How Your Packaging Can Improve the E-Commerce Fulfillment Customer Experience
The internet retailing world has been particularly interested, as of late, in developing ways to enhance the customer experience – post sale. Up until recently, the most utilized methods of enhancing the customer experience haven’t been particularly sexy – from strategic location of distribution and same day delivery to streamlined returns processes and custom carton printing. The focus has largely been to increase accuracy of shipments, decrease the order transit times, and find more ways to personalize the purchase. But as more and more retailers have upgraded systems and adopted similar methodologies, the leveled playing field makes it somewhat difficult to stand out from the crowd and truly differentiate from the competition. Furthermore, online merchants are finding it challenging to produce creative ways to interact with consumers during the shipping process.
As a result, some innovative companies are turning their attention to resourceful ways to make a lasting impact on the final few moments in the supply chain interaction – the critical few seconds when the end consumer actually receives and opens the package. The long running standards in package differentiation have been to invest in specially branded packaging, add inserts, provide free samples or extras, include a personalized note, and include marketing materials and promotions. The conundrum, however, is that most of these are not only widely used but they also require additional printing, additional touches, and additional complexity – which can adversely impact costs in an already profit-squeezed area of the business.
From Challenge to Innovation
One company has taken a challenge and turned it into an opportunity. Ted Shanley, founder and President of Seattle-area-based eCom Label Solutions says the idea for creating shipping labels that fold out and present the buyer with brand- and sales-building promotions occurred to him at a business meeting. While helping a client brainstorm a way to create a branding opportunity outside of the typical custom printing on a corrugated box, eCom Label Solutions came up with a fully customizable shipping label that can be used for returns, reverse logistics, packing slips, invoices, upsell, cross sell, advertising, coupon codes, social media, and more. “Our label will print out on laser printers that can run 8-12 x 14 inch documents through it that can handle label material. We have a list of compatible printers that we can make recommendations from. We help the merchant design and do the layout so there can be color printing on the front and back of label. They run a single pass through the printer printing the address in black-and-white on the label. The color part – invoices or ads or reminders to use social media – is pre-printed by us,” says Mr. Shanley.
Combining Function and Creativity to Enhance the Customer Experience
The most interesting part of this new shipping label solution isn’t just that it adds so much function to the basic shipping label, but that in addition to function it adds a new level of engagement to the final customer touch with limitless opportunities for engagement. From a logistics perspective, combining returns logistics information, packing slip information and invoice information is extremely beneficial, streamlining the pick and pack process into a simple print and stick solution instead of a print and insert methodology. Especially for third party logistics companies that manage multiple clients under the same warehouse, the function of the label is tremendous. But even more interesting are the possibilities for retailers to take extremely targeted messages to end customers in order to drive further engagement. For example, with the simple addition of a QR code, a consumer can quickly scan and provide immediate feedback, be entered in a contest, provide instant messaging through social media, or countless other ideas. According to Joel Sobanski of FedEx, “Anything we can do to differentiate and provide value and solutions allows us to be entrenched with our customers.”
A Way for Third Party Logistics Companies to Provide Additional Value
Online merchants aren’t the only companies that can capitalize on the added value that the eCom Label Solutions label provides. Third party fulfillment companies are under the same types of pressures to create additional value for fulfillment customers, and by bringing a custom label printing solution to the table, they are armed with additional ammunition in an otherwise somewhat stale industry. Says Hiroshi Mikitani, CEO of Rakuten, “Consumption today is not rooted in things, it is rooted in experience. Those merchants [and vendors] who understand this mindset will be the ones racking up sales.” The warehousing and fulfillment companies who extend these types of solutions to customers will no doubt be on the front end of innovation within the industry, helping them to participate in the growth of their clients.
It’s Time to Think Outside of the Box
Whether through an innovative shipping label solution or other means, it’s definitely time for merchant and vendors alike to think outside of the traditional box to further engage consumers. With so much at stake in the increasingly popular and growing ecommerce shipping segment, every touch and every moment within the fulfillment experience is becoming vital to the success of merchants. Those companies who are able to capitalize on that last and often ignored customer touch point will most likely be able to gain traction over the competition. As Kim Pinto of FedEx points out, “I have been trying to find ways to get this customers attention and this may just be the thing that is going to give me an upper hand.”
Oftentimes, as a lead generation company within the warehousing and fulfillment niche, we get asked by potential warehousing vendors or current customers just how many “large scale” opportunities we see on a regular basis. And because we’ve received even more of these requests than usual lately, we decided to analyze our last couple of years of data to determine just how many leads we produce that would classify as larger volume, versus the smaller and mid-sized deals. The results definitely provided some insights into the overall online marketing segment for warehousing and fulfillment services.
