The short answer to the question of when to hire a fulfillment company is this: Every business is unique, so each owner decides at a different time and often for different dominant reasons. The business in question could be a small, one-owner operation growing rapidly or a booming e-commerce company looking to expand its capacity without adding warehouse space or personnel.
You could ask 50 fulfillment customers why they decided to outsource their shipping, receiving, packing warehousing and associated tasks, and you’d probably get as many different answers. The right time in many people’s minds is when the logistics of shipping and receiving take them away from their true business and whatever it is they do best. That might be anything from manufacturing custom auto parts to making chocolate candies — with success in any industry comes growth pain.
When it’s decision time, you can’t go wrong gathering more information. What follows are basic data about professional fulfillment, many of the advantages of having it and hints that may help you decide when to use a fulfillment company.
What Are Fulfillment Companies?
Fulfillment companies become the shipping, receiving, packing, inventory, warehousing and customer-service departments for everything related to ordering. They meet the truck at the loading dock, unload product, categorize and organize items, store inventory, receive orders, pick or retrieve the article, pack the product efficiently and send it at the most economic rate.
- Breadth of services
- Strength of expertise
- Level of quality and commitment
- History of success
- Varied or customizable options.
With a good company, you should be able to work the agreement for services to fit your needs. You can fully expect that the partner will receive, inventory, pack and ship as a professional warehouse and inventory keeper working for you.
E-commerce, Web- and signal-based selling channels and a variety of industries use fulfillment services to cut costs and boost sales: Consumer goods, apparel, publishing, catalog, automotive, media, subscription services, supplements and many others.
A fulfillment company brings many benefits to your business:
- Money savings
- More time in the schedule
- Less stress and workload on you and your staff
- Precise order tracking
- Data and intelligence reports
- Technology products and people
- Robust e-commerce features like gift certificates
- Fast, accurate returns-exchange processes
- Unity among multiple channels
- 24/7 customer support
- Instant inventory checks in real time
What Are the Reasons to Consider a Fulfillment Company?
Time and demand motivate. The headache of spending the majority of your time tracking shipments or running down the answer to a customer’s inventory question may lead you straight to the decision to hire a fulfillment partner. Other times the wide-eyed entrepreneur whose orders exceed their expectations might seek strategies to help them meet demand. Some choose a fulfillment service because they prefer to stay out of the shipping and receiving industry and because it is a complex and time-consuming task.
If orders are part of your business, someone at the company spends time keeping track of them, including back orders and when it’s time to ship — essentially the status of everything. You may want to consider asking that person how much time it takes to check and manage orders and then apply the same question to anyone whose time gets used fulfilling the customer’s expectations.
Money is a good reason to procure fulfillment services. Costs differ because there is wide variation among companies and the combinations of services each offers. You may require certain qualities or characteristics such as comprehensive service, high standards, multiple locations and more.
To determine what you stand to save, you’ll need to ask for estimates from the procurement-services companies. Compare that expense against that of doing it yourself including personnel, equipment, compliance and facility for your specific business. The spreadsheet or scribble pad will soon reveal the numbers clearly, and everyone’s motivating figure will be a little different. Doing the math for your situation gives you a more comprehensive idea of exactly how many dollars you stand to save.
Another way to think about the money is that storage and warehousing costs tend to be fixed expenses on the balance sheet: The building and real estate, the climate control, electricity, water, operating items and more. Fulfillment services can convert those fixed expenses into ones that will only increase when sales do, which positively affects most companies’ accounting.
An efficient fulfillment partner will also help you avoid the costs of adding seasonal workers and buying more equipment like scales, sealers, racks, forklifts, heavy machinery and software systems.
Stress can be reduced through fulfillment services. While some balk at the thought of spending money on such services, the cost advantage shows in the numbers as well as in the less-quantifiable and just-as-important value of alleviating workload and anxiety.
Flexibility: A good fulfillment company empowers you to respond seamlessly to seasonal fluctuations that apply to your ordering. The National Retail Federation projects that 20 percent of all yearly retail sales happen between the start of November and the end of December. Any company big or small is apt to struggle to keep up with the extra demand during the same season their business and personal lives involve more activity. The same principal of service efficiency applies regardless of what season in the year your demand increases.
Technology plays a big role in the shipping and receiving industry, and it is a challenge to keep systems current and running smoothly. Most hardware and software goes obsolete too soon, facing you with either an expensive upgrade or a new system. When you partner with an order-fulfillment company, it worries about the required technology and typically has a larger client base to help defray costs when new elements are needed.
Safety matters greatly, but the complexity of federal and other safety-compliance laws and regulations can be overwhelming for even the most dedicated legal mind. If you have a warehouse or facility, you know there are countless lists of regulations, training, equipment, procedures and certifications that apply to workers, machines and the workplace. Some would claim it’s priceless to have a professional fulfillment-services company handle regulation conformance and assume liability for proper procedures.
Expansion moves within your grasp when you have a partner who can propel your product onto the international online market with relative ease. It could be a signal for fulfillment services if you have been dreaming of going global but loathe the thought of deciphering all the rules and figuring out how and where to go.
