FulfillmentCompanies.net, the preeminent name in fulfillment matchmaking services, is pleased to announce the results of our 2021 Warehousing and Fulfillment Pricing and Costs Survey. From year to year, FulfillmentCompanies.net tracks key industry data with an eye towards the future of warehousing, logistics, and 3PL. This year’s survey results identified a strong correlation between price-per-square-foot leased and profits. As in past years, the cost of running a warehouse rose slightly from $7.81 to $7.91 per-square-foot. However, corporate profit margins remained in lockstep with costs, rising from 9.77% to 11% in 2021.
In a year fraught with upheaval and uncertainty, the industry persisted, maintaining a reasonable level of growth and progress.
About the Annual Warehousing and Fulfillment Costs Survey
Every year, FulfillmentCompanies.net engages our vast network of the best fulfillment companies and warehousing partners regarding the state of industry costs and pricing. For the 2021 survey, we interviewed more than 600 strategic partners, and we are pleased to announce that we had a record number of responses this year.
For the sake of confidentiality, we do not record individual warehouse names alongside their respective responses. To gain the wealth of data we did while ensuring fidelity to the resulting metrics, we examined all responses considered to be significant outliers and only included results that fell within a predetermined range of averages. It should be noted that our area of focus is North America, with 94% of respondents being in the United States, with the remainder located in Canada.
Key Metrics Identified Within the Survey
The year we’ve seen a nationwide surge in e-commerce fulfillment. A record amount of products flowed through distribution centers. This surge has in turn put additional stress on warehousing, logistics, and distribution-related jobs, causing warehousing costs and prices to rise steadily alongside.
In terms of warehousing cost increases, the following metrics are especially notable.
Warehousing Costs Rose Consistently
The square-foot cost to lease storage space rose to $7.91
The average hourly rate of frontline warehouse staff rose from $13.47 to $14.00
The average yearly salary for managerial staff rose from $52,765 to $55,854
As costs rose for warehouse owners, so did the prices they charge for their logistical expertise. Over the past year, we saw those prices increase in proportion to costs incurred by the warehouse. Interestingly, while less companies overall raised their prices, those that did increased them at a more aggressive rate than in previous years.
Fulfillment Prices Showed Mixed Results
61% of respondents increased their prices regularly (-8% from previous year)
Those who increased prices did so by 5.59% (+2.29% from previous year)
Pick and pack rates rose slightly from $2.96 to $3.13 for D2C
B2B order costs remained static at $4.27 for a single item
Through this year’s survey we were also able to glean significant information about industry-wide storage fees and common practices.
Storage Fees Showed Modest Increases
93% of warehouses charge storage by the pallet
The average cost was $14.79/ pallet or $0.45/ cubic foot
49% of respondents offer discounts based on bulk storage needs
Finally, the survey was useful in identifying common shipping prices and trends across the industry as well.
Shipping Discounts and Other Miscellaneous Fees Increased
64% of respondents offer a cost-plus pricing model while 37% offer discounted rates
Those who offered discounts averaged a 19.28% reduction off the published rate
For international customers, that discount rose to 24.18%
95% charge return fees of product with the average being $5.28/ return
95% also charge receiving fees which ranged from $441/ container to $2.58/ SKU
The Future of the Warehouse Fulfillment Industry
Despite a turbulent year which featured explosive ecommerce volume, costs and prices rose steadily in proportion to one another as they have in past years. As new technology comes to market and the ecommerce channel continues to flourish, expect rapid change to continue in subsequent years. Until next year’s survey, FulfillmentCompanies.net will continue to analyze the information gained from our extensive network of warehousing partners in order to bring actionable data to help you streamline your company’s logistics.
We currently find ourselves smack-dab in the middle of a global crisis unlike any most of us have ever seen with our own two eyes. From mandatory lockdowns and social distancing to stock market nosedives and product shortages (finding toilet paper and bread is an ever-increasing challenge these days), COVID-19 has dramatically altered our everyday life in the short-term, and will no doubt influence the way we structure our lives moving forward. Having not yet reached the other side of this crisis, a lot of uncertainty remains in the world. But one thing seems certain – not a single square inch of our society seems to be untouched by the devastation taking place.
While only time will tell the long-term consequences of this deadly virus, the warehousing and fulfillment industry has also been significantly altered by COVID-19 in the short-term. To see the immediate impact, look no further than the actions of the world’s largest online retailer and arguably the most intimidating fulfillment and shipping force around today – Amazon.
Fulfillment by Amazon is Suspended for Non-Essential Items
Due to COVID-19 response, Fulfillment by Amazon (FBA) warehouses will no longer receive non-essential inventory through April 5th, 2020. As a result, countless online merchants that rely on Amazon sales will see their businesses impacted by this change – forcing them to choose an alternative path for fulfilling any orders to their customers.