Methodology Behind the Statistics
In our system, we classify warehousing and fulfillment leads based upon the number of orders processed per month, which we felt would be a fairly good measure for this particular study. In our system, lead volumes are classified into the following monthly volume levels: Less than 200 orders per month, between 200-499 orders per month, 500-999 orders per month, and 1,000+ orders per month. The number of orders per month are taken directly from the prospect. In most cases, they are very accurate. It is important to note that in other cases, the figures provided by prospects can vary from actual figures. For example, newer companies may anticipate larger volumes than may actually be achieved. Similarly, some companies have been known to underestimate order demand, and actual volumes are higher than anticipated. For purposes of this study, we took prospects at their word, and used their “form filled” order volumes as the measure for size of the deal. One final note on the study – all of the leads evaluated in this study were derived via online marketing.
Let’s Get to the Results
After reviewing the last few years-worth of data, we found that 90.38% of all leads generated had monthly order volume levels of less than 500 orders per month – in other words, companies looking for small business fulfillment servcies. On the flip side of the coin, a slim 9.62% of all leads generated had monthly order volume levels in excess of 500 orders per month. Results of the study are reflected in the below pie chart.
So What Does All of this Mean?
As a producer of online leads for various Business to Business segments, insightMedia, Inc. has a very unique vantage point. The results seem to indicate that most leads are smaller volume opportunities – and these results were also highly correlated with the results for other B2B niches. In other words, in areas from warehousing and fulfillment to call center and search engine optimization, most online leads that we’ve generated fall into the small and mid-sized business segment. But why, you might ask? We believe (not so scientifically) that the proportion of smaller deals is due to the larger percentage of small businesses within the US. According to U.S. Census data, 99.7% of all U.S. Employer Firms are small business (less than 500 employees). The numbers pretty much speak for themselves.
How Can Fulfillment Companies Use this Information?
A study doesn’t provide much value unless there are some insights that one can draw from it. In this case, we think that there are a couple of very valuable ways to interpret the data and incorporate the findings into your fulfillment business. First, if you’re one of the fulfillment firms that is only looking for large scale opportunities, you’ll have to find some very creative ways to generate these types of leads – as the opportunities are very few and far between. Second, if you are the type of fulfillment organization that targets these types of opportunities, the potential for growth is significant. Further refining your internal strategy to effective fold these types of organizations into your warehouse will have a great appeal to the prospect, and will also diversify your risk pool. It’s no wonder that companies like Amazon and Shipwire have created solutions to appeal to these types of companies. As for our company, we definitely embrace the small business market segment, and are proud members of the segment ourselves. But hopefully armed with a little data, you too can put some thought into your strategy to solidify your niche and target customer type, as well as create a thoughtful strategy to best position yourself for success against the competition.
For online retailers, accurate and efficient order fulfillment is largely contingent upon a solid integration between the Web Store (the customer facing website where consumers order) and Warehouse Management systems (the back end warehouse system that manages inventory and orders). Whether fulfillment is performed in house or via an outsourced fulfillment provider, electronically sending over correct order information to the warehouse staff not only eliminates manual order entry error but also helps to streamline warehouse operations. Furthermore, the warehouse must be able to send the shipping tracking information for all orders back to the Web Store software so that customers can receive updates on their orders and track them to their doorsteps. But with so many e-commerce shopping cart solutions and inventory management systems on the market today, how does an online retailer make sure that they’re using the most effective solutions to integrate these divergent systems? The answer may not be as clear cut as one would think.
Integrating with Your In House Warehouse Management System
Shopping cart software programs, such as Magento, Volusion, Shopify and others, are great for creating powerful websites that capture orders and collect payments from customers. Still other companies opt for using a content management system for their web site, such as WordPress, coupled with a shopping cart plug in to capture and process orders, which also offers a viable option. But what happens once the order is ready to be pulled and shipped? Oftentimes, newer and growing online merchants simply utilize the shopping cart software to print invoices and packing slips and manage the status of orders.
In the case of newer companies with more limited time and budgets, simply using the shopping cart as an order management system can be a short term solution. For example, one route is to utilize an inexpensive content management system, such as WordPress, coupled with a Web Store “plug-in” that adds additional functionality to the website. A great example of this in action is to use WordPress’s popular Foxy Cart along with a plug-in called Order Desk. Developed by SparkWeb Interactive, Order Desk is a centralized, web based platform that organizes orders received from WordPress Web Stores, allowing growing merchants a way to easily process and ship orders. Order Desk also integrates with some third party warehouses to address outsourced warehousing needs, as discussed below.
