Storage and warehousing
You will most likely need a place to store your inventory. You may also need a place that is willing to accept shipments on your behalf from your manufacturers. Storage options range from an informal self-storage facility where you drop off and pick up inventory yourself to a tightly-run warehousing operation that manages thousands of square feet of inventory, and handles receiving and shipping for you. Storage facilities are available for perishable items requiring refrigeration, temperature-sensitive items requiring air conditioning or heating or, more typically, warehousing providing protection from the elements. Third-party fulfillment services often charge a storage fee based on the product storage requirements and any required special handling.
BusinessDictionary.com defines logistics as the planning, execution, and control of the procurement, movement, and stationing of personnel, material, and other resources to achieve the objectives of a campaign, plan, project, or strategy. In the first article of this series, Fulfillment Services . . .so much more than filling orders!, we compared basic fulfillment without any other services to a turkey dinner without anything but turkey. To continue the comparison, it is logistics that turns the simple turkey dinner into the outstanding meal complete with mashed potatoes, cranberry, stuffing, and pumpkin pie. It takes planning and execution to create a mouth-watering, sumptuous dinner where all the food is done at the same time and the quantity is abundant enough to leave everyone satisfied. Likewise in fulfillment, it takes planning and execution to have the needed products on hand, and then fill and ship the orders according to customers’ expectations.
It is rare for a fulfillment company to provide its own courier services. In most cases, companies outsource shipping to courier or delivery companies. However, many times fulfillment companies—because of their large shipping volume—can negotiate larger shipping discounts with major delivery companies such as UPS, DHL, FedEx and USPS than small retailers can. Fast, dependable shipping is critical to the success of your online business and your fulfillment company’s top priority should be getting your orders to your customers quickly, accurately, and to their specifications.
Most fulfillment companies offer a range of shipping options to ensure the most reliable and cost-effective delivery methods. Options range from overnight delivery to slower, but more economical, forms of shipping. Several options are available for international shipping but be sure to discuss this with your fulfillment provider to make sure they are capable of shipping to (and providing the customs paperwork for) the countries you expect to do business with.
Two other topics to discuss with your fulfillment provider are turnaround time and accuracy rate. Can your fulfillment provider ship out orders the same day they receive them? What is their typical turnaround time? A good fulfillment company will ship out expedited orders the same day they receive them and the remainder of orders within two days of receipt. Also, a good fulfillment company will have an accuracy rate of 99% or better. This means orders are picked, packed and shipped correctly, and to the customers’ specifications. This is important as errors are costly in expense, time, and customer satisfaction.
Next week we’ll wrap up this series with a final look at a few remaining pieces of the fulfillment puzzle: customer service, reports, and procurement.