A short time ago, one area of your home was a great space to store your business inventory. Now your inventory has taken over your entire home. Products are everywhere. Sleeping quarters double as storage rooms. Orders are coming in faster than you can fill them. You need inventory fulfillment help, and you need it fast.
Choosing an Order Fulfillment Service
As a business grows, the owner, employees and devoted helpers often spend a great deal of time doing the following:
- Organizing inventory
- Receiving shipments
- Repacking products to send to customers
Time spent devoted to on-site inventory is time away from marketing and sales efforts. It also places a glaring spotlight on a positive business problem: the need to outsource certain business tasks like fulfillment.
Business owners who work outside the home probably don’t have products piled everywhere in their homes. However, they have other reasons to seek off-site inventory:
- They need freedom from managing unorganized and inaccurate inventory.
- They want to streamline the fulfillment process by improving logistics and web-based ordering abilities.
- They want to focus more on sales than warehouse and fulfillment.
- They’re interested in direct marketing campaign, but lack space to get the task done.
- They want to save overhead and employee costs.
What Is a Fulfillment House?
You have options to solve your inventory management problem. No, the options don’t include renting an unused area in a friend’s home, making children live elsewhere or moving everything to a self-storage area. Yes, those are creative options, but a better solution is hiring a fulfillment house.
You may not be familiar with the term fulfillment house because the industry has a lot of terms for fulfillment companies. The terms fulfillment service, fulfillment company and fulfillment provider are often used interchangeably.
Once a company takes an order, the fulfillment house is responsible for getting that product to the customer. The fulfillment provider takes the product from its shelf and packs it. When the product is ready to send, it contacts the shipper. The fulfillment service provider also sends an automated email, informing the customer that the product has shipped.
Fulfillment may handle the following:
- Customer credit card processing
- Current inventory levels on website
- Product reorder
- Call-center support
- Product returns
Let’s say someone orders 10 products from your store. You inform the fulfillment company via email, fax or telephone. Your part of the process is done. The fulfillment company gathers the items from its warehouse, packs them and notifies the shipper and customer.
What if a business is already working with other partners, such as a hosting company? In this case, the fulfillment company’s responsibilities may change. A small business owner may do the in-house work or hire a hosting company to take credit card information. The fulfillment company would pick-and-pack products, provide customer support and process returned items.
Choosing an order fulfillment service allows a business to handle small orders or no orders at all. A business wanting to handle small orders will have to hire a package delivery company and keep some inventory on hand.
Before Choosing a Fulfillment Service Provider, Know Why You Need One
A business owner may see inventory needing shipment but have no time to do it. Instant thoughts of hiring a fulfillment service become an urgent need. However, choosing a fulfillment service provider involves making short-term and long-term decisions prior to talking to any fulfillment provider.
Let’s examine some important questions you should ask yourself:
What are your specific business needs right now and in the future?
Knowing your specific needs now will help you determine whether fulfillment is a temporary solution, seasonal option or long-term goal. For instance, if your long-term goal is to add different products to your company, you may want to use a fulfillment company to store the products.
How much time do you have to devote to inventory management?
Many business owners fail to realize every aspect of a business takes time – and this includes shipping products. Unfortunately, they soon discover that shipping products takes a lot more time than anticipated when orders are backlogged.
If this is your situation, fulfillment will save you valuable time that can be better spent attracting and retaining customers.
How much money do you want to save?
Take time to create a shipping budget. How much money do you spend shipping each package, tracking the package and emailing customers? Find the total for each month. Use the total to compare fulfillment company prices. You may find that it’s cheaper to hire a fulfillment company.
Can a fulfillment service provide better quality service?
Are you available to take every customer call? Are you ready to ship when the order request comes in? Are your friends and family members acting as your customer service representatives? Truthfully answering those questions will help you determine if a fulfillment service can provide better quality customer service.
Do you have enough space to store products?
You’ve probably answered this question already, but it’s still important to explore the answers to other alternatives, such as self-storage.
Renting storage is different because you have to make a major time and space commitment. You typically pay for only the space you need when outsourcing fulfillment. Many fulfillment companies understand the need for space in flux. One month a business needs space for 20,000 products, the next month space for 15,000 products. With a fulfillment company, you enjoy a flexible commitment.
What are your labor costs?
When you began your business, your labor costs were probably pretty low. Maybe it was you and a couple of friends picking, packing and shipping your products. Now you handle close to or more than 1,000 orders a month. If you’re hiring someone to help you pick, pack and ship, your labor costs are more than when you started.
When you hire a fulfillment service, you don’t have to worry about product labor. The fulfillment center picks, packs and ships the products, meaning you won’t have to worry about late night rushes.
After you determine your shipping needs and decide you need a fulfillment service, the next step is determining which fulfilling provider will match your needs and goals.
What to Look for in a Fulfillment Center
As you begin researching fulfillment centers, you will quickly realize each company prices services in different ways.
Consider Pricing Fees
Yes, fulfillment services come with a lot of fees, but each is for a different service, so they may not apply to your fulfillment situation. Here are a few possible fees to consider when choosing a fulfillment service:
- Order processing fee. This refers to the fee per order processed.
- Flat fee for each order. There may also be a charge for every additional item in the box. Flat rates vary by orders processed each month and packing materials included.
