Selecting the right fulfillment company for your eCommerce business requires you to carefully weigh your options and look at some analytics for your online store. Some fulfillment companies might not be willing to work with the kind of volume you usually do, and the logistics of some fulfillment companies might simply not be a good fit for the volume you work with or the kind of products you sell. By understanding how fulfillment companies think and how the size of your company influences your choices and options, you’ll be better suited to find the best Fulfillment Services Company for your start up or growing business.
Small Business Fulfillment Services Companies – Understanding Minimums and Volume Requirements
The role of a fulfillment company is to store your inventory, prepare your orders and ship them to your customers. They provide this service to a number of online businesses similar to yours, and need to know what to expect from their clients so they can plan accordingly. This is why most fulfillment companies set limits. The maximum and minimum limits set by fulfillment companies also allow them to figure out a pricing structure that works for them.
Some fulfillment companies specialize in working with eCommerce store that usually generate small volumes of orders. These services work with a large number of clients and can offer affordable pricing for this type of online stores.
However, on the other hand, MOST fulfillment companies work with mid to large eCommerce businesses. This means an online store that generates a relatively low number of orders would probably not interest this type of fulfillment service or that they would not be able to offer competitive pricing.
Even if a fulfillment services companies will work with smaller or start-up volumes, most of them do have “minimums” in order to do business with you. Minimums usually fall into one of the following categories:
- Minimum orders per month (e.g. 200 orders per month)
- Minimum monthly spend (e.g. $500 of fulfillment fees spent per month – if your bill doesn’t hit the $500, they would still charge you the $500 minimum
- Minimum number of pallets per month (especially for “warehousing” projects, a minimum number of pallets may be required)
- Requirements sometimes take the form of only working on long-terms projects, in which case they will not help if it is a one-off project
- Occasionally, companies will waive the minimums for a certain number of months in order to help your start-up “get off the ground” and achieve the minimum levels
Keep in mind that if you are truly “cash strapped”, you may have to hold off on outsourcing until you have adequate funds. Also, if shipping is a core function of your business (for example, some just in time manufacturing companies), then outsourcing may not be the best option. Otherwise, most often the “freeing up” of time allows you to focus on more critical tasks for your company that bring value and grow sales.
Location Influences Your Start-up Fulfillment Options
Where does your inventory come from and where do most of your orders go? If most of your inventory comes from overseas, a warehouse located near a main hub would make a lot of sense – think California or New Jersey. On the other hand, if you mostly sell products made locally, a warehouse located in a state where a large number of orders are generated or located where orders can easily be shipped all over the country at an affordable cost would make more sense.
Would it make sense to store your inventory in different warehouses? Using a network of warehouses located around the country makes sense if you want to offer affordable shipping costs and short delivery times. Some fulfillment companies can help you provide this type of service to your customers thanks to their network of warehouses as long as you generate enough volume for this solution to make sense.
Storage Requirements and Other Specific Needs for Start-up Fulfillment
Regardless of the volume you work with, working with large products such as furniture is very different from selling smaller items. There are very different storage and logistics requirements and you need a fulfillment service that can handle the type of products you sell so that you can guarantee an optimal experience for your customers.
There are unique challenges when it comes to large or heavy products. These items need to be stored in a safe manner, special care has to be taken to avoid damage and you need to find affordable shipping and delivery solutions. There is also the issue of storage space since large items obviously take more room and you might also require long-term storage for products that sell at a slower pace.
Selling smaller products comes with a whole other set of challenges, such as storing these items without damaging them or losing anything and finding an efficient way to prepare orders.
When Is the Best Time For Start-Ups to Connect with Fulfillment Companies for Live Quotes?
There is a “right” time to start connecting with fulfillment companies and making a final selection. If you contact them too early in the process, not only will most companies likely not respond to you, but also they will not provide the best rates possible. In fact, my fulfillment houses will not take your company seriously until:
- You’ve ordered products
- You know the date of arrival and quantities being ordered
- You at least have a baseline website up and running so they can see you’re moving forward
- You have a definite company name and corporate entity set up (this is especially important for international companies looking for US fulfillment services)
- You’ve figured out which location best suits your fulfillment needs
If you don’t quite have these items “checked off”, it may be best to spend time finalizing your business plan and preparing your budget and financial forecast. We’ve even created a page dedicated to explaining all of the fulfillment costs and pricing.
Start-up Fulfillment – Other Factors to Consider When Choosing Fulfillment Options
There are other specific requirements to take into consideration depending on the type of items you sell. Fragile or perishable products require additional care for storage and selling products such as clothes means you need to select a fulfillment service that has established an efficient way of preparing orders without sending the wrong size or color.
For helpful tips, check out our resource on What to Look For When Searching For a Fulfillment Provider.
You also need to ask yourself how quickly you plan on growing and select a fulfillment service that can grow with you since switching to a different solution could be expensive. Choosing a fulfillment service is a complex process and this decision is very important since it will affect your profit margin as well as the kind of experience customers can expect when they order from you. You should contact us to learn more about how we pre-screen warehouses and how we can help you find the right fulfillment service.