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Your web store front may be virtual, existing only in your website hostingprovider's cloud infrastructure, but the products you're selling there most certainly exist in the phyical world. That means you'll need to store them, inventory them, as well as ship and replenish them as you business grows. That's where e-commerce fulfillment services become almost mandatory. E-commerce fulfillment services accept product shipments from you or your manufacturers, and then log them in, store them, pack them, and then send them out. They usually send them out via FedEx, UPS, USPS, or another shipping service.
Often called 3PLs (short for "third-party logistics"), e-commerce fulfillment services have been around for years, managing product distribution and fulfillment for large retail businesses and small mail-order companies. While the services covered here in this roundup provide the same services, they separate themselves from traditional 3PLs because of their concentration on providing fulfillment services for e-commerce retailers.
Using an e-commerce fulfillment service can save you a huge amount of time, effort, and cost—especially if you're selling more than a few items per month. However, there are a lot of factors to take into consideration when choosing an e-commerce fulfillment service. There are also a lot of separate costs involved, some of them difficult to predict. Your final costs will depend on the e-commerce fulfillment provider's policies and resources as well as your company's specific needs.
Before you begin researching e-commerce fulfillment services, you should pin down exactly why you need them. What type of product will you be shipping? Is the product fragile, heavy, or large? How many items will you ship per month and to what locations? What kinds of shipping options do you intend to offer your customers? The best way to do a price comparison is to decide on which features your business will need, and then have a conversation with each e-commerce fulfillment service you're considering.
E-commerce fulfillment companies usually start with basic fees for services that include receiving (accepting and managing inventory at the warehouse), storage, pick-and-pack (the process of selecting and packing the products for each order), and shipping. Billing can vary depending on how many shipments you have per month. Companies that ship more products per month can expect discounts on the rates.
Then there will be additional costs that depend on your company's specific needs. These costs can include insurance to cover breakage and other issues, special packaging (for fragile, heavy, or large orders), branded boxes, grouping products in "kits" (if, for example, you are selling gift assortments), inventory management, expedited shipping options, and a variety of other costs.
An important factor to take into consideration when choosing an e-commerce fulfillment service is the number and location of its storage facilities. Because most e-commerce retailers today are competing with Amazon Prime, customers now often expect to get their orders quickly, preferably within two days. The more warehouses to which your e-fulfillment service has access, the more shipment options you have, and the faster your product can get to your customers—without you having to pay for two-day or overnight shipping.
For example, if you find that most of your customers live in California or New York, then you can arrange to store most of your inventory near those areas. If you suddenly find that you're selling large quantities of product in Chicago or Minneapolis, then you may want to move some of your inventory warehouses to the Midwest. While there will be an extra shipping charge to move your inventory, it may be worth it, both in lower shipping costs and more satisfied customers.
Making business decisions like this requires the right data, which brings us to another selection point when considering an e-fulfillment service: the dashboard. Make sure to evaluate any front end provided by the 3PL provider not just for ease of use but for what kinds of data it gathers, what it can display and how, as well as how well it can export that data or integrate its features with the other e-commerce management tools you're using.
Another factor that can affect both your customers' satisfaction and your bottom line is how the e-commerce fulfillment service handles problems such as damaged shipments, mistakes in shipment, and returns. This is especially important when you get a complaint from a customer when an order arrived damaged or when part of the order is missing. Who is responsible?
Some e-commerce fulfillment services may require you to buy extra insurance if you're dealing with fragile or more expensive products. Others might fold their insurance fees into your monthly fee. Still others may depend more on the insurance provided by shipping companies. In this case, an e-commerce fulfillment service that provides a higher level of control and supervision over its processes—from inventory acceptance to final shipping—can help you determine responsibility for any issues. Some older e-commerce fulfillment houses may invoke what's called a "shrinkage allowance," which lets them lose or damage a small percentage of inventory before their responsibility kicks in.
Many industries have certification programs that professionals sign up for to get certified in their particular field. While there are some certifications that you can look for when choosing an e-commerce fulfillment service, there isn't any one single organization that oversees these facilities (aside from federal agencies that oversee the storage food, prescription medication, and other regulated products).
However, there are a few independent organizations that certify either the facilities or the people running them. Three of these organizations are the American Purchasing Society, the International Warehouse Logistics Association (IWLA), and the Warehousing Education and Research Council(WERC).
Security is also a concern when it comes to choosing an e-commerce fulfillment service. You want to make sure that they have basic securityprotocols in place for the safety of your inventory. This doesn't only mean having guarded entrances and video monitoring. You want to know how your inventory is followed from truck to storage, and then how it is packed and shipped out.
These days, the ability to monitor each step of the way by using video, UPC codes, or a combination thereof can be extremely helpful. Some e-commerce fulfillment services will also let you inspect their facilities.
Finally, check to make sure that you're not contractually stuck with an e-commerce fulfillment service with which you're not happy. Many e-commerce fulfillment services, especially those that work with smaller merchants, offer their services on a month-to-month basis so that you can move on if there's a problem. Some will offer that up to a certain point.
If, for example, you're moving several thousand items per month, then you need an annual contract. If your e-commerce fulfillment service does insist on a contract, then make sure that the contract includes a reasonable cancellation policy.
One of the greatest advantages that a good e-commerce fulfillment service can give to an online retailer is immediate access to information on your inventory via great customer support. This access is offered via web-based software. The feature set can vary widely, but there should be certain basics available to you.
To begin with, you should be provided with real-time access to how much inventory you have in each of the service's warehouses. You should know when products arrive from the manufacturer, when orders arrive, when orders are packed and shipped out, and when returns arrive and what is done with them.
One important service that an e-commerce fulfillment company can provide is to accept orders electronically by integrating with e-commerce applications such as Shopify and retail distribution companies such as Amazon. If you're already invested in a third-party shopping website or point-of-sale (POS) system, then you will want to check to see if the e-commerce fulfillment house works seamlessly with your existing setup or if it can set you up using an application programming interface (API).
However, there should always be a way for the vendor to manually intercede. For example, if customers call in a panic because they put in their wrong address, then you will want to be able to cancel or edit the order.
Other features to look for in an e-commerce fulfillment service include the ability to track weekly and monthly sales, produce a variety of reports, or easily enter a support request. Some services offer features that help with marketing, such as the ability to sort customers according to where they are located or how many products they have bought (so that you can mark them for email marketing campaigns and other promotions). Since most POS systems already offer these services, these features may not be on the top of your needs list for an e-commerce fulfillment service, but they're a nice plus.
In the end, the success of an e-commerce fulfillment service can only be judged by how quickly and efficiently the service gets your product to your customers. Once you have chosen an e-commerce fulfillment service, you have, in essence, chosen a partner in your company's success, so choose carefully.
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