This video is brought to you by Fulfillrite.
Shipping orders can be a real pain. Sure, it means your business is booming, which is great! But who wants to spend all their time packing boxes and printing postage?
This is why order fulfillment companies exist. Small business owners don’t want to spend all their precious time, energy, and money ferrying items back and forth to the post office.
But how do you know when it’s time to hire a fulfillment company? How do you know how to choose one that fits your business model? We’ll talk about these questions and more in this week’s video!
But before we get to that, a quick note. If you watch this video and decide you want to hire a fulfillment company, we can help you get started. Go to fulfillrite.com/open to request a quote today. Link in the description.
Alright, back to the show!
5 Reasons to Hire a Fulfillment Company
Hiring an order fulfillment company is a rite of passage for many businesses as they grow. That said, it doesn’t start to make sense until you’re shipping at least 50 orders per month.
Once you cross that threshold, there’s no exact number at which you need to hire someone. There are rather a handful of reasons that would compel you to do so. Here’s what you should look out for.
1. Saving money
Shipping can quickly become unbelievably expensive. If you ship items on your own, you’re going to end up paying a lot for two specific things: postage and supplies. Even businesses that ship a lot will end up paying retail, or nearly retail, prices on postage. On top of that, the price of bubble mailers, boxes, packing tape, bubble wrap, and the like can really add up as your business begins to scale.
Obviously, you don’t want shipping costs to eat into your margins too much. That’s why a lot of companies choose to outsource fulfillment.
It sounds counterintuitive to think that paying someone to ship for you will save money. But here’s the easiest way to understand it. Fulfillment companies pay less for postage and supplies since they buy so much of both. They then pass the savings along to you, which is often enough to offset account fees, pick and pack fees, and other service charges.
On top of that, you reclaim a lot of time by outsourcing fulfillment, which could mean spending less on labor, or at a minimum, having labor hours dedicated to more revenue-generating activities.
2. Providing better customer service
Customers have really high expectations for eCommerce shipping these days. First, about 80% of customers expect shipping to be free. Eighty-three percent expect regular communication about the location of their purchases. And 95% of consumers expect shipping issues to be resolved in transit.
That’s pretty wild, right? These are some tough expectations to meet if you’re not an expert in logistics. It’s possible to do this on your own, but between the time and cost concerns, it can quickly become an all-consuming task.
Hiring a fulfillment company means delegating this work to experts who work all day, every day shipping packages. That means that you personally would not be responsible for the timely and issue-free delivery of your items. Someone else could take care of your customers for you.
3. Growing customer base
Starting a business is hard. Scaling a business is harder. Having hordes of happy customers can be wonderful for your business, and every entrepreneur wants this. However, as more customers come your way, the amount of effort it takes to take care of them increases.
Hiring a fulfillment company is an important step you can take to future-proof your business. The difference between shipping 5 and 500 orders per day, if you or your team are doing the work, is enormous. To a fulfillment company, it’s barely noticeable.
4. You’re running out of space
Real estate is expensive. Storing items in your office, garage, or a storage unit quickly becomes expensive. When you start to run out of space, it makes financial and logistical sense to hire a fulfillment company.
Clutter can destroy your sense of calm and your ability to accomplish good work, so getting an overflow of inventory out of your home or place of business often makes sense. And if you’re paying the storage unit down the street and driving back and forth to retrieve inventory as you need it? Well, not only would hiring a fulfillment company save you money, but it would also decrease the complexity of your business as well.
5. Stress and overwork
Even the most dedicated entrepreneurs need at least some semblance of work-life balance in order to succeed. No human being can run at peak efficiency 24/7. So if you find yourself stressed out, overworked, and still shipping your own orders, it might be time to get some help.
Maybe you’ve run the numbers and it still costs more to outsource to a fulfillment company. Fair enough. But consider that your well-being and ability to come up with plans to grow your business both diminish with stress, and shipping is one of the easiest things you can get off your plate.
How to Choose an Order Fulfillment Company
Let’s say you’ve found at least one of the reasons for hiring a fulfillment company to be compelling. So what’s the next step? How do you actually choose a fulfillment company that meets your needs?