The product types that can be fulfilled through Amazon FBA are as follows:
Health and Household
Beauty and Personal Care
Industrial & Scientific
All other product types will have to fulfill orders on their own, or will have to quickly secure a third-party fulfillment service to perform all fulfillment and shipping of orders. According to recent studies, upwards of 66% of Amazon sellers use FBA, so the number of affected merchants is undoubtedly large. That leaves only one-third of all Amazon merchants with a fulfillment solution already secured and at their disposal.
We included a copy of the entire notice at the bottom of this post.
Non-Essential E-Commerce Product Sales Taking a Significant Hit
According to one of our most recent surveys, fulfillment companies are reporting an average decline in order volume of 18%, with some companies seeing upwards of 60-80% losses in order volumes. Some sellers of nonessential goods have seen their sales drop by 40-60% on Amazon lately due to the virus. The length of the slowdown will no doubt influence whether or not these merchants will be able to weather the storm and continue operations.
There has been no word yet on the suspending of professional subscription fees and other costs of doing business on Amazon, and sellers are no doubt looking at all options to sustain the short-term financial impact of the virus. Similarly, for consumers, there has been no indication of whether or not Amazon will refund or discount Amazon Prime fees despite the fact that non-essential prime shipments may take a month to deliver.
Finding an Alternative to Fulfillment by Amazon
For merchants that need to self-fulfill orders (otherwise referred to as Fulfillment by Merchant), there are a couple of options. First, online sellers can fulfill orders themselves. While this is a viable option, it has a number of challenges, including the ramp up required to implement physical shipping of orders (obtaining all of the supplies and software needed to execute this strategy) as well as shifting time away from other core functions to spend time picking, packing and shipping orders. Especially during these critical times, allocating management time towards core functions is imperative.
Second, and more easily implemented, merchants can choose from a wide variety of 3rd party fulfillment companies to store and ship products. The benefit to this strategy is that fulfillment companies are an “essential service,” meaning they have to remain open during the shutdown in order to deliver products to consumers. Furthermore, fulfillment centers are very well versed at integrating with Amazon and can quickly and seamlessly transition order fulfillment operations. In the short-term, Amazon Prep fulfillment companies offer another viable option as they are used to performing Amazon fulfillment services direct to Amazon’s DC’s and oftentimes also handle direct to consumer shipping directly for orders placed on the Amazon network.
But online merchants that use FBA aren’t the only businesses affected by Amazon’s most recent limitation on shipping of orders. New sellers aren’t currently able to send product to Amazon’s fulfillment centers, and therefore have to find an alternative.
If you find yourself looking for a viable fulfillment warehouse to ship your Amazon orders, please contact us today and we can quickly short-list the best options for your business. We know which companies are still operational, and can help you find a reliable option to store and ship your orders both during this crisis and beyond. Furthermore, stand alone fulfillment companies offer many benefits over FBA for sellers – from lower price structures to enhanced communication and more flexibility for packaging. We have a wealth of information about comparing Fulfillment by Amazon, Fulfillment by Merchant, and fulfillment services.
How to Make the Switch from FBA to Fulfillment by Merchant
Luckily, making the switch from FBA to fulfillment by merchant is relatively straightforward in Amazon. All you have to do is go to your Amazon seller central account, and find the manage FBA inventory from the inventory drop-down menu. Once there, you can locate the SKUs that need to be switched and change to Fulfilled by Merchant. You will be prompted to convert these SKUs. The process to convert to fulfillment by merchant usually takes 24 hours.
Not All Online Sellers Are in Dire Straights
As a result of selling products that are in high demand due to the virus, some companies need to scale their fulfillment solutions due to increased demand. Products that have seen the largest upswing in order volume include food and groceries, personal care and beauty products, home healthcare items such as thermometers, protective devices such as face masks, home cleaning products such as Clorox wipes, office supplies for remote work such as printer paper and ink, and emergency deliveries.
Due to the popularity of some products, Amazon has had to take a very proactive stance with new sellers. In the case of some products, such as hand sanitizer, toilet paper, and protective masks, Amazon now requires their approval before being listed. This and other measures (for example, monitoring excessive price gouging) are being taken in order to curb opportunistic sellers from taking advantage of buyers from its marketplace.
Amazon Merchants Dealing with Out of Stock Scenarios
Some companies are out of stock or nearing out of stock scenarios on Amazon and other marketplaces, which is a blessing in the sense of having robust sales during this downturn but is also a potential disaster. If merchants run out of stock over an extended period of time they risk being demoted in Amazon’s search rankings by its algorithms. In order to navigate these times, experts are recommending the following:
Prioritize marketplaces with the highest sales (e.g. Prioritize Amazon so as not to lose your Buybox status)
Utilize “vacation status” if needed
Pull back spending in areas where you’re out of stock
How the COVID-19 Crisis Will Impact Online Ecommerce Going Forward
In the short-term, the impact of the coronavirus could be devasting, so minimizing risk is of utmost importance. Especially for Amazon sellers, creatively brainstorming cost minimization is critical. Many sweeping legislative changes are under works, so short-term financing and loan options may become available sooner than later. In addition to cost cutting strategies, companies may also look at alternative ways to generate revenue. The addition of new product lines is a viable option to weather the storm into the future.