In that same vein, owners and managers may desire to grow the business but not be able to fund another big warehouse. Fulfillment services give you practically unlimited space that can flex with the demand of your business and enable you to add new dimensions. You can think of it as on-demand shipping, receiving and storage services.
Shipping relationships expedite orders and cultivate success. You might be leery that options are limited with this or that fulfillment company. Some may be, and it’s worth asking about a company’s preferences and established relationships with carriers. NFS, for example, works with all of them:
- United States Postal Service (USPS)
- United Parcel Service (UPS)
- Federal Express
- Canada Post
- Less-Than-truckload (LTL)
- Royal Mail
- Yellow Freight / Roadway
When you choose a fulfillment-services partner, you gain automatic access to well-forged relationships with shippers which normally take years and hundreds of orders to form. The time you don’t have to spend on the phone with your vendors is more time you’ll be able to spend doing your true business.
Shipping expertise is not gained quickly or easily, and those who know it best are the people and professionals moving in those circles daily and constantly. Business owners are typically too busy with functions such as manufacturing, marketing, accounting and management to know which shipper’s rates are doing what today.
Some people know exactly when to use a fulfillment company — when they lose track of what shipping rates are best for each of their company’s desired destinations. A fulfillment company steps in as the expert to procure the best combination of packaging and shipping prices.
Shipping locale can make a huge difference in what you pay to get things where they’re going, and NSF for example, has the capability to place product in regional warehouses that get it closer to its ultimate destination. Anyone who’s paid for gas or flown in a plane understands that the farther something has to travel, the more it costs to get it there. These days, anyone who orders online nearly expects to have free shipping or discounted shipping, and it is a proven marketing tool. It makes sense to keep shipping prices as competitive as possible.
Another soft-yet-important factor about location is cracking local markets such as cities, counties, state governments, and private companies and organizations. Many can have an official or unofficial policy to hire only contractors and vendors who support commerce in the state or region.
Storage often becomes the deciding factor when someone needs to store a lot of items somewhere for an online business and can no longer sacrifice their basement, garage, attic, storage building or back room for the purpose. Picture yourself having a staffed, professional warehouse with nearly infinite room for your product — but that product is still right at your fingertips through technology and innovative record keeping.
Service quality makes a difference in any business. It’s why companies train employees or issue uniformed shirts, have mission statements, or hold strategy meetings and bonding sessions. They want to project a professional image and avoid serious customer-service offenses.
Many successful business owners worry about who will be talking to their customers calling about an order. And again, it is wise to investigate who does what and how much training representatives have. NFS’s call center seats 60 people, so a real live human is there to answer at whatever time of any day people call.
Each agent receives extensive training for the system where orders are accessed, as well as training on protocol with customers, including problem resolution, up selling and save-the-sale techniques. If customers need a bilingual person to help with their order, several are usually available in the call center. The facility features quality monitoring and call recording to ensure that exchanges are conducted according to expectations and a 10-point training plan. They’re able to help customers any way they like, on the phone or by chat, and they make reports in real time.
Morale works into the mix in a way business owners often don’t think about until after seeing the benefit of having fulfillment services. For example, the professionals at NFS are year-round, full-time, dedicated people who specialize in what they do.
Companies who go it alone often have to hire temporary workers to get them through the crunches or pile extra work on people who may or may not receive it well. Either variety of help might not be the highly ethical and conscientious service you’d like. Once you have fulfillment service, it acts as the flexible labor pool you can tap into when needed, which keeps things on a steady course throughout the workforce.
Solutions result from partnering with a fulfillment-services professional. It’s tempting to think, “How hard could sending stuff be?” Along with logistics, the actual packaging of merchandise involves a whole subset of needs.
If you send five things once a month that are the same size, you probably don’t need help managing the process. Other owners might fulfill many orders with different items, often of different size and variety, and they might be surprised by the considerations shipping requires.
- Is the item breakable?
- Should it fit snugly or can it rattle around?
- Do you choose Styrofoam, plastic air bubbles, compacted paper, confetti or some other filling for the items?
- Does it best fit into a box, plastic-bag mailer, custom container or disk case?
- Where will the label be placed?
- Will the package comply with regulations?
- Does packaging react with any materials or products?
- Should the item be held upright?
The last thing you need is inadequate packaging that damages goods. Neither buyers nor sellers want that to happen and it triggers the return process, costing you money and your customer time. Packaging may seem a trivial thing, but getting it wrong — even just on occasion — can change a client’s perception of your product and company.
Competition remains fierce in all avenues of e-commerce. A fulfillment-services partner can help you gain more than one edge with cost savings, more time for your true business, and a systematic, reliable and technologically advanced system to organize, manage and fill your business orders.
NFS began more than 50 years ago as fulfillment-software developers before expanding into transaction management, customer care and complete warehousing and distribution services. We can, will and want to help you find the answers and strategy you seek.
Contact us today at 1-800-637-1306 to get started with your custom strategy!