What Entrepreneurs Need to Know About Fulfillment Houses

— April 3, 2017

A tale of two entrepreneurs: Jane spends hours everyday packing and shipping orders. While she’s thrilled her business is doing well, she realizes she needs to find another solution to free up her time.

fulfillment houses

Her friend and colleague Danielle recommends a fulfillment house like she uses. Unlike Jane who physically packs many of her orders with the exception of some after school help, Danielle focuses on sales and marketing and lets someone else handle the fulfillment.

Freeing up your time to focus on other parts of your business, sounds like a good idea but what do you need to know about hiring a fulfillment house?

Simply put, a “fulfillment house” is a warehouse where goods are stored, packed, and shipped. When your shopping cart is well integrated with a fulfillment house, then the entire process is seamless. Your customer makes her purchase on your website, the fulfillment house is notified and fulfills the order and you focus on growing your business.

There are specialty fulfillment houses for print-on-demand products such as t-shirts and coffee cups as well as others that focus on books, CD’s and anything else.

While it can be scary to turn over your fulfillment to a 3rd party, if your growth is hampered by doing it yourself – and you have the steady cash flow – then it may be a good investment.

So how do you know when it’s time to enlist the services of a fulfillment house? If you’re spending more time on packing and shipping than you are on sales and marketing, then it may be time to re-evaluate.

3 Ways Fulfillment Can Streamline Your Business

When you’ve run out of room at your home. If your garage/attic/living room is packed with inventory, then you might want to reclaim your space and turn the storage over to a specialist.

You have consistent cash flow. There is a monthly commitment to securing these services and you need to be in the position to meet it.

They’re efficient – The best fulfillment companies offer a seamless transition from the time the customer places the order to their receipt of the item. The customer has no idea they’re dealing with a 3rd party. What’s more, many fulfillment partners seamlessly integrate with popular ecommerce platforms like Shopify.

Key Considerations When Choosing a Fulfillment Company

History/Reputation – While new companies can be good strategic partners, you’ll want to check with similar businesses to see who they recommend. When you choose to work with a vendor who is already familiar with your type of business, that can make the transition easier.

Pricing – Fees can vary from flat rate retainer to fees for receiving, storing, packing and shipping. The best deal will depend on your usage and needs. Do you want them to maintain large amounts of inventory or will they only handle the top selling items at this time?

Storage – Are there limits to the length of time you can keep inventory there? While your goal is keep your inventory moving, (of course), what happens if you sell seasonal items? Gloves and winter hats aren’t likely to be top sellers in July. Will you have to pay extra for them?

Scalability – If you suddenly had a product go viral, or if your operation grows quickly over a 6-12 month period, can your fulfillment service handle it? You don’t want to have to switch providers in the middle of a growth cycle as that will only add extra stress.

Software/Automation – Ideally, your customer places an order on your website, and it’s tracked/fulfilled/shipped without any input from you or your staff. A seamless technology integration will allow for this and it works no matter what you sell.

Who Is NOT Ready for a Fulfillment Service

If your business is currently going through boom and bust cycles and you don’t have the cash flow to make the monthly commitment, then you’re simply going to have to keep doing it yourself.

Also, if you have a lot of breakable items, then you may be better off developing the packing process yourself and teaching it to someone in house.

As you know, there’s a lot that goes into packing and shipping. From the size and type of boxes you use to which carrier you use for delivery and how returns are handled. Everything impacts your bottom line.

A good fulfillment house may recommend an improved packing process or a cheaper type of delivery system. They can be your partner in shipping and fulfillment.

What do you think? Is your business ready for a fulfillment house?

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Author: Jen Phillips April

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