For sellers looking into the distant future, now is a good time to take some of your spare time and consider strategies to hedge risk and take advantage of the changes to come. As this pandemic plays out, a few things seem relatively certain for online sellers:
Online ordering will increase
New e-commerce companies will enter into the marketplace
Delivery services will only continue to become more popular
Remote working will become more viable
And online sellers will need to incorporate new thoughts into their overall company strategies to adjust to the changes that will take place due to COVID-19:
Having alternative or backup channels for fulfillment if needed due to a catastrophe
Researching additional manufacturing facilities to hedge risk
Adapting to new changes to managing health in the workplace
Modifying and updating HR policies, including attendance, flexible schedules
Amazon’s Notice to Merchants Regarding the COVID-19 Modifications
We are closely monitoring the developments of COVID-19 and its impact on our customers, selling partners, and employees.
We are seeing increased online shopping, and as a result some products such as household staples and medical supplies are out of stock. With this in mind, we are temporarily prioritizing household staples, medical supplies, and other high-demand products coming into our fulfillment centers so that we can more quickly receive, restock, and deliver these products to customers.
For products other than these, we have temporarily disabled shipment creation. We are taking a similar approach with retail vendors.
This will be in effect today through April 5, 2020, and we will let you know once we resume regular operations. Shipments created before today will be received at fulfillment centers.
You can learn more about this on this Help page 450. Please note that Selling Partner Support does not have further guidance.
We understand this is a change to your business, and we did not take this decision lightly. We are working around the clock to increase capacity and yesterday announced 58 that we are opening 100,000 new full- and part-time positions in our fulfillment centers across the US.
We appreciate your understanding as we prioritize the above products for our customers.
Thank you for your patience, and for participating in FBA.
FulfillmentCompanies.net, a leader in fulfillment matchmaking services, recently released its 2020 Warehousing and Fulfillment Pricing and Costs Survey. Results revealed that while the cost of running a warehouse is steadily increasing, profits are also rising. The cost of leasing warehouse space in 2019 was $7.79 per-square-foot, and profits were 7.25 percent. Costs rose steadily to $7.81 per-square-foot in the 2020 survey. However, profits took a jump to 9.77 percent. Increases in fulfillment costs and pricing across the board are helping the industry maintain steady profits.
About the Annual Warehousing and Fulfillment Costs and Pricing Survey
This year’s survey had record response rates from the best fulfillment companies – more than 600 warehouses within the company’s network. Respondents were largely single location regional fulfillment companies who were surveyed confidentially. Specific warehouses were not recorded alongside responses nor were their geographic locations noted. To accommodate for entry errors or misunderstandings related to the questions, researchers did not include responses that fell far outside the averages outlined. When respondents used various formats for a single question, researchers chose to use the most common format.
Key Findings in Our Annual Survey
Demand for warehousing and fulfillment services is steadily increasing, mainly due to the popularity of e-commerce fulfillment services. In order to keep up with demand, warehouses are spending more on labor and leases. Across the board, researchers found warehousing and fulfillment companies are increasing their pricing to accommodate for demand. As a result, the industry has been able to increase profits. Consider these highlights from the survey.
Warehousing Costs Increase
The cost-per-square-foot to lease warehouse space averaged $7.81.
The average starting hourly rate of warehouse staff is $13.47 per hour.
Warehouse managers make $52,765 per year on average.
Fulfillment Prices are Up
69 percent of respondents increase pricing on a regular basis.
Of those that increase rates, 92 percent increase pricing annually, while 8 percent do it every two or more years.
3.3 percent is the average price increase year-to-year.
The average pick and pack charge for a single item B2C order is $2.96, slightly up from $2.86 in 2019.
The average pick and pack charge for a single item B2B order is $4.27, slightly up from $4.17 in 2019.
Warehouse Profits are Positive
Corporate profit in the last three surveys is as follows:
2017: 8.83 percent
2018-2019: 7.25 percent
2020: 9.77 percent
3PL Industry Fee Trends
In addition to pick and pack fees, respondents revealed average increases in various other fee categories too. For example, storage fees were $13.20 per pallet and $2.85 per bin in 2019. In 2020, these increased to $14.58 per pallet and $3.3 per bin. For the 56 percent of respondents that charge a setup fee, the average jumped from just $336 for new clients in 2019 to $520 in 2020. Returns fees also trended upward to $4.05 per order, from $3.53 in 2019. Receiving fees on the whole increased, averaging as follows:
$35.3 per hour
$330.20 per 20-foot container/$465 per 40-foot container
$1.5 per carton
$7.65 per pallet
Performance Tracking within the Fulfillment Industry
Today’s warehousing and fulfillment companies know the importance of measuring performance to gauge success. Ninety-three percent consistently measure key performance indicators, including these most popular KPIs.
