Any company selling food products directly to consumers through mail or shippers must deal with fulfillment services. E-commerce sites are especially bound to them to enable their business. These services vary. Full-service fulfillment companies provide an end-to-end solution. They take products from the producer’s or importers warehouse shelves, package them, pass them to shippers, inform your customers the state of their order in shipment. They also handle payment via credit card, provide inventory levels to your website and reorder product as needed. They may offer call-center services, and they may handle returns.
You may only use part of the full logistic functions of the fulfillment company such as pick and pack, returns processing and customer support while choosing to fill orders yourself. You can then open a contract with the major package delivery services like Federal Express, UPS, or the postal service.
Special Considerations for Fulfillment of Food Products
What are the special considerations in fulfillment for food products? If you sell food products, the locations you choose to store and package your shipments need to be food grade. This means they have to meet high standards of cleanliness and pest control.
The facilities that process, pack or hold food products for human or animal consumption must be registered with the United States Food and Drug Administration. Any owner or operator who carries, forwards, warehouses, brokers, or facilitates food delivery will be required to register. The Federal FDA Food Safety and Inspection Service (FSIS) is mandated to conduct continuous inspections of meat and poultry processing and to conduct periodic inspections of other food processors. State and Federal agencies collaborate and coordinate the inspection process.
Food firms subject to inspection need to be prepared for an inspection at any time and must be staffed with someone familiar with the inspection process at all times. Staff members must be prepared to accompany the inspector during the inspection. Staff must also be trained to carry out mock inspections at regular intervals to assure the company is operating as required.
The Rise of E-commerce Fulfillment Food Sales
As food and beverage sales increasingly push into e-commerce marketing, new concerns and questions about he supply chain arise. Issues related to product freshness and product damage are special concerns. In the food sales industry, margins tend to be small and logistical challenges tend to be daunting. As of now, according to the research firm BI Intelligence, only 15 percent of U.S. consumers have bought food online and only 1 percent of food and beverages are purchased online. However, the pace of growth is increasing. Bi Intelligence predicts that online grocery sales will expand at an annual rate of 21 percent, reaching nearly $18 billion by 2018, that will be at a rate 7 times as fast as offline grocery sales.
The increasing interest in online grocery sales is due to a number of unique features of online shopping.
- Convenient access to a large selection of products.
- Emergence of concierge shopping and subscription food services that are innovating on the model of grocery stores and offering services unavailable at local food stores.
- Some of the biggest names in high-tech sales like Amazon, eBay and Google are beginning to offer and promote same-day delivery services.
The increasing use of e-commerce food shopping makes food product fulfillment services all that much more important. The logistics and warehouse management systems to handle the increased fulfillment demand are in development, but no one knows how long it will take to get them ready. The big question for each e-commerce retailer will be whether to handle fulfillment services in-house or to use 3PL services.
- Last year Kroger grocers acquired Vitacost.com. Vitacost’s extensive e-commerce technology and fulfillment center system that has been handling food grade products, will enable Kroger to service customers in 50 states.
- Peapod, one of the largest grocery store online retailers uses its own fulfillment system and fleets to deliver food to homes.
- Amazon, just venturing into the online food retail business under the name Amazon Fresh, has opted, so far, to outsource most of its deliveries.
When you look are ready to look for a fullment company, insightQuote can help you research and find the best fulfillment company for your business. Please contact us to find out how.