However, as the business becomes more complex, and as needs change and increase, many merchants graduate to the next level of business – and purchase an inventory management system. These systems help to better manage the flow of inventory from purchase to fulfillment, but they also add a layer of complexity to the overall fulfillment equation. In particular, data must be passed back and forth in order for the shopping cart to communicate with the inventory system – such as sending order information to the inventory system, sending shipping tracking information back to the shopping cart once the order has been processed, and generally managing inventory counts for seamless fulfillment of customer orders.
One solution for solving the challenge of information exchange is to use custom programming in order to electronically pass order information back and forth between shopping cart and inventory management software. On the positive side of the coin, custom programming can solve nearly every integration challenge. However, on the flip side, custom programming can be expensive. Furthermore, it is risky to invest in a custom solution when, at some point in the future, user needs may change or systems may become obsolete.
Thankfully, many of the more popular shopping carts and content management systems offer built-in integration tools or software plug-ins that can bridge the gap – and planning is the key to choose the best path, avoid unnecessary expenses, set the business up for the best future success, and take advantage of software that already exists. For example, shopping cart behemoths such as Shopify, because of their wide use, attract developers who create custom apps that integrate and make the overall fulfillment process easier. Examples of inventory management apps for Shopify include Stitch Labs and Lettuce.
Integrating with an Outsourced Fulfillment House
For some online merchants, fulfillment companies come to the rescue by handling all aspects of the receiving, storage, and order fulfillment and shipping of product. These third party fulfillment houses generally have sophisticated warehouse management systems, oftentimes tailored to their industry so that they can manage inventory for a multitude of customers. A lot of times, 3PL (third party logistics) warehouse management software offers a giant leap forward for small and growing online retailers in terms of inventory and order management as well as overall reporting. But stepping into their more expansive systems isn’t without its challenges.
The most significant of the challenges is the preliminary step of actually integrating the merchants’ online Web Store with the warehouse management system. Many of the top-of-the-line warehouse management systems have very simple integration tools for the more popular Web Stores on the market. So online sellers that use shopping carts such as Volusion, Magento, and Shopify can take a huge sigh of relief. However, what about those companies using a less popular shopping cart? In many cases, integration can present interesting challenges, requiring additional programming time and resulting in a hefty set up fee to utilize a third party fulfillment company.
In order to overcome the challenge of allowing simple and straightforward integration for shopping carts of all shapes and sizes, a handful of software companies have come into existence. These companies have developed software that acts as a bridge between shopping carts and warehouse management systems, resulting in a smoother set up and integration process. One example of this type of software is Drop Stream. By using a cloud-based integration platform, Drop Stream helps to take away the pain for integrating shopping carts with fulfillment centers.
It Pays to Plan Out the Course
No matter your particular situation, one of the most important aspects of shopping cart and inventory management software use and management is to spend adequate time planning for the future. With so many options, shopping carts in particular can seem like a dime a dozen, making the decision seemingly insignificant. However, in order to utilize the best programs for the long term success of the business, thorough thought and consideration should be given to not only which systems suite the needs of the business best, but also which tools to use in order to provide a stable future and avoid unnecessary costs. Up front due diligence can save significant hassles later down the road.
Shopify is one of the most popular ecommerce shopping carts, used by merchants across the globe. But if you’re considering outsourcing all of the inventory storage and shipping services for your online sales, then there are some important things to take into account so that you can be certain that you’re working with a competent provider. Even though it would seem that fulfilling orders for your onlilne Shopify account would be simple and easy, there are quite a few things that complicate the process. In fact, if you choose a company that isn’t fully experienced with Shopify shipping and order fulfillment, then you might be putting your company at risk of underperforming for your customers – which could lead to unhappy customers or even lost business.
Are They Already Integrated with Shopify?
When a fulfillment provider takes over the storage and shipping of your product, the first thing they’ll need to do is to integrate their warehouse management system with your Shopify account. Integration allows them to receive orders automatically from your website. Similarly, integration also allows the warehouse to forward your system all of the “end of day” shipping tracking information so that you can, in turn, forward your customers all of the information they need to adequately track their orders. Finally, integration allows for a thorough “syncing” of information between your system and the warehouse management system so that you can have full information on all of your inventory and orders. As you can imagine, integrating with a shopping cart is a very involved process. If the prospective provider hasn’t previously integrated with your shopping cart platform, you might be up against an uphill battle. On the other hand, if the potential fulfillment house has already integrated with Shopify, then it will take them less time and, therefore, less money to integrate your particular online store.
