Fulfillment Company 101: The Art and Science of Quality Order Satisfaction
No matter what kind of business you have, want or may get in the future, its success hinges on one principle: delivering what you promised. Customers’ expectations must be met, or the company won’t last long — whether it’s a pizza place, law firm, jewelry maker or auto mechanic.
So, what is a fulfillment company? And how can it cultivate good business?
What Is a Fulfillment Company?
The most basic functions of fulfillment companies are to help you fill your orders and deliver the product to satisfy your customers. Full-service fulfillment sees your product from the place it originates, which might be storage at your business location or elsewhere, through to product delivery at a residential or commercial address.
The order process normally includes all or parts of these main steps:
- Return (if necessary)
- Maintain online platform
Customer service arches over all the steps and represents the most major aspect of filling orders. That category can include anything from answering a question to efficiently processing returns or exchanges.
Fulfillment companies are most often associated with e-commerce and situations in which online companies sell and ship products, but all types of virtual and brick-and-mortar businesses use fulfillment services in one way or another. Any company filling orders uses some type of internal or external fulfillment process to receive, fill, ship, package, handle and otherwise manage the orders.
For a simple example, a restaurant has a permanent, internal order-processing system. A growing e-commerce retailer with a garage office, however, is likely to use an order-fulfillment company once it reaches a certain threshold of sales.
A variety of reasons prompts business people to seek fulfillment services. Some might have a storefront but find they need more capacity. Others may have a computer and a hot idea but no place to store inventory or conduct shipping operations. Another example could be a medium- or large-sized company that hits on a great, new, successful product but finds it has insufficient capacity to stock the items and process the orders.
All kinds of people from budding entrepreneurs to seasoned executives need solutions for delivering what their company promises. They learn quickly that handling and delivery problems hinder good business, even if everything else is done perfectly.
Most Basic, Most Important
The essential nature of “getting it there” must translate to an urgency and conscientiousness that follows through all the steps and processes of order fulfillment, such as:
- Providing the order platform/system
- Receiving the order
- Processing payment
- Sending a confirmation
- Pulling the product
- Inspecting the product
- Packaging the item
- Coordinating shipping
- Sending efficiently
- Tracking the order
- Keeping records
- Handling returns
- Answering questions
- Organizing and storing merchandise
- Affixing bar codes
- Maintaining inventory
- Delivering reports
Beyond the human resources needed to fill orders well, many kinds of order-fulfillment require specialized equipment, including:
- Pallet jacks
- Label machines
- Postage machines
- Shipping computers
- Boxes and packing materials
- Safety equipment
- Office machines
- Warehouse space
- Loading dock
- Temperature control
- Pest prevention
A fulfillment company gives you these things without having to make a huge capital investment. Often the challenges of organizing, staffing and maintaining a big or small warehouse exhaust the individual business owner, creative entrepreneur or corporation that would rather devote more time and resources to its true business.
Each company is unique, but many of them have struggles, challenges or quality concerns that fulfillment services eliminate. At NFS, we provide comprehensive and customized support for completing orders of all types.
We know you want to make an informed decision about fulfillment service, and we want to help by sharing what we know. You and many people likely need help answering their own questions about if they need a fulfillment company and if so, how to pick one and choose relevant services.
These decisions will involve a little bit of a different strategy for everyone since business characteristics differ so greatly from company to company, but basic information will help you make a more informed decision.
How do you know if you should hire a fulfillment company? Some advisors say you need one if you have more money than time.
Most owners will want to compare the cost of in-house fulfillment services to the cost of hiring a company to handle them.
With broad variation among business types, it is practically impossible to quote a generic figure of how much one method saves over another until you calculate the costs relevant to your business. However, a good fulfillment-services company usually saves money over in-house operations because the experts know the most efficient means of shipping, storing, retrieving and keeping records.
For example, not everyone knows how to arrange the inventory for the best storage and access. Shipping experts pay attention to how an item needs to be oriented, to what kind of climate it needs and to such things as light sensitivity.
Order-fulfillment company fees will vary, but when you outsource order processing, you can generally expect to pay approximately 10% of the sales price plus shipping costs. Your potential partners can give you more information about their specific rates, which again will vary depending on the quality and range of services a company provides.
To calculate the cost of operating your own warehouse, you’ll have to analyze the expenses according to your business’ needs, like what size of a facility you would need, how many orders you would process and how much space is needed to store each item. For example, are you storing products that are large or small? Does anything require special packaging?
The list of expenses involved with creating an in-house order fulfillment operation usually includes these items:
- Real estate (rent or mortgage)
- Shipping and postage
- Customer service
- Administration time
The list of things to anticipate and ask about in outsourcing order-fulfillment services usually includes these items:
- Initial fee
- Monthly minimum payment
- Receiving prices – sometimes per unit or per hour
- Storage needs expressed in cubic feet
- Order-fulfillment fee
- Returns cost
- Software capability
Once you being shipping products regularly, you realize what a maze of options there are through the United States Postal Service (USPS), UPS, FedEx and many others who handle freight, fly internationally or do some kind of special delivery. For example, you might need a company that also has partners such as Canada Post, DHL, less-than-truckload (LTL), Royal Mail and Yellow Freight.