Order picking accuracy (99.31 percent)
Inventory shrinkage rate (2.84 percent)
Percent of customers retained each year (94.59 percent)
Understanding the Warehouse Fulfillment Industry
In a competitive environment, it’s critical that warehousing and fulfillment companies understand the industry. To assist them, FulfillmentCompanies.net updates this survey each year and continues to add questions that will bring about new insights. For example, new questions this year asked about charges for inbound call center services, kitting services, carton fees, and subscription box orders. And because local fulfillment services are vital, FulfillmentCompanies.net will continue to drill in on local data to provide help for searches interested in exploring “fulfillment companies near me” scenarios.
FulfillmentCompanies.net surveyed its warehouse network of the best fulfillment houses throughout the US and Canada in order to see how logistics professionals are responding not only to Amazon’s recent expansion into a small parcel delivery service but also to Amazon’s overall position in the logistics marketplace. The goal of this survey was to determine how warehouse operators perceive Amazon’s growing dominance in the industry. The findings are below, including the questions that we asked on the survey as well as the percentage of responses.
Do you see Amazon’s recent announcement to recruit entrepreneurs to run small scale delivery services as an opportunity or threat for the logistics industry and in particular fulfillment companies like yours?
61.5% said “Opportunity” 38.5% said “Threat”
Do you consider Amazon fulfillment as a direct competitor to your business?
44.2% said “Yes” 55.8% said “No”
Do you believe Amazon’s dominance in online retail, growing fulfillment network, and now entrance into the shipping industry is moving the company more towards a monopoly position within the e-commerce logistics industry?
80.8% said “Yes” 19.2% said “No”
How much of a threat do you perceive for your company with regard to either Amazon’s fulfillment services and/or shipping services?
7.7% said “No Threat” 23% said “Mild Threat” 23% said “Neutral” 36.5% said “Slight Threat” 9.8% said “Strong Threat”
Conclusions to be Drawn from the Survey
While a majority of our respondents felt that Amazon’s new Delivery Service Program represented an opportunity rather than a threat, other responses reflected that warehousing companies feel that Amazon is a serious contender in the logistics industry that needs to be accounted for in any strategic plans. Nearly half of the respondents of our survey (44.2%) indicated that Amazon is a direct competitor to fulfillment warehouses. But even more alarming is that a vast majority of warehouses (80.8%) believe that Amazon is bordering on a monopoly. Almost 47% of the warehouses in our network indicated that they believe Amazon is either a slight threat or a strong threat to their business. All in all, fulfillment warehouse operators have a sharp eye on everything that Amazon is doing so that they can respond and best position themselves against this market leader.
Final Thoughts from the Warehouses in our Network
Below are some of the other general thoughts from the warehouses that responded to our survey:
Amazon can never give the service level that smaller 3PL’s can deliver. If you fit in their box, then great, but most brands don’t fit in only the FBA box for their brand. This means there is a place for both FBA and higher service-level 3PL’s to co-exist.
Amazon fulfillment services are definitely creating problems for the smaller fulfillment company and UPS and FedEx. I believe that they have a huge market share and are a definite game changer.
UPS and FedEx have owned the small package delivery services for years. Amazon will be moving into this space as a disruptor and if they prove to have reliable service, may reduce to costs of shipping small packages. If Amazon can provide service to our customers on a 24-7 basis, this will certainly be a large threat to our company in the future or we will need to change our business model to include also working 24-7.
I don’t like the Amazon business model where they use 3PL and delivery companies to start the business then take it over on a direct basis.
Amazon has too much overhead to work with many of our customers. The ones that can go to Amazon recognize they must deal within their rules, their ever-changing rules. Our customers can’t afford Amazon’s ridiculous storage fees. However, many do because they sell their product, it’s more than a fulfillment house, and they’re the selling vehicle. We see it as a cycle, many clients have gravitated to Amazon but are beginning to develop strategies to sell more from their own sites. They’re beginning to see the value in education on eCommerce selling.
While I agree that Amazon is building a monopoly with online retail I think there will always be plenty of logistics business for smaller providers who focus on their customers, provide excellent service, lower fulfillment costs and can offer customized flexible solutions unlike big companies like Amazon.
Whether you are new to the world of eCommerce or already enjoying success, it will always pay to consider trends in business. One trend may surprise you. It is the simple fact that the “post-purchase experience” is now rising to the foreground and forcing online merchants to reconsider how they handle issues such as order fulfillment, shipping and even returns.
Customers want a noticeable measure of customer service if any issues occur, but they also expect well-packaged goods, clear and prompt communication about issues such as packages shipping or ID numbers, and so on. This leads to repeat business, and as that is the key to long-term success and growth, it pays for you to take note and consider the best options.
As this is such a huge area for anyone in eCommerce, the focus of this article will be those three main routes through which your customers’ post-purchase experiences occur. As the title describes them, they are:
We are going to look at each in turn to find out what they are, their pros and cons and any other factors that might influence your decision. Before we do, though, let’s be sure you understand that post-purchase experience through the lens of order fulfillment.
Your job, once a customer has made the order, is to get them whatever they purchased as quickly, affordably and safely as you can. You will have to consider things like inventory management, warehouse operations, order processing, picking and packing, shipping and communicating with the client.