Some Other Considerations
In addition to asking each potential fulfillment company if they’ve already integrated with Shopify, you’d be wise to gauge their overall experience within the e-commerce fulfillment niche in general. Many “general” fulfillment companies have experience with storing and shipping orders, but e-commerce fulfillment is distinctly different and offers a number of challenges above and beyond traditional fulfillment scenarios. Experienced providers will be able to handle all of the specifics to the ecommerce space, whereas general fulfillment companies may not be adequately prepared to address these issues.
About Shopify eCommerce
Shopify is used by over 70,000 online stores as a shopping cart solution and has helped those businesses sell over $2,000,000,00 worth of merchandise. You read that correctly, over two billion dollars in transactions have gone through Shopify’s secure shopping cart. That is an amazing feat that speaks volumes about Shopify’s amazing shopping cart solutions.
One of the greatest strengths of Shopify is the ability to accept credit cards from all over the world through utilization of either directly accepted payments or over 70 payment gateways. This allows you to choose the options that work best for your company and your clients. Another strength of Shopify as an eCommerce solution is a fluid customer checkout process. This encompasses shipping options ranging from fixed shipping rates based on weight or location or various carrier shipping rates that clients can choose from quickly and easily. The rest of the checkout process is simply, yet secure. This allows clients to place their orders quickly with great confidence in their purchase choice.
A feature that sticks out to many business owners is the ability to set up an automatic e-mail to potential clients that hah items in their shopping cart, but never completed the order. This can help increase sales and show clients that you care about their business after drawing them back. Lastly, a feature many take for granted is the ability to choose from over 50 languages for the checkout process while also choosing the appropriate currency. Add to this the ability to automatically handle major country and state tax rates and you are able to further tailor your eCommerce solution to suit your specific needs.
All these and more contribute to an amazing eCommerce experience for you and your clients. These translate to increased sales and better customer satisfaction indexes. It is easy to see why so many companies large and small use Shopify as their eCommerce solution.
When using an outsourced fulfillment company to process orders for your Magento shopping cart, there are a number of important things to consider in selecting the best provider. After all, the fulfillment company will have to do all of the following:
Receive orders from your shopping cart
Send shipping tracking information back to your shopping cart
Integrate reporting so that you have access to all inventory and order information
So how do you know which fulfillment company to select? First and foremost, it’s important to find a company that has an extensive track record in e-commerce fulfillment services. E-commerce fulfillment has been around for quite some time, so the experienced providers have a long track record of not only successfully integrating with your shopping cart, but also an ability to adapt to any changes going forward. Second, you’ll want to select a company that has already developed a pre-existing integration with Magento. This way, you’ll save time and money when setting up your account with the fulfillment provider. In many cases, if a fulfillment provider has already integrated with Magento, it may only take a couple of easy steps in order to finalize the integration. Third, it is helpful to find a fulfillment firm that has general experience with ecommerce sales in general, as they will likely be able to assist you with general ecommerce trends and provide strategic advice for your company in terms of how to maximize sales online.
About Magento Shopping Cart
Magento is utilized as the eCommerce solution for over 200,000 businesses. Included in that number are some of the world’s leading brands. Magento is chosen for a number of reasons that correlate with some of Magento’s amazing features. Here are some of the features and how they benefit both client and company.
Magento offers almost endless options for customizing your business’s fulfillment. This benefits the business owner by allowing them to target specific clients, promote specific products, and set up shipping options tailored to the products they sell. Customization helps the target clients find what they want and need quickly and easier which can lead to increased customer satisfaction and higher sales.
Client Retention and Return Business
Magento allows for easy setup of coupons, gift cards, and other promotions. Coupons and gift cards increase both client retention and increase the chances of them returning in the future. Coupons can help push sales of specific products or just increase sales in general. Gift cards are a great way for clients to spread the word about your business while increasing sales.
Interactivity allows customers to compare products before adding to their online shopping cart just like when they are shopping in a retail store with physical products. Everyone loves being able to compare products side-by-side. Clients will feel reassured that they are making the right purchase and will be more satisfied. Another interactivity option are Wish Lists. Clients can create a wish list for products on your site and share them with friends on social media sites. This encourages others to come to your site and make purchases for themselves as well.
The features listed above barely scratch the surface of the amazing features Magento offers. Look into eCommerce solutions to find the one that best suits your business, but know that Magento offers features, customization, and scalability to suit almost any business.