It doesn’t matter if you’re sending something across the world or across town, you or your shipping partner must decide the most efficient method to get your product from point A to point B. No company wants to waste profit or lose business on an imprecise or incorrect shipping decision.
In addition, an excellent fulfillment-services partner alleviates a lot of stress from business ownership and management. Everyone values this differently on the ultimate balance sheet.
The hard numbers and limitations of real estate, staffing, revenue and other realities are crucial factors in determining the value of a fulfillment company, but there are other components that must be considered as well —besides just the money. It’s beneficial to look at if you actually want to run a warehouse and if you have the strengths to do it well.
In making your order-fulfillment decision, ask yourself: Are you well equipped to provide exceptional fulfillment service and do you want to?
It hurts a business when customers feel disappointed by any number of the following:
- Their package does not arrive when expected.
- Their item is damaged.
- Their order is partial or incorrect.
- They can’t reach a customer-service representative.
- They encounter an untrained person when they do make contact.
If you feel like these may come be an issue in your business interactions with your customers, fulfillment services could really help your bottom line. Other ways you might come to realize fulfillment services are the way to go include:
- You don’t want to be knee-deep in packing slips.
- Your basement living room, garage, closets or other areas are bursting with product.
- Order fulfillment takes too much time away from the thing you love doing.
- You need more time to market, present and produce your product.
- It would help you win jobs in other places to have an in-state shipping address.
Find Quality Service
Your fulfillment partner can become your shipping, receiving, packing, inventory, technology, warehousing and customer-service departments and can do everything from unloading the truck to storing records after delivery. For example, NFS can do all the services associated with fulfillment services, or we can tailor the menu of fulfillment tasks to fit your business.
Some online retailers need someone to keep their virtual inventory and process credit cards. Business people may want to outsource all or parts of the processes by which it fills orders, and most can find the exact combination they seek.
A good fulfillment service company will see the item through until the customer is happy and has what they need, and then the transaction goes to an archive. Not all fulfillment companies offer the same level, list or quality of services, so once you determine what things you need a fulfillment service to do, shop around, talk to associates and interview or even test out potential partners.
Ask about their years of experience, offered services, specialized expertise, quality-control practices, software and technology, customized options, shipping companies used and prices charged. You can also check warehouse locations to see how many there are and where. Question if they can provide references and a tour of their facility.
See if they offer order tracking and same-day shipping. You’ll also want to make sure they serve the size of company you are or plan to be. Ask to see a sample report and data on their returns-exchange processes. Explore any features available such as gift cards and discount codes, and ask if they can guarantee unity among selling channels if you have more than one. See if they have 24-7 customer service and if they can check inventory in real time.
Make sure your potential fulfillment partner can not only do everything you want now but can also accommodate future growth. E-commerce, Web- and signal-based selling channels and a variety of industries use fulfillment services to cut costs and save time. Some of the biggest include:
- Consumer goods
- Artwork and crafts
- Sporting goods
Master the Challenges
It is not hard to find examples of bad experiences with shipping, customer service or e-commerce, and you can probably think of a few personally. If you’ll be in the order-fulfillment business as a primary or secondary manager of the process, you should be aware of “what can happen” in the marketplace.
From the time an order is placed to the time the customer has the right item in hand, there are many potential bumps in the road to delivery:
- Late shipping
- Lost item
- Wrong item
- Damaged goods
- Poor customer service
- Exorbitant shipping costs
- Failed returns or exchanges
- No returns
- Delivery failure or mix-up
The stories unfold all over the world. One UK-based firm researched consumers’ opinions with regard to possible shipping problems and reported that 87% of them would switch to another company if they experienced shipping delays or order problems.
Kissmetrics, an analytics firm, published an article that states more than 40% of shoppers drop off a site during the billing and shipping steps, with most citing slow performance or perceived poor process as the reason. Correcting those initial problems can boost sales as much as 5%. That leaves us to wonder how much more business would or could boom with optimized order processing.
Professionals Lead the Way
From the entrepreneur bogged down in inventory slips, barcodes and purchasing platforms, to the home-based business owner with anxiety and product stacked to the ceiling, order-fulfillment services can help in a number of ways. You can accomplish more when you’re not worried about “getting it there,” including growing your business, improving your product, boosting productivity and efficiency and working on customer attraction and retention.
In the ultra-competitive and ever-expanding universe of e-commerce, companies need every edge they can get. Their success or failure depends not only on delivering what they promise but also getting it there on time and in good condition. Armed with some good, basic knowledge about your business, you can determine if an order-fulfillment company satisfies your needs, whether comprehensive and broad or niche and selective.
The many reasons to consider a good order-fulfillment partner include:
- Storage capacity
- Service quality
- Customer service
At NFS, we are family-owned and provide services for business-to-business and business-to-consumer applications. We also offer more than 50 years of experience in the shipping and receiving industry. We’ve built the expertise, human and technological networks and valued relationships to help our customers with all aspects of their order-fulfillment needs — from A to Z and everything in between.
Feel free to come to us if you would like to ask questions, hear your range of options or talk with someone you can trust for knowledgeable advice. Quality service and respect for our clients has helped NFS rise to the top of the fulfillment-services industry, and we’re eager to use our experience to help more people meet goals and achieve success in their business.
We offer many solutions in order fulfillment, and we can help you take care of that first and most important principle: to deliver what you promise. Contact us today to get started.