Eighteen months into running Tackle Grab, which sells fishing gear by monthly subscription, co-founder and CEO Stash Karandanis had had enough. The company had 2,000 subscribers and was growing fast. But Karandanis was still doing all the fulfillment--carefully packing merchandise into boxes, pasting mailing labels on them, and arranging for shipment--at his home in East Sandwich, Massachusetts.
"Crazy is an understatement," he says. "All of the logistics and shipping was in my basement. It took 12 days to do 2,000 kits." Karandanis and his co-founder, Owen Hall, scrambled to hire a fulfillment service in nearby Boston, but couldn't find a reasonably priced option. Then Riley Life Logistics in Raleigh, North Carolina, quoted a much lower price. Going with Riley freed up nearly half a month's time for Karandanis to focus on other tasks--and today Tackle Grab has more than 15,000 members.
Tackle Grab's tale has a happy ending, but many e-commerce companies find fulfillment vexing. With shipping and logistics in-house, costs may be kept down, but eventually, finding a partner is essential for managing growth and sanity. Resources like crafts marketplace Etsy, easy-to-use e-commerce shipping software like ShipStation, and e-commerce platforms like Shopify make it simple to set up a business online. But fulfillment is still time-consuming, complicated--and, well, scary.
"No one is going to care about your product more than you do, and you're entrusting that to a third party," says Karandanis. "It's terrifying."
Particularly for newer companies. Jen Resnick is the founder of Wala Swim, an online swimsuit retailer for women that buys from vendors worldwide. Bringing all her different products into one fulfillment center and delegating all the sorting and specialized packing and packaging to a partner seemed like too big a risk for her young company.
"There are all these unknowns, and there's no room for error," she says. Resnick is keeping it in-house for now. Still, she concedes, "I do think we'll be forced to face this decision again."
She's right, because sooner or later, all e-commerce founders ask themselves: How much is the time spent packing and shipping actually worth? Mark Bollman, CEO of the Boston-based apparel brand Ball and Buck, says there's an easy way to know when you're ready to outsource fulfillment: "The turning point is when you've got someone whose full-time job is fulfilling orders." That money, he says, is better spent on a shipping partner.
Amazon is a go-to option for many--it offers storage, pick-and-pack services, and exposure on a scale few other companies can match. The number of sellers using its fulfillment services grew 65 percent in 2014--but some entrepreneurs prefer a local partner they can visit, or one that offers a more specialized service. "To have the custom packaging experience we want to offer our customers," says Bollman, "the service at Amazon wasn't feasible." (A rep from Amazon wouldn't comment on this matter.)
Getting referrals from similar businesses is the first step in finding your partner. "It might feel intimidating, but you'd be surprised at how much businesses are willing to help one another and provide insight and forge connections," says Randy Goldberg, co-founder of Bombas Socks. "Don't be afraid to get friendly with businesses in the same niche as you," echoes Karandanis. Once you've got some companies to talk to, know what to ask. A good partner can scale services up or down quickly, depending on your needs. Can it offer variable shipping rates during slow months? That can make a huge difference in your costs. Prepare yourself to spend time haggling over details, as contracts with fulfillment companies tend to be especially long and complicated. Always get a per-box breakdown of all fees--including those for storage, boxing, pallets, and returns. Also, don't overlook the softer stuff when it comes to choosing your partner. "Find a company that believes in your model and wants to grow with you," says Karandanis.
Still on the fence? Bollman has some simple advice. "If you're debating whether to make the switch, make the switch," he advises. "Go earlier rather than later."
Still planning on doing your own fulfillment? Some apps can help.
COSTING APP - ShipHawk
Gives shipping quotes for large items from more than 200 delivery services.
19.8 million tons - Total volume of corrugated cardboard boxes that were recycled in the U.S. in 2013.
TRACKING APP - Parcel
Tracks shipments by more than 200 courier services.
65% - Increase in number of clients using Amazon's fulfillment servicesin 2014.
SHIPPING APP - Shippo
Prints mailing labels, finds shipping discounts, and works with many online fulfillment platforms.
1817 - Year the corrugated cardboard box was invented.
There are hundreds of fulfillment companies in the U.S. Below are some that are accustomed to working with startups.
- Pros: Accurate and fast, thanks to its Kiva Systems robot technology.
- Cons: Works mostly with fashion and apparel brands.
- Startup clients: Bonobos, Gilt, Ministry of Supply
Rock Hill, South Carolina
- Pros: No minimums.
- Cons: Has impressive shipping times, but its East Coast location means a longer wait for West Coast addresses.
- Startup clients: Ball and Buck, Castaway Clothing, La Matera, Old Try
Bay Shore, New York
- Pros: Specializes in working with startups; proximity to New York City transportation hubs makes it easy to check on operations.
- Cons: Northeastern winters can result in shipping delays.
- Startup clients: Thinx, Brooklinen, Miggo
St. Charles, Missouri
- Pros: Four distribution centers--St. Charles, Dallas, Fresno, California, and Carlisle, Pennsylvania.
- Cons: Minimums occasionally required, though not typically for smaller accounts.
- Startup clients: Dr. Squatch Soap, Wool & Prince, Modko