In the business world, outsourcing has become a dirty word synonymous with shipping jobs overseas, leaving good, hardworking folks jobless. Like many stereotypes, this isn’t an accurate description of outsourcing as a whole.
First, outsourcing is simply having a company, outside your own, deal with certain aspects of production, shipping, orders, etc. This company can be as close as a few blocks away or across the country, but there is no reason why you need to send your operations overseas; there are many affordable fulfillment centers here in the United States. Second, doing Kickstarter orders yourself can be a prescription for disaster if you have more than a few dozen to fulfill. Here are a few reasons why outsourcing your orders makes good sense.
The first problem you will come across when trying to fulfill Kickstarter orders is organizing them. Figuring out who got what, how many items need to be sent, where the items need to be sent, and what orders have already been completed takes a very organized, almost compulsively organized, person. If you aren’t someone who loves creating spreadsheets, then you probably won’t be able to handle dealing with large amounts of orders. Fulfillment centers use sophisticated software to sort out order details to make sure that everything gets shipped in the right amounts to the right people.
Even if you are able to get all of the right orders in the right mailing envelopes, addressed to the right people, how long will it take you? A month? Two months? Another benefit of using an order fulfillment center is that they will be able to get incentives into the hands of your benefactors quickly. A quick turnaround can keep the buzz of your project fresh and may bring you more opportunities or overfunding.
For argument’s sake, say you are able to organize the orders and ship them out. Do you have the time to do it? Organizing orders, filling out addresses, packing and shipping can take a huge chunk of time, and more than likely, your Kickstarter isn’t your only commitment. Plus, you want to work on more than just the orders of your Kickstarter project and get the actual idea up and running with your funding. Fulfillment outsourcing will free up your time so that you can do more important things.
Outsourcing orders can be a great thing for your Kickstarter project. If you choose a qualified fulfillment center and let them do their job, your orders will go smoothly and you can get your project sailing forward ahead of schedule.
Crowdfunding campaigns are quickly becoming a popular way of funding start-up businesses or side interests for established businesses. In trade for a donation, the a crowdfunding event will offer some sort of incentive. Often the incentive is an item associated with the product the start-up will be offering. People who try crowdfunding are becoming more and more creative with their incentives. Some offer signed books, bulky, handcrafted items or a sample product. While being creative with incentives is a good way to garner donations, once the campaign is over, the nightmare of shipping the items begins. Before you start a crowdfunding campaign, it is best to consider how you will provide incentive fulfillment. Here are some things to think about.
Choosing Your Incentive
When choosing your incentive for a crowdfunding campaign, your biggest considerations should be:
Will this item entice donations?
How hard will it be to package this item for shipping?
How much will it cost to ship this item?
While coming up with an enticing donation may not be all that difficult, the shipping part may have you scratching your head. Remember, items that must be boxed take longer to prepare for mailing and usually cost more to mail. Items that can slip into an envelope or padded envelope, like buttons, postcards, DVDs, CDs or bookmarks are much easier to send out and the mailing costs are much more affordable.
Of course, you can skip mailing costs altogether by focusing on incentives that can be sent out digitally, such as MP3s, videos or ebooks. In this case, you would just need to come up with a fulfillment process that would send out these items using a password system or email address.
After you are sure of your incentives, then you need to plan how to get them out to your benefactors in a timely fashion. Of course, you could always mail them yourself. If you are going to be sending out a large number of incentives, though, there’s a chance that you don’t have time to bother with incentive fulfillment. Often, doing it yourself can take days, if not weeks. A better solution may be to hire a fulfillment company to do the work for you.
Find Fulfillment Companies with Crowdfunding Experience
It is important to find a fulfillment company that has experience with crowdfunding campaigns so that you can get the very best service for the best price. These types of fulfillment warehouses are extremely unique, because they handle a very large volume of incentives in a short period of time, all the while accurately shipping them without mistakes.
Not a lot of fulfillment firms specialize in this new area, so even though a company will probably tell you that they can handle your incentives, you want to be sure that they actually can. Ask for references and don’t be afraid to contact some of their previous clients. This is the best way to find out if your prospective company will give you the service you need.
With your incentives, processing and shipping planned, you can be on your way to a successful crowdfunding campaign!
