Tag Archives: storage

Seven Advantages to Outsourcing Fulfillment

21 May

Outsourcing order fulfillment has many advantages. Here are just a few to consider when looking at considering whether to keep fulfillment in-house or to outsource it.

1) Focus on business

Unless you own a fulfillment company, fulfillment isn’t your primary function. By outsourcing fulfillment, you gain time to spend on primary functions such as sales, marketing, supply chain, and innovation. Let the experts deal with storage, shipping, software, and other fulfillment-related requirements.

2) Financial considerations

There are financial advantages to outsourcing fulfillment. The costs of setting up a warehouse, staffing, managing, securing, and developing technological solutions is daunting.

3) Facilities

Start-up companies may not have adequate storage facilities or the funds to build them.

Fulfillment Services

Warehousing and Fulfillment Services

Fulfillment companies typically have thousands of square feet of warehouse space. Companies that warehouse their own inventory have additional expenses, too, such as staff and utilities. A fulfillment company distributes this expense through storage fees to multiple clients which results in a storage fee that is less than an individual company would pay to do it in-house.

4) Shipping costs

Unless a producer ships thousands of items per month, they don’t get the beneficial “bulk” shipping rates available to many fulfillment companies. The price these companies pay often deviate from standard shipping prices by 30% or more. In some companies, the savings associated with shipping bulk rates provided by fulfillment companies can outweigh the charges of the fulfillment company itself. You may also be able to negotiate a flat-rate for shipping—a single fee based on weight and service, as opposed to weight, service, and destination. This makes shipping expenses predictable, which makes budgeting easier.

5) Shipping materials costs

Similar in concept to the savings associated with shipping costs, shipping materials bought in bulk also are purchased at more favorable rates. When compared to the cost of purchasing supplies for shipping through retail outlets, savings can amount to 50%. Of course, this depends on the fulfillment company.

Often, fulfillment companies include the packaging fee in the cost of shipping, or per order. This is how fulfillment providers can quote “free packaging.” Most order fulfillment service providers make a list of standard cartons available to their clients. A company whose product doesn’t fit one these packages may need to provide their own packaging or pay an additional fee.

6) Behind-the-scenes fulfillment services

There are many hidden aspects to running an e-commerce business. Don’t forget to look at these services when making your decision.

  • Receiving and unpacking merchandise
  • Receiving orders via mail order, email, phone or phone
  • Processing of credit cards
  • Handling of returns, including inspecting merchandise and restocking
  • Preparing documentation for international shipments
  • Generating reports
  • Updating customer databases
  • Issuing customer credits
  • Maintaining inventory
  • Making bank deposits
  • Answering customer service phone calls, e-mail correspondence

7) E-commerce software need

Fulfillment houses develop intelligent e-commerce systems to help manage the many elements within the business. The e-commerce system is adaptable and may be able to integrate into clients’ ordering system. Some fulfillment houses may even host commerce sites themselves. The software also enables integration into respective couriers’ systems to provide clients with live information about package deliveries.

As you can see, fulfillment isn’t for the faint-of heart. Why not let the experts take care of this for you while you focus on growing your business?

 

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Fulfillment Services: Warehousing, Logistics and Shipping

17 Apr

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.

Logistics

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.

Shipping

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.Full-Service Fulfillment Options

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.