In the modern eCommerce world, fulfillment partners play an important role in the supply chain aimed at delivering your product to the end customer. Storage of goods, preparation of parcels, international shipping, reverse logistics - it's hard to imagine any business larger than a few orders a month to function without the support of third-party logistics companies in these fields.
The proper fulfillment provider can boost your customer satisfaction. On the other hand, pricking inexperienced or ill-equipped partners for your business model can seriously hinder your competitiveness in the market.
With the vast offer of eCommerce fulfillment companies on the market, picking the right one for your business can be challenging. That's why today we'll go over five points you should pay attention to when choosing the right partner.
Why do you need a fulfillment partner tailored to your inventory management needs?
Answering this question is the first step to properly accessing the needs you might have. Think about which part of your operations are you looking to improve. Do you run a business moving large items and need someone to help with the storage of your goods? Or maybe you have way too many orders to handle them all with the resources you have? Is it the inventory management that gives you a headache, or maybe you just want to fully focus on developing sales channels and not worry about the logistics at all? The answers to these questions will allow you to make a wise decision and choose the best solution for you in the real thicket of fulfillment companies available on the market.
The third-party logistics companies specialize in delivering their partners with complex logistics solutions enriched with multiple warehouses, tailored to meet the demands of both average eCommerce merchants as well as highly specialized businesses. By agglomerating orders from many different sources, fulfillment companies can get the best deals possible from their suppliers. This gives eCommerce a shot at cutting shipping costs. The scale of operations helps to negotiate individual times for pick-ups from courier companies, which helps in the fast and accurate delivery of goods to end customers. Good fulfillment companies also specialize in handling the parcels returned by recipients, refreshing goods, accessing their condition, cycling the stocks, and providing advanced reporting systems.
Customized packing, properly securing the goods for transit, lower delivery fees, and access to a wide selection of shipping companies - all of these play an important role in the way your customers see your business. Remember, however, that the multitude of challenges you face and the needs of your customers does not mean that they must prove costly.
Work with a fulfillment partner that fits your business
Not every third-party logistics company can handle all kinds of goods you might offer to your customers. Having in mind the storage and handling conditions of your merchandise is the first step in figuring out which fulfillment center will fit you best. The fulfillment companies can be categorized into two main groups.
A general service fulfillment company
These are companies that do not aim to specialize in any particular market segment but offer a wide spectrum of fulfillment services delivered in chosen geographical location. Usually with room-temperature warehousing conditions, standard shipping solutions, and packing. These are great if your merchandise does not require special handling or a rigorous fulfillment process. Usually, these are the most cost-effective fulfillment solutions matching most order management needs.
Specialized fulfillment partners
These are fulfillment centers, that focus strictly on a particular sector. It may be fashion, heavy goods logistics, chemicals, food, and many others. Such fulfillment sites are equipped with specialized equipment, have implemented particular order processing procedures, and operate with staff members specially trained for handling the goods in this fulfillment warehouse.
Work with a partner who will support your growth
The scalability and future growth potential should be high on your list when picking the right order fulfillment company as a partner. This is true in both short- and long-term perspectives.
In a shorter timeframe, your logistic partner should be able to provide you with uninterrupted fulfillment service all year round. This means handling your business-specific peaks as well as general seasonal heat periods (Christmas, Black Friday). The last thing you want is for your customers to get their goods with heavy delays, all because the fulfillment provider was unable to meet the demand.
The scalability from a long-term perspective means that your fulfillment company will be able to provide you with the best fulfillment service as your business expands. Researching reliable partners; negotiating terms of the agreement; introducing, testing, and implementing processes specific to your business in the fulfillment operator's warehouse space may be a long and costly ordeal. Doing all of this only to find out that your fulfillment provider will not be able to keep up with your business due to warehouse space limitations, system restrictions, or any other issues a year from the start of your cooperation.
If you plan to expand your business outside of the boundaries of your local market and sell your goods to other countries, choose a partner who will be able to provide fulfillment services also on the desired markets. Although shipping itself may be possible worldwide from any distribution center, high shipping costs, long delivery times, or lack of local reverse logistics service may be a huge obstacle to overcome.
Work with a partner with the technological potential
Modern eCommerce business model relies heavily on your presence on multiple platforms and storefronts. Aside from your in-house webshop, you want your merchandise to also be available on such platforms as Amazon, Allegro, eBay, etc. Handling so many streams of orders can be challenging without a solid technological background.
When picking your fulfillment provider, always ask about the possibilities for system connection with the most renowned platforms and think about which ones will you use to reach your customers. It is also an excellent idea to check ahead of time the possible matter of provided seamless integration solutions in case of custom or non-standard systems. This way you will have a clear overview of what is and what is not possible when planning your business strategy.
Work with a partner offering a wide variety of shipping possibilities
Positive customer experience is one of the key aspects of your brand growth is based upon. Top-quality pick-and-pack service, low shipping rates, and timely deliveries are all equally important for your recipients.
To give your clients the experience they expect, you have to think also about last-mile courier delivery. Giving your customers a choice between various shipping solutions and courier companies ensures they can receive your parcels precisely in the way they prefer. Working with a good fulfillment partner with an already established network of contacts and business relations with major shipping players greatly pushes away the possibility of a poor brand experience for your customers.
Work with a partner whose pricing you fully understand
Though the general structure of fulfillment services prices across the board may seem similar, the truth is that not all fulfillment operators apply the same price structure for their services. Understanding the way fulfillment costs are calculated will save you many unpleasant surprises when the invoices start flowing.
- Startup fee - some fulfillment warehouses charge the clients for IT work need to start cooperation. Setting up a new account, creating system connections, and testing them out may take from a few weeks to a few months. These are usually one-time costs but sometimes may even reach a few thousand Euros.
- Administration fees - these are fixed costs that some fulfillment providers charge for keeping a dedicated Account Manager responsible for managing, communicating, and addressing all possible questions you might have. These are usually fixed sums charged monthly, though they may also be based on an hourly basis.
- Inbound costs - accepting your goods in the warehouse is a process more complicated than it may seem. The products have to be checked, counted, entered in the warehousing system (WMS), and properly placed in the warehouse space. These are the charges for all of these actions.
- Storage costs - these are the costs of simply storing your goods on shelves and pallets in the fulfillment partner's warehouse. It may be charged per pallet, per shelf, or based on the square meter space your merchandise takes.
- Order fulfillment costs - the costs of preparing the parcel to be shipped. All actions that your fulfillment partner has to take to safely pick and pack the goods shipped out to end customers. The structure and pricing vary heavily between fulfillment centers.
- Shipping costs - these are the costs of actually shipping your goods to your customers. The price usually depends on the size and weight of the parcel, but may be affected by fuel surcharges, environmental fees, taxes, difficult-to-reach zones of delivery, and additional services you may offer to your customers.
Picking the best fulfillment partner to reach your business goals
As you can see there are multiple points to consider before you choose a fulfillment partner for your business. Shipping conditions, flexible pricing, specifics of your business, and growth potential are all important. Picking the perfect partner to match your fulfillment needs shouldn't be rushed or taken light-heartedly. Before you decide on it, you will need to make thorough research of possible options.
At Linker, we aim to make this process straightforward for our customers even when starting their business outside of local markets. Thanks to our network of reputable companies, we connect reliable fulfillment providers with eCommerce sellers wanting to ship their goods globally.
But you don't have to take our word for it - you can check it for yourself by reading case studies of our cooperation with clients!
Are you looking for the perfect fulfillment solution for your business? Drop us a line!