As with shopping for most business services, the stakes for selecting an outsourced fulfillment services vendor are extremely high. The selected fulfillment company will store all of your product, pick and pack shipments to customers, and generally serve as the entire back end of your company. This is an enormous responsibility, not to mention that if things end up going wrong, changing providers is beyond difficult. So choosing the best fulfillment firm for your specific needs that will perform high quality work is critical to not only the success of your business but also the minimization of any potential disasters or headaches with logistics. So with such an important decision on your hands, what are the most important things to look for in a provider? Take your time selecting a provider and put them through the below tests in order to find the best fulfillment company for your business.
Ask For Customers and Referrals
This is one of the most frequently used tactics for selecting a service provider, so you should definitely include it on the list. However, be careful not to give it too much weight in the decision. Providers can give you references for their happy customers, which may or may not be a good indication of your company’s success with their service. Ask the references if they’ve experienced any challenges with the provider and attempt to get insights into how the vendor performs when faced with challenge.
Ask For Credentials and Certifications
There are numerous credentials, awards, and certifications for third party fulfillment companies. Some credentials and certifications are relevant for certain types of commodities, such as food grade commodities. Other awards are given to fulfillment companies for exemplary service in the industry. Ask the potential provider if they have any awards or certifications. While absence of these indicators isn’t the end of the world, understanding each company’s accomplishments will help you with your decision.
Even though warehousing and shipping seems like a relatively simple operation, there are so many factors that make it quite complex for many businesses. For example, companies with unique requirements, kitting projects, and a high number of SKUs are just a few of the examples that can make this seemingly easy function difficult.
It should be of no surprise that many of the companies out there have trouble when it comes to routinely and accurately shipping products for customers. So, take a critical look at anyone that you consider, because you don’t want to be caught behind the eight ball with shipping errors.
How much experience a company has is a critical factor for success. After years of experience and seeing a multitude of scenarios, fulfillment companies are better able to handle new challenges and operate more efficiently – which leads to lower costs of service. And don’t forget to ask for customer references!
Pricing in the Form that can be Compared
Fulfillment houses are notorious for offering complicated pricing structures that are especially difficult to compare among competing proposals. First and foremost, ask each company to provide ALL pricing information, so that there are no surprises. Furthermore, make sure that you get some mock shipping charges so that you fully understand the price of shipping that would be passed on to your company. Finally, with regard to pricing, ask as many questions as necessary with each provider so that you fully understand their pricing enough to compare them with other companies.
Of course, many would argue that the company with the lowest prices would be the best way to go. Sometimes, however, you get what you pay for. Use your common sense — when a company comes in much lower than others, you might want to consider why. If something seems too good to be true, it probably is. Furthermore, quality is extremely important. For a company to provide high quality services, they won’t necessarily be the cheapest company out there. Some of the fees may include a minimum fee, storage fees, and pallet fees. Ask questions and compare fee structures.
Tour of the Facilities
There’s no better way to get a feel for a company than to physically meet with them and tour their facility. This may not be possible in some instances, but it is preferred. By visiting with the company, you’ll be able to meet staff, see with your own eyes just if the warehouse space is organized, and get a feel for the company. If you’re considering using companies out of your area and can’t visit them, try to replace a site visit with phone conversations and a video tour of their facility if relevant. Nonetheless, you’ll no doubt be able to gauge whether or not the facility is clean and well organized just by getting a quick walk through.
One way or another, also be sure to get a good feel for the people that you would work with. These will be the individuals that you interface with for day to day operations and when problems arise – so it’s important to have similar values.
Size of Facilities/Number of Employees
Check into the size of the facility and number of employees to get a feel for the potential vendors’ ongoing viability and experience. Again, this isn’t a complete deal breaker if the company is smaller than other options, however, you should be aware if the company’s owner is picking and shipping orders, as the vendor may either be more of a start up company. This will be a risk factor for you to consider amongst other alternatives. Newer businesses might offer more flexible pricing and terms, but may not necessarily have the experience required for more complicated projects. On the other hand, some of the more established firms may be overly expensive and geared more towards businesses that ship in high volume.
Ensure employees care about the quality of their work. This facility will be an extension of your business and are a link to your clients. Do the employees handle your merchandise with care? Are they well trained to avoid errors?
Location of the Facility
Location is a critical factor when making a selection for fulfilment provider. It’s usually a function of where your product is manufactured or procured and where your customers are located. Many companies unknowingly believe that it has to be located close to them – which may be helpful if you are more “hands on” and would prefer to keep tabs on your partner while building a closer relationship. But keeping an open mind will open up avenues that could lead to increased performance, lower costs, and less headaches.
