How To Pick The Right Order Fulfillment Company

So you’re successful. Or you’re on track to be successful.

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Your orders are going out, just about as fast as you can ship them in-house. Sales keep rolling in and the trend is set to continue.

But you’re just bone tired. Doing your own shipping is getting old. You’d rather be designing new products or working on marketing campaigns. But boxes have to go out.

Because we’re in the order shipping business, we’ve heard this story a ton of times. It’s why people reach out to us!

But, of course, turning over your order fulfillment to a third party, well, it’s scary! Another company is going to be directly responsible for how your business is perceived. And once you get started with an order fulfillment company, it’s a pain in the neck to switch.

So you want to get it right!

This begs the question: how do you pick the right order fulfillment company in the first place? That’s what we’ll talk about in this video.

My name is Brandon, here on behalf of Fulfillrite. If you need help shipping your orders, go to fulfillrite.com and request a quote. We’ve shipped thousands of orders and we’re happy to help you ship yours too. The quote doesn’t cost a thing, so if nothing else, you get some good information about pricing. Link in the description.

But enough self-promotion, let’s talk about how you find an order fulfillment company that’s a good fit for your needs.

Let’s start by answering the obvious question first…

Do you really need help shipping orders?

This is a super important question. There’s no point in getting a whole other company involved in your business unless you really need the help. In fact, we have a video about the situations in which you start to break even on order fulfillment, which you can check out here.

Put simply, there are two reasons why you’d want help shipping orders: time and money. That is, you either save a bunch of time by not having to ship orders or a bunch of money by either not having to pay staff to ship for you or by getting cheaper postage rates by working with a fulfillment partner.

Usually, this happens around 100 orders per month, but that’s just a rule of thumb.

The actual way you know you need help is to ask yourself some questions and observe your answers and think about what they might mean. Some questions we recommend include:

Is your customer base growing fast with no sign of slowing down?
Are you unable to ship out orders quickly and/or accurately?
Are you and your team overworked, specifically because of shipping?
Do your business operations, particularly around supply chain work, feel complex?
Are shipping fees eating you alive?
Are you out of physical storage space?

If you answer yes to any of these questions, you probably do need to hire some help from an order fulfillment company.

But you can’t just pick any fulfillment center anywhere. You’ll need to start by picking a location…

Pick a location.

First, here are two assumptions to start with:

You need warehouses as close to your customers as possible, but
You don’t want to pay more for warehouses than you need to.

To that end, you’ll need to decide how many warehouse locations you need, and where they should be.

This is a nuanced bit of business planning to get right, so let’s start here. If your store is just over 100 orders per month, you probably just want one warehouse. You can send all your inventory to one place, which is easy and relatively cheap. And if something goes wrong, you know exactly who to call.

But if you have several hundred orders per month, you’ll want to have multiple warehouses within each country or region where you have at least, let’s say, 100 orders per month. That way, you minimize the amount of international shipping your fulfillment centers have to do, cutting down on postage costs and delivery time. But you’re also not on the hook to keep a partner in Europe if you have like 2 orders per month in the region.

You can apply this same logic to, for example, having a west coast and east coast warehouse in the US. Or a warehouse in Australia, Canada, and so on.

It’s a delicate balance: too few warehouses and shipping can be slow and expensive. But if you have too many warehouses and freight, storage, and other overhead fees will pile up. And the only way to really know for sure what makes sense for you is good old-fashioned number-crunching!

But once you do that, if you find you need multiple warehouses, you can go about this in two ways. You can either find a fulfillment partner with multiple locations that work for you. Or you can find multiple fulfillment partners that specialize in different regions. If you end up taking that second option, you’ll need to manage your warehouses with inventory management software like NetSuite, Skubana, QuickBooks Commerce, or something else like that.

Once you figure out how many warehouses you need and where you need them, then you’ll want to…

Figure out which services you need.

Before you reach out to warehouses, thing about what you need done. Order fulfillment itself is a given. But every warehouse has its own specialty, so you want to choose one that’s a good fit for your business model.

For example, it’s not hard to find order fulfillment partners that ship small, lightweight, ecommerce-friendly items. But if you need to ship things that are hazardous or fragile, that’s a different story. Same thing with perishable goods or items that require refrigeration.

Here’s one that might also surprise you – stores with a high SKU-to-order ratio, such as apparel, also have a tough time finding fulfillment partners too.

So in short, you need to find a company that specializes in your niche, or at least has some experience fulfilling orders within it.

Then you will also want to consider value-added services as well. Order fulfillment might be the main thing you need help with, but think about whether you will need help with kitting and assembly. How about customization and personalization? Refurbishment?

If any of these things are an important part of your business model that you could foresee asking a fulfillment partner to do, then you’ll want to pick a partner that can handle them.

Now thinking about location, number of warehouses, and services required, that’s going to help you narrow your search a lot. Huge time-saver!

But not every company is equal, and you’re going to want to…

Find reputable companies.

Once you know what you need help with, it’s easier to narrow your search. The next step is to find good candidates. Don’t worry about cost right now. Most fulfillment centers don’t publicly display rates because the pricing model is too tough to succinctly communicate online.

Make a list of companies that you are interested in. Check out neutral third-party review sites. Trustpilot, Google Reviews, and G2 are all good places to start. Look at the average score, but also read negative reviews too. While every company will have a few odd and unfair negative reviews in there, the 2- and 3-star reviews can tell you a lot. Look out for issues like communication, delays, damage, and surprise costs. Those are areas where problems often show up and cause a disproportionate amount of damage to businesses using fulfillment centers.

Once you go through the neutral third-party information, see if you can find case studies and testimonials as well. Reach out to the customers whose names are mentioned and see if they are willing to vouch for the companies using them in marketing materials. You won’t always get a response, but it’s still a worthwhile exercise that could save you some serious trouble if there’s a mismatch between marketing and actual service.

Now I’m going to talk about getting quotes in a second, but I advise you to use the quote and initial selling process as a window into your prospective fulfillment partner too. Specifically, look out for these red flags. If you see these in the selling process, things are not going to get better once you sign agreements or send inventory!

Infrequent or poor–quality communication
Long-term contracts or complicated rules
Complicated pricing or nickel and diming
Low-quality software
Poor returns process

Short version – their account reps and pricing model should make you feel comfortable with the company. If they don’t, walk. Use your spreadsheets to make decisions on price, but when it comes to stuff like this, it’s actually smart to trust your gut.

With that in mind, let’s talk about money, specifically how you…

Request and compare quotes.

Once you’ve narrowed down your list to a few good potential order fulfillment partners, it is time to request a quote. This process is quite straightforward.

In this video, we talk more about how the order fulfillment pricing model works. So I’m not going to break that down here because it’s complex.

Suffice it to say, that when you receive quotes, forecast your sales volume and try to predict your need for value-added services. Then use that to figure out what each company on your shortlist is going to charge to ship your expected order volume.

You don’t necessarily want to go with the cheapest warehouse. But the all-in cost of the partner you ultimately choose, should at least be competitive!

And there you have it! When it comes to picking the right order fulfillment company, there are five basic steps:

Make sure you really do need the help.
Figure out how many warehouses you need and where they should be.
Outline your service needs.
Find reputable companies.
Compare quotes.

If you follow these five steps, you’ll be doing your due diligence, and you’ll be able to confidently choose the right partner for your eCommerce shop!

If you enjoyed this video, please take a moment to like and subscribe. Don’t forget to slap some postage on that bell so we can express ship new videos to you as soon as they drop. And last but not least, if you have any questions, leave a comment below. I will personally answer as many as I can.

Thanks for watching!

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