The USPS confirmed that it will no longer be delivering first class mail on Saturdays. It will continue to deliver other packages and express delivery shipments, though specific details weren’t given. This most recent move has been made in an attempt to stop the financial bleeding that the governmental organization has been experiencing for some time. These struggles have been in large part to a changing economy, bureaucratic issues, shifts in the use of Internet related communication versus traditional mail, and a ballooning retirement obligation.
But this latest cut is only the beginning of the bad news. Even after all of the changes that the USPS has made recently to cut costs, the shipping giant isn’t even close to cutting enough costs to remain a legitimate going concern. In order for the organization to continue in the foreseeable future, it will have to make broader and more sweeping changes. Last years’ operating loss was in the billions, so there’s a long road ahead to ensure that the USPS continues and thrives.
What This Means For Small Business Shippers
The USPS has long been a vital partner for many small business shippers, largely due to its low cost shipping methods (in particular for small weight products and international shipments). If the organization continues down this path without significantly altering its cost structure, small businesses may be left with finding an alternative method for their small parcel shipping needs. As with any major changes within an industry, it’s important to keep informed of the changes that are taking place so that risks can be mitigated through appropriate planning. And while it’s not a foregone conclusion that other USPS services will be altered or even that the entity will at some point in time fold, it might be wise to start looking at alternative plans so that last minute shuffling can be avoided.
Choosing a fulfillment company is going to be one of the most important decisions you make regarding your company. Choose the wrong company, and it can spell disaster for your bottom line. There are many factors that need to be considered, when evaluating these companies.
Where are they located? Are they centrally located to your customers? This can translate to savings in shipping and transportation.
How long have they been in business? You want a company with experience. You also need to be able to check out references.
Do they require a long commitment? If you cancel are there large fees?
If the relationship does not fit, you need to be able to make adjustments.
How do they handle mistakes and returns? How they handle your customer sis very important. If they don’t have good policies to deal with you, can you expect them to handle your customer adequately? These are your customers. Your reputation is at stake.
How is their facility for handling? Can they protect your products? What kind of space do they have? If you have special needs, can they meet those needs now and in the future? Will they have room to accommodate growth?
And how about their technology? Are they willing to spend money to have the best systems available? This can protect you against errors and cut cost because of better efficiency.
Do they have enough staff to properly run their service? If they have put together a great workforce, this will help improve your bottom line, satisfy your customers with timely deliveries, and help cut down on errors.
What is their cost compared to other fulfillment companies? Cheaper isn’t always better, but getting the most for your money is always a good idea.
These are some very basic, but needed questions to answer when choosing a Fulfillment Company. I would like to challenge you to consider another option when making your decision. Take a look at the impact of Sales Taxes.
Sales Tax is charged on the sale of any product or service, according to the rate the state has set, upon the products selling price. Throughout the United States, sales tax rates vary. Some states charge high rates, some charge low rates, but may vary at the city ad county levels with additional rates added to the state rate. There are however, five states that do not charge sales tax:
Choosing a fulfillment company in one of these areas can benefit your bottom line. Keeping up with the different Sales Tax rates can present a myriad of problems. Having the fulfillment company located in one of the five states that do not have a Sales Tax can eliminate collecting tax on all but those within your own state. Those living in the same state as your physical address will still have to pay the rate imposed by your state. Less time spent with bookkeeping, can save employee cost, time, and money. And we are all about trying to find ways to save money in our overhead.
But don’t stop here – you need to be careful in performing this analysis. Do your homework. Just because the state doesn’t charge a sales tax doesn’t mean it will be the lowest cost alternative. States charge a number of different types of taxes and fees outside of sales tax, and these may be passed on to you through your fulfillment company. Also, if the state isn’t strategically located for minimizing shipping, you may only be hurting your company by incurring larger shipping fees overall – more than offsetting any sales tax savings earned.
You must always make your decisions on which Fulfillment Company best fits your needs based on asking a few questions, weighing the values each bring to the table, and on good sound business practices. Remember, it’s important to choose a company that will make a good partner, in protecting and growing your business.
We all know the reason shippers use USPS – because it’s historically been a lower cost method of shipping for many types of packages, especially lower weight shipments. And we don’t blame you for taking advantage of this price advantage over the years. But things are changing quickly at the United States Postal Service, so we’d recommend that you at least have a “Plan B” in your back pocket.
The USPS is currently losing $25 million per day, according to Postmaster General Patrick Donahoe. And at this pace, the organization could run out of money within six months to one year – leaving your packages undelivered when the governmental entity is unable to make payments to its employees and key suppliers. “We’re now seeing the end result of years of under-priced postage services coupled with a switch to internet related services. The USPS is going to have to make sweeping changes in order to stay afloat,” said Will Schneider, President of WarehousingAndFulfillment.com.
