There are any number of reasons an online seller might contemplate using a fulfillment center to handle their warehousing and inventory control. Fulfillment centers provide a tremendous service in receiving, storing, and shipping out a seller’s products to their customers. They’ve allowed many e-tailers to reclaim their time and regain control over their businesses – but that doesn’t mean they’re right for every online store and every situation.
Evaluate Your Options
To help you determine whether or not fulfillment is a good fit for your E-Biz, Joe Walowski, senior project manager for AmazonServices.com/fulfillment, recommends asking yourself a few questions about your business:
1. What is my order volume?
Most fulfillment firms have minimum monthly retainer fees. If your order volume is fairly small, then you may find that some of the fixed costs of using a fulfillment service aren’t justified for you.
Tip: One notable exception is iBagit.com, a fulfillment service that caters to small and medium sized businesses, and poses no minimum pricing or inventory.
2. Where do I want to be spending my time?
Think about where you spend the majority of time in your business operations. Your warehousing and shipping tasks may be a nominal part of your routine, and not something that, at present, you need to worry about outsourcing.
On the other hand, simple logistics may be consuming far too much of your time. If you’re at a place where you have no time to generate new sales leads – and even if you did, you simply couldn’t handle any more sales orders – then a fulfillment solution may be exactly what you need. States Walowski, “Your time should be used on the activities that help you grow your business and increase your profits – not on back-end functions.”
3. Do my sales offerings lend themselves to outsourcing?
Not every product is suited for fulfillment. Highly customized products (monogrammed shirts, for example) need additional work to get them ready for the end user, and that’s not the kind of service a fulfillment firm provides.
However, that doesn’t mean a firm will only accept ready-to-ship items. Many offer preparation and kitting, although they’ll charge extra for those services. Preparation refers to assembling or preparing items that arrive from the supplier in a dissembled or unready state; and kitting means gathering separate items, and sending them out as a single product bundle. Look at the products you sell, and ask yourself if the actions required to get them in ship-shape can be easily outsourced.
The Customer Component
Besides storing and shipping your products, most fulfillment centers can also take over your customer service duties. If you decide to utilize the services of a fulfillment center, you then need to decide if you want to maintain control over your customer interactions. You may prefer to keep that personal level of contact. But if you’re spending too much time answering emails, or customer service just isn’t your strong point, then you’ll want to explore your options in this area. Two things to consider are the how much those options will cost you, and whether you’re comfortable with the customer service your firm provides.
Fulfillment centers deliver time and cost savings, but there’s a price tag involved. Advises Walowski, “Fulfillment is a very real opportunity cost. You have to look at the trade off and what you’re gaining, and determine if that’s the best course for your business.”