When shipping products on a large scale is crucial to your business, the challenge of figuring out how to get so many items from here to there--and in perfect condition--is daunting. A do-it-yourself approach to fulfillment allows you to ensure accuracy and quality control, but it also takes time, employees, organization, and physical space. Working with a quality third party can alleviate those challenges and drive cost savings, but forfeiting control of such an important part of the business can feel unnatural and risky.
When assessing whether or not to keep your fulfillment processes in-house, Scott Sims, founder and solutions architect at Distribution Technologies, suggests prioritizing customer service goals, not just costs and expenses. Sims has decades of experience helping businesses design effective fulfillment processes. He counsels clients to remember two primary concerns: timeliness and accuracy.
Customers expect to receive what they ordered by the promised delivery date, and there is very little margin for error. "It takes so much time and sales and marketing effort to acquire a new customer, but a business could lose that customer on their first order if it is mis-shipped," says Sims. Whether handling fulfillment in-house or with a partner, small businesses must be certain they can meet customers' expectations.
A practical consideration is space. Do you have room to store all of your product and packaging supplies? Where are you housing your inventory and are you equipped to handle growth? Farrah Haidar owns and operates Seven Sisters Scones with her sister, Hala Yassine. They have a bakery in Johns Creek, Georgia, but they also built an ecommerce platform so they can sell their goodies all over the country. Haidar explains that ordering packaging materials in small quantities gets expensive, but they don't have the space for storing bulk supplies. During peak seasons, like Mother's Day, they also don't have the manpower. They opt for a flexible solution, a combination of in-house and outsourced fulfillment, in partnership with their logistics partner, The UPS Store.
The team at The UPS Store helped Haidar and Yassine choose strategic packaging to save on shipping costs. "Everyone thinks about packaging first, but you should really think about shipping considerations first, then design the packaging," advises Haidar.
To determine whether or not you should outsource fulfillment, think about these three factors:
- What are you shipping? Is assembly required, and, if so, is it difficult? How customized and complex is the "unboxing experience"? Would you feel comfortable outsourcing this part of your business?
- How much are you shipping? What are your goals for growth? Do you have the manpower to handle this in-house?
- Where are you shipping to? Could you save money by working with fulfillment locations closer to your customers? Are you shipping internationally, and are you comfortable navigating the tricky world of customs alone?
Because they handle such high volumes, fulfillment operations may be able to pass along shipping discounts to their customers. They should also have a streamlined process that can get items from point A to point B quickly and intact. Outsourcing may also help you save on staffing and even real estate costs, since you won't need to worry about storing materials. But remember, when you outsource, you lose some control over the customer experience. So choosing a reliable partner is critical.
What You Want In a Fulfillment Partner
Deciding that you would like to outsource fulfillment is an important step, but your work doesn't end there. Now you need to perform your due diligence. Sims cautions that a phone call and some online research is not enough. You have to meet with vendors in person to better understand their services and personalities, and to tour their facilities. Sims suggests asking to observe them fulfill another client's order so you can get a sense of their approach.
When choosing a fulfillment partner, consider the following:
- Reliability: Will your packages arrive on time and undamaged? Ask how many other clients they are working with to be sure they have the bandwidth for your business. See if you can speak to some of their other clients to verify their level of service.
- Service and features: What's important to your business, and can this partner meet your needs? What type of technology are they using?
- Personality: Does the business reflect your values? Are they the type of company you want to do business with?
- Price: Compare vendor costs and calculate how they will impact your pricing strategy.
- Flexibility: Can you scale services, up or down, depending on your needs? This is especially important for seasonal businesses.
- Strategy: Will they act as a strategic partner, or are they simply packing boxes? Small businesses can drive big savings with slight tweaks. The ideal fulfillment partner can help you identify these opportunities.
The right fulfillment strategy depends on your business's unique needs. Understanding all of these factors will help you go into the decision-making process with your eyes open so you can do what's best for your business and your growth plans.