Get Your Plan B in Place
With the USPS in so much trouble, it’s more than smart to start thinking about alternatives for your shipping. In the very least, takes a few of these steps to prepare for the transition:
Start building a relationship with other small package shippers, such as FedEx and UPS. Find out who your account rep is and get to know them better.
Learn about all of the software and hardware needed to ship through these other services. Transitioning will require the set up of new label printers and software.
Find out time frames for pick up for various shipping services with alternate shipping companies. They will have standards in terms of when they pick up for ground and expedited services.
Inquire about any carton programs with other carriers. The USPS has notoriously been generous with shipping boxes, but this is a more common cost of other shipping companies – and justifiably so.
The best time to negotiate rates isn’t when the USPS stops shipping – it’s before that happens. Get rate quotes from other carriers before they start increasing rates further.
Making the switch to a new shipping company isn’t easy. And there’s no guarantee that the USPS will stop shipping. But the warning signs are large enough that it would be wise to at least put a plan together should the nightmare became a reality. By thinking through the transition ahead of time, you’ll be better prepared to react quickly and not miss a beat with your shipments to customers.
The following guest blog post is being published compliments of Scott Frederick, Marketing Director for PartnerShip LLC – a leading provider of shipping solutions to small businesses.
Am I Overpaying for Shipping?
Shipping can be one of the most complicated – and costly – activities for any small business. Poor or no planning can result in overpaying, as well as losing sales if the business can’t provide consistent and cost-effective delivery to its customers.
Do you negotiate competitive discounts with your shipping providers? Do your purchase invoices include shipping and handling charges? If you answered “yes” to either of these questions, then you could very well be overpaying for your shipping.
Here are four tips for you to take control of your shipping and reducing your overall shipping costs:
#1 Obtain Discounts with Carriers
Most carriers – whether express, parcel or freight – provide discounts to businesses that routinely ship or receive merchandise. The old adage “everything is negotiable” is an immutable fact when it comes to shipping fees. The challenge, however, for small businesses is how to go about obtaining the same, steep discounts that are normally reserved for large businesses and heavy freight shippers.
One tactic a small business should consider is joining an industry trade association. Often times, industry trade associations are able to aggregate the buying clout of its members to negotiate and provide better shipping rates to all the businesses that participate in the program. PartnerShip LLC is an example of a third party logistics provider that specializes in working with industry trade associations across the country to create discounted shipping programs for participating members.
Another approach a small business can take is to work directly with a third-party logistics provider (3PL), or even directly with your carriers, to see if you can get better discounts then you presently have today. Often times if you simply “ask for better pricing” you will get it because 3PLs and carriers are always looking to retain and grow their business. If you’re not sure who to call, online services like fulfillmentcompanies.net can be a good source for finding qualified vendors that meet your specific criteria. Be prepared to share example shipping invoices or manifests with your 3PL or carrier to help them best assess your shipping patterns and provide you with the best pricing.
#2 Develop an Inbound Shipping Management Program
One of the simplest and easiest ways to immediately cut your inbound freight costs is to change your shipping terms from “prepaid and add” to “inbound collect.” Having your vendor or supplier ship collect on your recommended carrier eliminates any handling charges, thus saving you money.
When you gain more control over your inbound shipping, you can save on small package and freight shipments coming into your business every day. As the buyer and receiver of the goods, you can-and should-designate the carrier and arrange for shipping charges to be billed directly to you at your discounted rate. This is called routing shipments inbound “Collect.”
In general, there are many benefits to having your inbound shipments routed collect. As the example below shows, it often saves a lot of money. But even if you don’t have shipping discounts that are better than your vendor, their handling mark-up could still make the overall shipping costs higher than your own.
Inbound shipping programs are often best managed through a third-party logistics provider. A good 3PL can help you develop routing instructions for your vendors, monitor compliance, and audit invoicing to ensure you’re saving the most on your inbound shipping.
#3 Use the Correct Mode & Service Level
A common dilemma for small businesses is deciding the appropriate shipping mode to use for their important shipments. Shipping mode choices include LTL freight, small package, ground, air, ocean, rail, intermodal, and others. When deciding whether to use a small package or LTL freight carrier, for example, shippers must take into consideration the weight and characteristics of the shipment, the shipment destination (e.g., business, residence, etc.), service needs, pricing and fees, and loss or damage concerns.
The table below illustrates an example shipment of varying sizes moving across three different shipping modes. Each mode carries with it a certain level of cost, speed, and liability protection. Choosing the right mode will help your business maximize shipping costs and customer satisfaction.