Insurance/Free Trade Zone
Especially if your commodities are expensive, you’ll want to make sure that the fulfillment company has adequate insurance to cover the contents of its customers. In order to protect yourself, you can ask to be added as an additional insured under their policy. Furthermore, some companies prefer to bring their product in from overseas into a free trade zone facility. Only a select number of companies have this status, so it’s something you’ll have to dig into in order to find out the specifics.
Types of Commodities Stored and Shipped and Specialization
Many fulfillment houses specialize in processing orders for certain commodity types. Because they’re specialized, they can, in theory, produce better results for their clients. For example, companies that specialize in apparel warehousing may have unique equipment to be able to store and ship these unique products better than a general warehousing facility. Depending upon your product type, look into the types of commodities that each prospective vendor targets and factor this into your overall decision.
Length of Contract
Historically, warehousing companies have used multi-year agreements in order to hedge some of their risk of investment, and add price discounts as an incentive. Of course, these agreements add risk to you, since you’ll be locked into using their services or pay penalties if the agreement is broken. On the other hand, some companies don’t require any term to their agreement whatsoever. Be sure to check into the length of each potential contract so that you understand all of the ramifications of your decision.
Who Pays for Errors
It’s not a matter of “if” the chosen provider will make an error shipping, but rather “when” the company will make an error. The high quality companies just don’t make many of them! So do yourself a favor and find out who will pay for errors when they take place. Highly credible companies will take ownership of any errors that take place and will have a methodology for correcting errors.
Shipping Services Offered?
For some companies, it’s important to secure the best freight rates possible in order to pass on the lowest shipping totals to customers. And for companies that ship LTL (less than truckload) and full truckload shipments, costs can be significant. So learning whether or not the company has it’s own fleet for shipping, has contracted rates for small package and LTL shipping, and what discounts will be available are crucial to making the best decision.
Demo of any Technology Needed
Many online merchants and ecommerce sales companies have a great need for a high tech oriented fulfillment provider. In this case, they may need to integrate their shopping cart with the 3PL’s warehouse software, receiving real time inventory and reporting information, and get customer’s shipping tracking information each day. Some fulfillment firms are more equipped to handle these specific needs, so finding out if the potential provider offers e-commerce fulfillment services will be a make or break decision.
Try and get as much information as possible about the systems in place that ensure efficiency and customer service needs. When was their computer system last updated? Do they perform updates and maintenance on their systems frequently? Can they integrate with your shopping cart if applicable? What types of reporting is offered?
Processes and Procedures and Performance Metrics
Most high performing organizations have standard processes and procedures in order to ensure limited errors and successful operations. Nowhere is this more important than in logistics. If a potential provider doesn’t have a documented listed of procedures, it should serve as a relatively large red flag. Furthermore, the best companies will have processes in place to measure their performance and a schedule for reviewing their performance with you, at least on a quarterly basis. You can ask each provider for historical accuracy rates. This will give you some idea of how well the company performs in terms of on time shipping and accuracy of shipments to customers.
Just as in any other industry, businesses come and go in the fulfillment and shipping industry. One good way to make sure that your fulfillment partner will be here to stay is to conduct some sort of financial viability analysis on the company. For example, you can either run a credit check on the company or ask the firm for some financial information. Your main objective is to make sure that they’re a going concern, with a solid financial foundation for the future.
The level of service you get from a fulfillment company will be a function of the size of your deal and the type of provider you choose. In other words, if you have a high volume of storage or orders, you’ll probably command a great deal of service and attention. However, if you’re a smaller company, then you may have to search more strategically for a public warehouse that will give you the best mix of service and pricing.
Volume of Orders and Storage
One of the things you will have to consider when you are choosing a fulfillment company is the size of your business and whether it truly makes sense for you to work with one of these companies, at least yet. Some of the fulfillment companies out there have volume restrictions in place. This essentially means that if you are not selling a lot of products, they might not want to work with you at all because they do not see it as financially viable for them.
However, there are also plenty of fulfillment companies out there who are more than willing to work with startup companies who are still growing.
Size of the Products
Another factor when choosing your fulfillment company is the size of the products you are selling. Some of the companies, for example, are only capable of handling smaller items. They might not want to handle larger products. Others might only want to deal with larger products. Make sure the company you are considering has the capability and desire to work with with the items you sell whether large or small.
What types of sales channels are offered through the fulfillment company? Are they providing direct to consumer fulfilment? Do they provide fulfillment to businesses, or to employees through a store? Understand the sales channels your company needs and then find a company that can handle them for you.