The problem you might already see is this: You did not go into eCommerce to run a warehouse and shipping firm. This is exactly why you will want to consider passing that on to experts who ARE in the business of running warehouses and shipping to the most professional standards.
Drop Shipping Explained
The use of drop shipping is not at all new. It is a scenario in which you are more the proverbial “middleman” than vendor. This is because you never actually have the merchandise in your possession. Instead, you are going to market the products and once orders are placed through your website, special software or other methods convey those orders to the “drop shipper”. They will package the goods per your requirements and ship them to the buyer. Drop shippers can be manufacturers, but they are just as often specialized warehouses.
In short, drop shipping is where you focus on your core competency of selling and marketing while outsourcing everything else to the drop shipping firm. The only exception is that you may be in charge of customer service.
What are the pros of this model? You have almost no overhead, which means you can begin this sort of eCommerce model at once. The profit margin depends entirely on the prices you negotiate with the drop shipper or manufacturer. You are never at risk for investing in too much merchandise you then unload at a loss. It also offers you tremendous insight into your audience. Did they respond more to product A or product B? Maybe they wanted a little of both? With this data, you never had to invest in huge amounts of merchandise, but you could then (with confidence) do so and use an alternative approach to the post-purchase process; third party fulfillment, also known as fulfillment companies.
However, in terms of cons – you will pay a higher per unit price because you’re not purchasing the product in bulk. Also, you will be at the control of the drop shipper in terms of fulfillment and shipping, relying upon their services for the critical last steps of the customers journey.
Fulfillment Companies Explained
In this approach, you do make that investment and buy the inventory before you offer it for sale on your various websites, marketplaces and landing pages, meaning that you can capitalize on lower costs per unit due to buying in bulk. Where the fulfillment companies enter the equation is that the warehouse and shipping center receives, stores and ships orders to your customers. In other words, they receive bulk lots of goods you sell through your online venues, and they then process all your orders and ship them to your clients.
Though you might automatically assume that your profit margins are lower with this model, give it a few moments of reconsideration. Firstly, you don’t have the cost of keeping a warehouse (either buying or renting). You have no employment expenses, utility costs or materials costs (such as investing in large quantities of packing materials). Instead, you have the cost of the goods and the fees from the fulfillment company used to determine your retail price and profit margin.
Are there other pros and cons? Absolutely, just consider the amount of time that is saved by outsourcing every part of the process after making the sale. Instead of managing a warehouse and shipping operations yourself, you are going to look at expanding your audience, offering superior customer service and satisfaction, improving marketing, and exploring additional product lines.
One thing to consider in our “versus” comparison thus far is this: Fulfillment centers “are best for brands which have their own, unique product (in drop shipping, you are using a supplier’s product), no inventory space and want to focus on acquisition rather than shipping.”
This brings us to the final model to consider, the self-fulfillment model that is the one that leaves you with the most control, but also the most responsibility.
As you might realize, a business that uses the self-fulfillment model is one that owns the inventory and handles all the order fulfillment itself. It means you may be making your products (or buying them), storing them and performing other warehouse operations. It means you will have a shipping department, and all the staff that these various tasks require. You may have to maintain separate offices and handle all the administrative work from there. This would mean relationships with shipping firms (if you are not manufacturing your own goods) and doing a tremendous amount of work to ensure the utmost quality and satisfaction.
Isn’t this the original model followed by mail order and other similar businesses? Yes, and it does give you immense control over everything from customer data to costs for supplies. Brands choosing self-fulfillment are often particular about the delivery experience. As we pointed out, this is a huge factor to buyers, but it does not mean that drop shippers or fulfillment centers cannot also supply that exact delivery experience, too.
Choosing What’s Right for Your Company
How can you determine which is the ideal model for your company and its goals? Let’s reconsider them each briefly.
Drop shipping is fast and easy to begin, it doesn’t require a lot of business development, it is incredibly cost effective and affordable, it is scalable and allows you to expand your offerings, and lets you focus on your core competencies of marketing and sales. However, it is not ideal where customer support is concerned because you are (in essence) selling other’s products. It does not nurture your company as an actual brand and the ease of entry into the market means your profit margins are going to be the lowest of all three approaches.
Fulfillment centers are one of the darlings of today’s eCommerce firms because they allow you to have global reach and without huge overhead expense. The fulfillment centers themselves are experts at packing and shipping, guaranteeing less damage and lower shipping prices. Where you need to be careful is in the old “if it sounds too good to be true, it probably is” area. In other words, a fulfillment company that promises the world but doesn’t have the credentials to prove it may be worth avoiding. Go with the proven leaders, even if they ask higher prices as your customer satisfaction counts on it, and as we learned at the beginning of the article – that is what matters most in the current climate.
Self-fulfillment is the final path, and is great if you have the funds to make it work. Why? You are in total control of product quality, customer service, optimized and prompt shipping, and even costs for materials. It is heavy in logistics and takes you away from your desire to focus on marketing, sales and company growth – unless you hire someone to tackle it for you. It is not always ideal for a startup because it does demand staff, space and specialized software (and even servers).
