What to Look for in a Fulfillment ProviderMarc Prosser
What to Look for in a Fulfillment Provider
When you sell products online, shipping can be a headache you don’t want to handle on your own. It can also eat up a lot of your profit if you don’t have the kinds of bulk orders that qualify you for discounted shipping rates. That’s where fulfillment providers come in.
Fulfillment providers essentially deal with the shipping and handling on your behalf. Because they’ve negotiated low rates with reputable shipping services like FedEx and UPS, you pay less for shipping products to your customers, and you don’t even have to touch your products to do so.
Choose Your Provider Carefully
There are many companies that offer fulfillment services, each with its own specialties and benefits. Start your search by knowing what you need in a provider.
Consider what you need to ship. Does your product require special handling, such as refrigerated food items or delicate glass? Are your products excessively heavy or large? When you have special needs when it comes to shipping, you want to ensure the fulfillment service you work with has experience shipping your type of product so it can arrive at your customer’s doorstep intact and on time.
Think about how frequently you ship products. Some fulfillment services have minimum requirements on how many orders you’ll need to ship. If you can’t meet that threshold, you need to find a provider that deals with smaller customers like you.
Look for other services. Some companies offer the full customer service experience, including processing returns. You’d probably not want to have that task added to your plate, so look at how you can streamline customer service with a single provider.
Consider your e-commerce platform. Whether you use Shopify, Amazon, Volusion, or another e-commerce system to process your orders, it can be immensely helpful to work with a fulfillment provider that integrates with the service you use. This makes it simple to manage inventory, orders, and returns.
Consider a provider that can help you sell more. Amazon is such a popular selling tool, many e-commerce companies sell exclusively through the shopping site. While you don’t have to use Fulfilled By Amazon to sell on Amazon, there is some positive clout that comes with doing so, since Amazon is praised by customers for its fast shipping and stress-free return process. Also, Prime members tend to only buy products that offer 2-day Prime shipping, so partnering with FBA can get you access to their orders. Working with a name brand like Amazon can significantly boost your sales.
Forecast your growth potential. Wherever you are currently with your fulfillment needs, will that stay the same over the coming months and years, or will it grow (or shrink)? Ideally, you’d want to find a company that can scale as you grow, and maybe offer preferred pricing if you hit a new volume tier.
Now, Look at Costs
There are four primary categories for fees when working with a fulfillment provider.
Intake fees: This is what you pay for the provider to receive and sort your products in its warehouse. Typically you’ll pay between $15 to 35 per pallet.
Storage fees. Fulfillment companies charge to store your products in their warehouse either by pallet or cubic feet. You may also have to pay a shelf fee based on how much space your products take up. Expect this to run $15-40 per month.
Pick and pack fees. This covers the cost of a fulfillment employee packaging items into a box, as well as the packing materials used. Not all charge this, but you likely won’t pay over $3 per package.
Shipping fees. Naturally, you also have to cover the cost to ship your products. Fortunately, you can save as much as 50% what you’d pay if you shipped it yourself. The higher the volume of your shipped packages, the more you can save.
With shipping, consider how long your products will spend sitting in a fulfillment provider’s warehouse. Do you have fast turnover? Will you be sending lots of small items or a few larger items?
Now that you know the basic costs, you can run a rough estimate on what it would cost you to ship the average month’s orders out. As you begin to look at specific providers, you can compare costs across the board and see who leaves you with enough profit margin and provides all the services you want.
Ask for a Referral
In addition to your own criteria, you want to find a provider who is reputable in your industry. If you have ecommerce contacts, ask who they use for fulfillment. If you don’t have contacts who can refer you, read reviews online and assess the top brands based on your own needs.
Shipping products is a huge part of the e-commerce equation. But finding the right fulfillment provider makes it so much easier, faster, and cheaper to get your products out of the door and into your customers’ hands.