#4 Consolidate Orders When Possible
As a general rule of thumb, one big order ships for less than three smaller orders. That means small businesses should consider consolidating multiple orders into a single shipment whenever possible, and always striving to minimize the number of packages it sends. All too often, shipments are arranged as they come in from sales or order processing. However, a little planning and visibility goes along ways towards shipping savings as the table below shows.
Consolidating orders provides additional benefits to both shippers and receivers of small package and freight shipments, including:
Reduced shipping supply expenses
Greater fuel efficiency (better on the environment)
Less time needed to receive, handle, and restock orders
One strategy for shipment consolidation is to create a simple shipping guide that takes into consideration all of your business rules for carriers, weight breaks, orders, and shipping contacts. Distribute this guide to your vendors and discuss it with your customers. A little communication can often go a long way towards small business savings.
Shipping is an important cost factor for any small business that ships or receives materials or merchandise. It is often possible to reduce these costs with a little planning and effort. Utilizing some or all of these four tips to control shipping costs can eliminate the strain shipping expenses put on your business. If you’re not sure where to start, consider finding a reputable third-party logistics provider that specializes in working with small businesses to help you with the process. There’s a good chance your shipping costs will go down and your bottom line will improve!
We were going out of town for Christmas, so decided to open presents at my daughter’s ousououse early. My grandson is starting to want to do sports, so I thought an item that could be used indoors as well as outdoors would make a nice present. I purchased a toy online that incorporated a basketball hoop, net for soccer and hockey. It sounded like a good idea. We got it wrapped and took it over to their house. I couldn’t wait to see him playing and having fun. He eagerly opened up the box and his eyes sparkled.
We Were Missing Parts!
Now, you can probably guess it was not assembled. So the process began of lining up the parts accordingly to the instructions. Lo and behold, 4 pieces were missing. They weren’t insignificant pieces either. If this had been Christmas Day or Christmas Eve, this could have spelled disaster. At this point I was disappointed and my Grandson, well, I don’t need to tell you how upset he was. Luckily, the parts were a standard PVC pipe and we ran to the hardware store to have 2 different sizes cut to fit. They were white even though the parts we were replacing were black. But, we avoided a train wreck.
Some of the Most Common Errors
If a fulfillment firm sends out the wrong product, if a partial product is shipped, if the product is defective, or the product is shipped late, these errors can have an impact on your bottom line. The fulfillment company’s lack of a system to prevent errors like this may have cost the company future sales for their products.
Buyers are looking for great items with great service. They don’t care how the order is filled, but they do expect it to be exactly as presented, in good shape, and on time. Since there is generally no face-to-face contact, it is important that you meet or exceed their expectation. We know every order cannot be perfect, and that mistakes are going to happen, but keeping them to a minimum is the key.
Why Do Fulfillment Errors Happen?
What causes errors to happen? When items are received at the fulfillment firm and not properly identified, mislabeled, placed in wrong locations or bins, data not entered correctly, picking and packing the wrong items, or not getting the quantity correct will lead to errors that cost you money.
So how can you choose a fulfillment company that will deliver great service?
Start by asking 7 leading questions.
What is your receiving process? Everything starts here. Identifying and counting upon arrival is key. Use of bar code is preferred. Labeling of each pallet or container with it’s own unique label is a good process. That way a single pass is needed to identify.
How do you validate orders? Some still do this by hand. If items are properly identified when they are received, then the receipts can be validated against the original purchase order. Once again bar codes are recommended. These can be checked with the automations system and purchasing software. Less human errors and the process will be faster.
What is your picking process? Many errors occur during the picking process. If they are still using the paper method of picking, then the picking forms need to be clear. They should list in the order it is required including location, quantity, stock #, unit of measure and description. Writing should be in easy to read font sizes. The route that should be taken is also important as this has an affect on the bottom line. Use of Radio Frequency is more desirable since they do not use paper. A warehouse management system just directs the picker, according to the best route, to the bin or pallet for picking, by way of a hand held RF terminal equipped with a bar code scanner. This process helps to eliminate the potential for errors.
How are the picks validated? Are they handling this by using checkers? Every time, a human handles it, there is the potential for mistakes. For near perfect results, use of automated systems and technology such as Radio Frequency, bar coding, and voice recognition is considered good practice.
Do they use the counting method or measurement? Electronic weight scales are accurate and efficient. It validates the quantities. Redundant counting by employees can lead to errors.
How adaptable and flexible are they? Customer’s needs are always changing. Being able to adapt to these needs on a moment notice is imperative. How they manage their business, and what systems they have in place is important. Are they willing to change to keep up with the market? What If I run a promotion? How about delivery over Holidays?