Which is right? Only you can know the answer, but if you sell your own products/inventory and want a third-party to handle storage, packing, and shipping for you, you’re looking for an order fulfillment company. If, however, you don’t have products or inventory, but are happy to sell another brand’s goods, the drop shipping model is an affordable way to get started right away. If you are looking to have total control and have the capital, you will find that self-fulfillment is ideal. Whatever path you choose, know that there are many services and resources available to you. From sites like Amazon that allow you to sell and fulfill your orders to online marketplaces like eBay, Etsy or even Walmart, you can leverage your presence. However, don’t overlook the importance of developing your brand. A website, social presence, blog and competent SEO are also part of any eCommerce success, and fulfillment can become one aspect of your favorable reputation and success.
Tapping into overseas markets can become very lucrative for businesses like yours, despite a lot of complexities dealing with international logistics. While many fulfillment companies here in the U.S. can help you make overseas shipping a reality, it depends on what their knowledge is on customs and other international regulations.
Any violations from lack of awareness could hurt your business reputation in short order. Many countries don’t accept certain products, and various fees and taxes need full consideration. Even if the fulfillment center receives a fine for violating these regulations, your overseas customers are going to blame you.
This could ruin any chance of keeping loyal international customers you’re just starting to nurture.
It’s all the more reason to consider the costs and benefits of expanding to an overseas fulfillment solution. Doing so could give you more advantages in reaching various foreign cities that are otherwise too difficult to reach from the U.S.
Let’s take a look at how this could work for you in the coming year.
International Markets Help During U.S. Sale Downturns
As a major impetus to find an international fulfillment center, keep in mind sales here in the U.S. can frequently fluctuate wildly. You may already feel the pain of this with the holidays ending and a sudden drop-off in sales figures.
By finding an overseas warehouse to partner with, they’ll help you find markets in their region to keep sales going when dwindling here. Some countries have specific holidays during other parts of the year that could help you attract sales during slow times stateside.
The Costs of Shipping Internationally
More than anything, you’ll want to find an overseas fulfillment center because of the large cost of shipping from here to there. Once you open new markets, above and beyond the fulfillment costs, the shipping fees, package tracking, taxes, and customs fees become tremendous. Since this constantly changes, you could also make mistakes on these as mentioned above.
During times when a good portion of your sales occur in a foreign market, it can start to become a major expense shipping there. Since you want new customers overseas to get packages as soon as possible, you’ll probably have to invest in air cargo most of the time.
It may become a challenge when you have to decide whether shipping by slower ship cargo is easier on your budget over air service. Because customers overseas want their deliveries just as fast as Americans do, you may have no choice but to do expensive shipping by air most of the time.
Expensive Shipping Charges for the Customer
A major problem with shipping overseas from the U.S. is that you’ll have to charge larger shipping fees to keep yourself profitable. International customers may balk at this when they see how high overseas shipping rates are. Even American consumers sometimes abandon shopping carts if they see shipping charges going beyond more than a few dollars.
International shipping frequently goes above $10 (and more), depending on what the product is. Going through an international fulfillment center allows you to get rid of the expensive shipping and just charge normal domestic shipping in a particular country.
Caveat: Communicating With Your Overseas Warehouse
Now that you see the benefits in cost for using an international fulfillment warehouse, it’s time to remember how important communication is with them. If you’ve slacked on keeping communicated with a domestic warehouse, you absolutely need to know what’s going on with one overseas.
Thanks to real-time technologies, you can find out without having to visit in person. Be sure to talk with everyone in charge there every day, whether through video conferencing or by real-time chat technology.
Expect them to give you transparency so there isn’t any confusion about your shipping expectations and what’s occurring internally.
Contact us at insightQuote to let us help you find a fulfillment center that’s perfect for you here in the states. Not only do we help with finding fulfillment centers near me in the US, we can also help in finding one internationally.
Returns are inevitable from consumers in a time when customers want specific items to help them solve problems. Not all products you sell are going to please everyone, though how easy do you make it for returns?
You may not know that over a fifth of all consumers surveyed said they were too busy to return an unwanted item to an online store. In many cases, they didn’t bother to return it because they thought the returns process was too complex and time-consuming.
When this happens, it’s usually due to realizing your returns process is too protracted. This only leads to customers thinking you make all returns too complicated to bother. Unfortunately, this usually results in the customer not shopping with your online store again.
You might experience other negative things until you streamline how you do returns. Here’s more on unreturned items and the impact it could have on your business.
Bad Feedback From Customers
Because online reviews are so common over the last few years, you can’t afford to ignore what people say about you. Having an inconvenient return policy could backfire and end up being mentioned in online feedback.
When you start getting numerous comments like this, it’s impossible to stop them. With excessive complaints about your returns process, it could lead to new prospects moving on to your competitors where returns are easier.
Places like Yelp make negative comments widely seen, so the impact can become far-reaching into the future. However, you can respond to them and indicate you’re changing things.