These are important questions because not all fulfillment companies serve the same kind of companies. Here are five things you need to consider when choosing a fulfillment company.
1. Item weight and size
The vast majority of eCommerce packages being sent in the mail are under 10 pounds. But that doesn’t mean all of them are! Depending on what you sell, your average order might be a few ounces, or it could be a few hundred pounds!
Some fulfillment centers, such as Fulfillrite, specialize in shipping small, lightweight items. Others specialize in moving heavy items such as kitchen appliances.
No matter what you’re selling, you need to find a fulfillment company that specializes in shipping products like yours, be they light and compact or heavy and bulky.
2. Order volume
If you want to start working with an order fulfillment company early, but have, say, 25 orders per month, you will want to find a fulfillment center that does not have a monthly minimum. That way, you only end up paying for the orders that you’re shipping out.
On the flip side, if you’re selling thousands and thousands of orders every month, you will probably want to only do business with a fulfillment center with a high monthly minimum order volume. By having a high monthly minimum, fulfillment centers like this can keep costs low for the small handful of businesses who qualify for their services.
3. Number of SKUs
A SKU is a unique item that can be sold. If you sell a single technological gadget, then your business may very well be based on one SKU. However, if you sell T-shirts in different sizes and colors, then your SKU count is the number of different shirts you sell times the available sizes times the available colors.
If you have only a handful of SKUs, then you will have no trouble finding a good fulfillment company for your needs. If you have a high SKU to order ratio, on the other hand, you will want to find a fulfillment center that does not have a SKU-to-order ratio requirement such as Rakuten Super Logistics or Red Stag Fulfillment.
4. Location of your customers
Another thing to consider when choosing a fulfillment company is the location of its warehouses. First, you will want to choose between a company with a single warehouse or multiple warehouses. Single warehouse operations tend to be simpler and have better communication and the ability to customize their processes around your company’s unique needs. Multi-warehouse operations can easily and more quickly serve large areas of the country, or even the world.
After choosing whether or not to go with a one warehouse or multiple warehouse locations, you then will likely want to choose a fulfillment company near your customers. For example, if you have a lot of customers in the northeastern US, you might want a warehouse in New Jersey. Similarly, if you have customers spread across the country, you might want a fulfillment company with locations in both the western and eastern halves of the country.
Lastly, if you have a lot of international customers, you may want a fulfillment company with locations in the US, Canada, Europe, and other economic zones from which your customers are ordering your goods.
Once you narrow down your choices to a handful of options based on the type of products you sell and where your customers are located, it’s time to make a choice. This is where the vetting process begins.
So what do you look for when vetting fulfillment centers? Here are a few simple suggestions.
First, make sure your fulfillment center of choice has good online reviews. Google and Trustpilot are good places to start.
Next, try to find some information on the timeliness of their orders. Find statistics if you can, and if not, check reviews and see if their clients complain about delays.
After you do that basic amount of vetting, it’s time to start requesting quotes. The first thing you will want to pay attention to is the timeliness and quality of communication. If a fulfillment center is not good about communicating with a prospective client, that is not a good sign.
Ask about contract terms and fee structure. Make sure there are not going to be hidden fees or long-term contracts that you are not comfortable paying for or signing onto.
Lastly, see if you can test drive the fulfillment company’s software. Their software is going to be how you experience their service for the most part, anyway, so you want to make sure it is high quality. Is it easy to use?
By evaluating fulfillment companies using these criteria, you can be sure that you have done your due diligence. That means you’ll likely be very pleased with the company you eventually settle on working with.
If you’ve watched this video and you feel like it’s time to hire a fulfillment company, you still might not know where to start. We’d like to help.
Fulfillrite is the most trusted name in order fulfillment. Boost customer satisfaction and scale your business faster with a logistics partner that feels like an extension of your team. Services include same-day shipping, real-time order and inventory tracking, dedicated customer service, and volume-based discounts.
Go to fulfillrite.com/open to request a quote today. Link in the description.
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And now, a parting question – have you hired a fulfillment company? If so, how did it go? If not, why not? Let us know in the comments below. We’d love to hear from you!