Flexibility and Additional Services
You should also think about the types of services you might need. Is everything you do rather straightforward and simple, or do you often need to have kits or bundles put together? What about your company and your products might make it more difficult for the average fulfillment company to handle? Understand what additional services you might need and how flexible you need the fulfillment company to be. This will help to ensure you are working with the right company that “gets you” from the start.
For some US online retailers, looking overseas for additional sales has proven to be a highly effective strategy, especially considering the financial effects of a stagnant US economy. Overseas markets can contribute sizeable revenue streams for merchants, and with the expansion of the Internet over the years, it’s easier than ever to launch a global marketing campaign. But despite the relative ease of marketing expansion into overseas markets, effectively rolling out a global distribution strategy can be a very daunting challenge. There are three main avenues that businesses take when it comes to global distribution – shipping international orders from the US, opening an international warehouse, and using an international third party fulfillment services company. By investigating the pros and cons of each, merchants can choose the best option that fits the unique needs of their online strategy.
Lost Sales May Result From Continuing to Ship International Orders from the US
The easiest strategy to implement for international order fulfillment is to simply continue along the same path. For many smaller online retailers, this is a viable option because it doesn’t include other costs and it minimizes the risks of either opening up another warehouse or choosing a high quality third party fulfillment firm. After all, shipping product from an international warehouse can add additional costs that some companies just can’t afford – from carrying additional inventory to international freight forwarding costs. But on the other hand, shipping individual orders internationally, with the added shipping and customs costs, may negatively impact the sales volume, as many potential international customers may be hesitant to pay the incremental shipping costs associated.
Opening Up an a Warehouse Allows for Control but Requires Great Risk
Many online merchants decide that the lost sales from high shipping and custom clearance fees is reason enough to expand into an international market and open up a warehouse space. In addition, for some companies that require a high level of control over the shipping process, opening up their own warehouse facility is a great option because it allows them to set up the warehouse and distribution process as they see fit. However, these companies take on considerable risk, as they have to secure a warehouse lease, manage a staff of warehouse workers, and adjust to a new international market.
Hiring an International Fulfillment House Balances the Risks
Perhaps the most balanced approach to take when expanding shipping into international markets is to hire a third party fulfillment house to store and ship product on behalf of the merchant. This strategy balances out the risks outlined above. From the one perspective, it allows the merchant to enter into a market and gain synergy from not having to ship individual order internationally. From another perspective, it minimizes the risks of taking on additional up front investments in warehouse and distribution costs associated with starting up a new facility. However, care must be taken when it comes to finding the right company. As with US fulfillment houses, there are a lot of distribution companies that don’t operate at the highest of levels. But by performing appropriate due diligence in finding an appropriate outsourced fulfillment vendor, this risk can be mitigated significantly.
Don’t Miss the Sale with Inadequate Ecommerce Software
Online merchants have to do everything possible to maximize their results, especially in these highly competitive times. And a great deal of attention is given to online marketing, special sales, social media, and other popular ways that retailers gain new business. But many companies fail to give appropriate attention to the ways that they can increase their conversions from visitors that are already on their website. And even less attention is given to “out of stock” scenarios.
Low Levels Have Become an Expected Norm
Unfortunately, the most widely used practice of dealing with low levels has been to notify customers during their online shopping experience that a particular item is currently out of stock. And sometimes an accompanying note to “check back soon” is placed on the web page, as if this will somehow magically attract the prospect back to the site at a later date. However, when people encounter the dreaded “out of stock” notice, they likely hit the back button and attempt to find a competitor that has the product or a similar product in stock. Out of stock items then become a serious “missed” opportunity.
New Software Advances Help Minimize Out of Stock Losses
Thankfully, new advances in ecommerce fulfillment software allow for innovative ways of handling out of stock items in order to minimize loss of business. In essence, they treat all items as if they are in stock, allowing customers to add to cart and complete some sort of checkout process despite the fact that some or all of the items are technically “out of stock”. The key here is that they allow an online merchant to collect contact information so that their sales team can follow up immediately in order to speak with the customer directly about the out of stock items.
Use Incentives to Close the Deal
With contact information and the ability to follow up with the customer directly, you’re armed with all you need in order to turn this potential lost sale into a home run. Instead of losing the business, you can offer to give the customer some sort of incentive in order to “wait” for the product to be replenished. This can come in the form of a percentage discount off of the product cost, free or expedited shipping, or anything else that you can think of to help minimize the disappointment. And the mere fact that you are proactively contacting them helps forge more of a relationship that can easily translate into further purchases down the road – because most of your competitors aren’t providing service to this extent. So think outside of the box when it comes to out of stock items and you may find that you’re able to further differentiate yourself from your competition.