Word Spreading About Faulty Products
If you make returns too complex, it’s more apt to spread other negative word about your business. Namely, it could lead to customers being more open about how bad the product was. Perhaps the biggest problem is you’re selling faulty products, something you’ll keep repeating if not amending returns and internal quality inspections.
When a customer can simply return the item and receive a good product, they maybe won’t mention the faultiness. They’ll figure it’s an anomaly, especially when you can make the “return and replace” process fast.
Losing Communication With Loyal Customers
Another bad scenario is if many of your loyal customers start complaining about your products because they aren’t getting what they really want. During these moments, you should realize you’re losing regular communication with those most loyal to you.
Communicating regularly with your most loyal customers can help you find out what they really want so you don’t have to deal with so many returns. However, making returns easy for them is essential since it’s basically another form of communication.
An efficient returns system usually collects information about what the problem was with the product, why the customer returned it, and how many returns you’re receiving. These metrics help give you information you need to improve your products, provide what customers want, and continually streamlines how you process returns.
Placing Your Fulfillment Center in Jeopardy
Since the fulfillment center is where returns take place, not properly processing returns there could lead to the warehouse losing their credibility in the marketplace. All of this may snowball and become a problem for them and you if you don’t change things as soon as possible.
What’s important is to stay communicated with your fulfillment center to work out an excellent returns policy. It’s time to make this work as quickly as possible on a level you see in major corporate stores. Mimic their simple returns packaging, as well as easier return forms.
Contact us at insightQuote so we can help you find a quality fulfillment center with pain-free return processes.
Personalizing communication with customers is something that you’ve likely worked hard to accomplish this year, though the methods you’ve used still lack critical elements. Nowadays, customers want quicker means of being able to communicate with your company if a problem arises. The old methods of phone calls, emails, or even snail mail inquiries are far too slow to get an issue resolved quickly.
Today’s consumers don’t have patience to let a concern go unsolved for weeks, days, or even hours. It’s why if you’re going to open a communication portal to them, real-time chat commerce is the best approach.
Of course, you have to ask yourself: does your online business need chat commerce? Using the words “chat commerce” might sound overly new to you, yet it simply refers to brand and retailers using chatbots or messaging apps to support their customers.
These help your customers search for products, place orders, track orders, or help on returns. Let’s look at what these virtual assistants do and how to cement customer relationships.
No doubt you’ve seen real-time chatbots that pop up automatically on many websites. They’re an invaluable way for a customer to inquire about something and get an immediate answer from a chat representative. While the chatbot can come up automatically with an automated “How can I help you?” message, your chat operators can take care of any problems instantly.
These are ideal if you expect customers to ask a lot of questions about your products, especially when the latter have complex features. The sooner you can get any customer questions answered, the better.
At one time, this had to occur through social media to work. Now chatbots are a major answer to personalizing all your customer communications. They can even get used when there’s a problem with orders and a customer needs fast information.
You’ll want to try out message apps as well, which are easy to upload on mobile devices. With so many customers on the go now, using messaging apps can change the game in communication. Some products you sell may cater to those who have to travel often. They may need to research a product on a mobile device during a work day and make a fast, educated decision on what to buy.
If they find you have a messaging app, they’ll find out information quickly from a chat representative. This gives you an immediate leg up on any competitors who may not use these apps often enough. Regardless, with so many messaging apps and virtual assistants out there, which one is the best for your business style?
Some of the Best Messaging Apps Today
Dozens of messaging apps are available, but WhatsApp is one of the best for easy use on Android and iOS phones. With easy setup and an ad-free platform, you can start using this almost immediately. It offers texts, photos, voice contact, and video messages to keep in full contact with customers when it’s necessary.
While you might consider WhatsApp unbeatable, it has many equals. Google Hangouts are still a good place to connect with groups of people all at once, especially when wanting to discuss your products in-depth.
Facebook Messenger is another great option, which just builds on Facebook’s current chat network and mobile features. One great feature on Facebook Messenger is their “Chat Heads” feature, allowing you to chat with customers while you have other apps up on your screen.
What’s important is to find a messaging app or virtual assistant with as many communication options as possible. Customers are going to have their own preferences for how they want to contact you, and vice versa. In this regard, give them as much choice as you do payment methods.
Contact us at insightQuote so we can help your business prosper in the new year with our FulfillmentCompanies.net service, allowing for efficient logistics.
Differentiation is a keyword every business should get to know, because it’s so essential in a time when competition is more intense than ever. No matter what business you’re in, it’s likely you have someone else doing or selling the same thing. Whether it’s on an international, national, or local basis, you have to compete with these other businesses every day with e-commerce.
The question is, do you have decent e-commerce tools to help you carve out a unique identity? Branding needs to become top priority in the new year if you think you can still attract business using mere basics.
Unfortunately, you’re at risk of just blending in with everyone else if you stick to overly simple e-commerce features.
Here’s how to differentiate from the 800 pound gorilla (e.g. Amazon), and how e-commerce tools can help you grow.