How do they handle Customer Service? Everyone will say they are good at customer service. But do they implement policies and procedures that back that up. If a shipment is late or delivered to the wrong address, or if the item is damaged or missing a part, what is their procedure? Will they pay for shipment in full; do you have to fill out a lot of paper work? How easy is it for the customer to reach them if they have a problem? Is it user friendly? How will I be compensated for errors? Do you reward your employees for being error free?
Expect from your fulfillment firm the same standards that you would hold for your own company, if you were handling this in-house. Remember that customers are just a click away from choosing another competitor. Delivering a good product, in great shape and within the agreed amount of time is essential to keeping customers coming back and wanting more.
While the list of items required for Perfect Order Fulfillment is small, there are many factors that contribute to imperfect order fulfillment. Does Perfect Order Fulfillment Exist? The answer is…Only in a Perfect world. The success of order fulfillment relies on the staff, the technology, and the communication between you and the fulfillment center.
Here are some examples of mistakes that can take place when orders are fulfilled.
Getting the order wrong
Fulfillment Company picks the wrong items
No technology in place (bar-code scanners, automated emails)
Calls are taken by a call-center and communication becomes blurred
While it is almost impossible to have perfect order fulfillment, it is possible to find a company that will work closely with your business to achieve the highest level of success and minimize mistakes. You can achieve Perfect Order Fulfillment by partnering with a company that has a proven track record, technological advances, and many happy referrals.
E-Commerce Fulfillment Checklist to Integrate Your Cart
Integrating your e-commerce shopping cart is an excellent way to help cut out the middleman between the client placing their order on your web page and the order being processed and shipped out. Having your shopping cart communicate with your e-commerce fulfillment company offers faster turnaround time and that means happier customers who get their orders sooner. This checklist represents what goes into the process of integrating your shopping cart.
Research needs based on current customer ordering capabilities including shopping cart layout and design, inventory management methods, and shipping method available.
Integrate shopping cart and fulfillment by creating a customized connection through an application programming interface (API).
Implement changes to allow customers to start using the advanced shopping cart interface with advanced capabilities to enhance client satisfaction.
Create an automated process in place to send out shipping tracking information as soon as possible, so that your customers will have full scope on their order as it progresses through the shipping process. Emails branded with your company logo further drive home your brand to customers.
Ask for a demo of the interface and any reporting so that you can see the system first hand and address any specific needs that you may have, such as changes to orders, customizing logos on packing slips, and how shipping tracking information will be processed.
Ensure that there is an adequate process in place for orders that change before being shipped. You know the scenario – a customer calls in frantic after placing an order, only to ask you to change that medium t-shirt to a large! If you’re processing orders in real time, this can be a challenge dealing with orders, and often leads to extra time picking and re-picking orders, as well as the likely chance of error due to manual intervention.
Spend adequate time testing and modifying your e-commerce store to determine ways to increase business. Simple changes, such as a quick follow up call after cart abandonment, can lead to an increase in sales.
Benefits for Your Company
Benefits for your company include less worrying and less time spent with e-commerce fulfillment and order processing while being able to track inventory more effectively, ability to track orders more easily and with greater accuracy.
Benefits for Your Client
Better customer experience with possible real-time shipping rate information will enhance your customer’s experience on your site. Added ability to follow product availability and enhanced order tracking capabilities will better your servicing of your customer’s routine requests.
Knowing when to outsource your fulfillment needs is a concern for many growing small businesses. Growth shouldn’t be hanging over your head like a veritable challenge. If you are spending much of your time worrying about needs in shipping, storage space and infrastructure, manpower, inventory, ability of you or your current employees, and time from order to delivery it is time to look into outsourcing fulfillment. All of this time being spent in this area may be causing you to miss sales or more strategic opportunities.
Using a fulfillment company allows you focus on you daily operations, customer service, and managing your other duties. It frees up time spent on mundane tasks to pursue even more growth which makes any company more profitable. Growth of your business should be a positive experience not a major concern.
Partnering with a fulfillment vendor also affords you instant access to knowledgeable experts who are ready to help. This keeps you from having to look for and pay a wage for possibly less experienced in-house fulfillment employees. You also won’t have to be concerned about infrastructure growth and spending to have more storage and inventory system updates. You also will usually get the added benefit of discounted packaging supplies and freight expenses with outsourcing fulfillment.
You can pick the location of your vendor to help expand your customer base and have more buyers. When a vendor is close to your customers, they are usually able to get faster shipping and more economical shipping cost over a larger area.
If your business capacity is hurting business growth it is time to look into outsourcing to a quality fulfillment company. It could be the best option for your clients and your business.