Forums: Discussions for entrepreneurs and small business.

I would be very interested in hearing anyone`s thoughts on using a
fullfillment center vs. handling product orders and shipping on your own. Is
one more expensive than the other? What would be some other differences
that maybe aren`t so apparent up front? Which do you prefer? Why?

Thanks!

Robin

There are many reasons to partner with a fulfillment company.  Of which, allowing you to focus on your core business and concentrating on growth is probably the biggest.  If you’re spending your time shipping, tracking, packaging, ordering materials, etc… it is taking away time and money from what you do best, running your business. 

 

One last point, make sure that the company you choose provides you with the management tools to see what is going on.  You should have access to real time reporting that includes: order status, inventory levels, backorders, tracking numbers, returned items, payment history, etc…

 

Another bonus is that you are typically saving 5%-10% on shipping charges because most fulfillment companies will pass along the discount they receive from the shipping carrier due to their large freight activity.

 

Dan

-------------------------

Product & Literature Fulfillment Experts Dan Coll, President Rapid Fulfillment, Inc. 461 Cochran Road, Suite 300 Pittsburgh, PA 15228 dan@rapidfulfillment.com www.rapidfulfillment.com

The decision to outsource fulfillment is a big one for most webstore merchants and, other than the fact that outsourcing frees you to focus on sales, the big issue is if the average fulfillment per order cost is affordable compared to your per order S&H revenue. 

Our typical pricing is $1.85 per order plus $.40 per item plus USPS or discounted UPS reimbursement and we provide free jiffy mailers or shipping cartons.  The monthly inventory storage cost is $69.95 plus $16 per pallet and there are no set up fees and no minimums.

The average ecommerce S&H fee is about 15% of product revenue, so you can see that the affordability of outsourcing depends on the average sale per order vs. the average ship weight /distance per package.

In my experience, it takes at least $30 per order for the numbers to work, but a lot depends on average ship cost.  Packages less than 13 ounces for example can be shipped via first class mail which brings the total fulfillment cost including fees to a very affordable level, even for inexpensive items. 

John Lindberg - President
EFULFILLMENT SERVICE INC

Hi there, As a franchise system, as soon as Pump It Up began opening over one unit a month, we chose to go to a fulfillment company. Although there was an upcharge, the efficiency was worth the expense to me!

Definitely fullfillment.