There isn’t any question that HubSpot is the leading e-commerce tool in the world. It helps you with numerous aspects in your online business (including SEO and marketing). This platform also helps differentiate yourself with their marketing tools, including setting up a valuable CRM to connect with customers in new ways.
You can’t do without a customer relationship management program. Not only can you communicate with customers in real-time, you’ll connect with others in your inner circle. You can include your fulfillment center in the mix to keep updated on logistics being up to customer expectations.
Here’s an e-commerce tool you’ve perhaps never heard of, yet can help you differentiate yourself better than any other. One reason Ometria is so popular is it customizes your e-commerce to individual shoppers for a more personalized tactic.
It’s also one of the best out there for metrics, giving you more thorough analysis of what makes each customer tick. Having this available helps you differentiate based on individuals rather than just catering to a faceless crowd.
Also known as retention software, you’ll be able to retain loyal customers easier by providing them with their own preferred way to shop.
Many consider this clever-named e-commerce tool nearly identical to Ometria above. Really, it’s apples and oranges between Jirafe and Ometria. While you’ll find some small differences, Jirafe’s strongest feature is its consumer intelligence system, giving you supreme analytics on what customers buy.
Being able to have this at your fingertips lets you create your own customized e-commerce plan, as well as ways to create sales offers you know can resonate.
As you see, many e-commerce tools take analytics seriously since the more you know about consumers, the more you get into their heads on what they want.
As yet another tool you’ve perhaps overlooked, this one relates directly to better managing your inventory. You can work with your fulfillment center easier using TradeGecko since it keeps a perfect track record of your inventory as you sell items.
No doubt you’ve experienced some discrepancies with your fulfillment center in the past about how much inventory you have left during critical sale events. TradeGecko updates your inventory in real-time so you won’t need to make last-second phone calls to the warehouse asking about what’s left.
With eShopWorld, you get another customized e-commerce tool allowing you to present more detailed data on products you sell. More precisely, it lets you list prices in different international currencies to aid your international customers. Plus, it shows the buyer their exact shipping charges, as well as any taxes or other fees they need to pay.
Providing more detail about what people are going to buy brings transparency to your business, as well as more trust.
Contact us at insightQuote so we can help your business succeed with the right fulfillment center. We help vet warehouses through our FulfillmentCompanies.net.
As the holiday season winds down for package deliveries and you’ve already assessed ways to improve your fulfillment costs and operations, perhaps one complaint you received from customers this year is not enough diversity in payment methods. Even if you take all major credit cards, customers expect more nowadays since everyone has their own preferences due to various circumstances. When you consider not everyone can use a credit card, how do you expect them to buy from you in a convenient way? You could lose a quarter of your potential customer prospects not offering alternative payment systems.
The good news is that if you think there’s only one or two alternate methods available, think again. So many new options are out there now to offer more choices than ever. Many of these range from direct debits to mobile payments, to even multiple digital currencies. In many cases, you can do these payment systems through established places like PayPal. Here’s some alternative payment methods to include on your web store to start the new year with a fresh slate.
The era of everyone owning a credit card has dwindled considerably as consumers realize it can lead to problems. Many don’t want the fees imposed, or the risks of perhaps charging more than they can afford. Some might only carry a debit card, which looks like a credit card, yet takes money directly from their bank accounts. It’s time to allow debit purchases, something you’ve perhaps avoided for years. Bringing this convenience to customers makes them more apt to buy since they’ll only spend money they have available.
Otherwise known as wire transfers, allowing this procedure makes it easier for customers to shop if they use multiple bank accounts. They may have to transfer money from one place to another in order to properly pay for a purchase they make with you. While fees are sometimes imposed with transfers, it’s essential to make it part of your payment methods for the added convenience. Otherwise, some customers may hold off buying from you, simply because you demand one bank account for every e-commerce transaction.
Allowing More Mobile Payments
If you’re not already aware, millions of consumers now shop on a mobile device. More specifically, 122 million consumer bought something via mobile during this holiday season. With this evidence at hand, you have no excuse not to provide mobile payment methods. You should allow a consumer to buy with one just one click on a mobile system accessible anywhere in the world. Your only challenge is making mobile e-commerce easy to use, easy to read, and adaptive for every mobile operating system.
An e-wallet works in tandem with mobile devices, yet you’re possibly still in the dark about what this is. With an e-wallet, you’re basically providing an online hub that stores all consumer information for future purchases. It means when customers shop with you (at home or on a mobile device), they won’t have to fill out multiple fields to buy something. Ultimately, e-wallets speed up the buying process to avoid any potential of an abandoned digital shopping cart.
Providing digital currencies should also become one of your many options. Undoubtedly you’ve heard about bitcoin, despite a lot of controversies over the worth of this currency. Digital currency experts note you need to watch out for crypto-currency, as well as pre-mined bitcoin. It takes some careful scrutiny to do this right, though other digital currencies exist to give you more variety. You’ve probably never heard of Ethereum, Ripple, or Litecoin, but they’re currency alternatives some prefer for more legitimacy.
Contact us at insightQuote so we can help you with your business by finding the right fulfillment center near you using our vetting services.