- Storage fee. This monthly fee is for the amount of storage space you will use. The fee is charged either per cubic feet, square feet or pallet. Base your storage fee on storing no more than about a three-month supply of your products to avoid paying extra storage costs.
- Minimum contract period. Some fulfillment companies want a six-month to one-year contract minimum.
- Credit card transaction fee. If you don’t have a merchant account, the fulfillment center will handle credit card transactions for you. The fee is usually based on the total transaction amount.
- Shipping cart services. You have the option to have your own shopping cart and transmit orders or go with your own method. It’s probably more cost-effective to use the fulfillment company’s shopping cart. It also receives the orders quicker.
- Return fee. You’re charged this fee whenever a customer returns merchandise.
- Receiving merchandise fee. You’ll likely be charged for having the fulfillment house receive your merchandise.
Enough with the fees, right? It’s time to move on to other things you should look for in a fulfillment service.
Communication is vital to customer satisfaction. You may have to call the fulfillment house to modify an order request. Consider fulfillment houses with more than one way for you to reach it. Whether it’s via telephone or email, the fulfillment house should return your call within a few hours.
Not all fulfillment houses offer more than one way for a customer to ship items. It’s up to you to pick one that gives your customers those options.
A fulfillment service will assemble products or kits you.
How to Select a Fulfillment House
You have used a number of resources to find fulfillment companies. You searched the Internet. You asked colleagues and businesspeople you know. You inquired at the U.S. Postal Service about fulfillment center referrals. You even contacted your local chambers of commerce.
Let’s assume you have a list of fulfillment houses and you’re ready to narrow down the list. How do you do it?
Always look for a fulfillment house with a good reputation and track record. You also want to understand the process of comparing fulfillment providers. Line-itemed costs vary from fulfillment provider to fulfillment provider. The following is just a sample of what line-item costs vary:
- Setup fee
- Storage fee, which varies by pallet, square or cubic foot
- Fee for receiving packages
- Per-order fee
- Shelving or stacking fee per box
- Per-item fee, which applies when you have more than one SKU
- Fee for printing and using shipping labels
- Box or package fee, which applies when the fulfillment center must open an unopened box or package
Remember: some fulfillment centers charge a percentage of each order. This percentage does not include the fees listed in the prior section.
Ask for Recent Customer References
Many older references may not remember their interaction with the fulfillment center or have gone out of business, so emphasize the importance of recent references.
When contacting each reference, ask about the company’s quality control, customer service and timeliness records. Of course, quality control is a big deal. If your orders are shipped incorrectly, you may be charged a chargeback fee by the retailer.
Schedule a Facility Tour
This allows you to confirm things and see how the facility operates. Whether or not you can schedule a tour may depend on your location.
Take notes when talking to references or taking a scheduled tour. It helps when reviewing the company estimates later.
Comparing fulfillment company estimates may seem overwhelming at first, so here are some things to help you finally choose the right fulfillment company:
Remember Where Your Customers Are Located
You’d rather select a fulfillment house close to customers than to your business. For instance, if you’re thinking about hiring a fulfillment center based in Illinois because that’s where you’re located, but the majority of your customers are based on the west coast, you may want to consider a west coast fulfillment center. The Illinois-based fulfillment center is more affordable until you consider shipping rates.
Guestimate the Amount of Shipping Volume
Fulfillment houses range from large and mid-size to small. Smaller fulfillment houses have less employees. Find a fulfillment center that can handle any extra workload. Do you have a consistent order volume? Do your orders spike on a certain day, or during a particular season or month? Find a fulfillment center that is the appropriate size to handle any extra shipping activity.
Find a Shipment Schedule That Matches Your Needs
Every fulfillment house has its own policy regarding processing orders. One fulfillment center may have a 3 p.m. deadline for processing orders. Another may have a same day deadline. If you miss the 3 p.m. deadline, the order is shipped the next day. This could impact sales, so it must be considered.
Ask About Error Rate
Mistakes happen. Customers sometimes receive the wrong products. The important part of working with a fulfillment center is to resolve things quickly. If customers receive the wrong items, it’s crucial that they receive the right items as fast as possible. What is the fulfillment company’s error rate? Will it ship replacement items at a faster rate than other shipping?
Make Your Selection Based On Range of Services
You need to pick, pack and ship services now. What about in the future? You may expand your business by launching a special catalog or direct mail campaign. Pick a fulfillment house with a range of services and that allows you to change and customize your relationship.
Form a Partnership
A fulfillment partner should share your standards and philosophy regarding getting your products to customers.
Consider Response Time
Choose a fulfillment house with a quick response time to day-to-day orders and increased shipment orders.
Opt for a Secure Facility
Pick the fulfillment house with the best safeguards to protect your inventory. In a fulfillment house, it’s easy to hide products. Items with a high dollar amount need additional security. Never take security for granted.
Choose National Fulfillment
Each fulfillment service company is different. Choosing National Fulfillment Services as your provider allows you to concentrate on your company’s fundamental activities, such as marketing, because we handle a variety of fulfillment services.
Begin researching fulfillment service providers by reading more about National Fulfillment Services. If you’ve finished your research, contact us.
We’re ready to handle your fulfillment needs, so you can concentrate on your company’s growth.