What is your plan for your eCommerce business? Is it a way for you to make a few bucks on the side or would you like to grow it into a thriving and prosperous eCommerce sales hub?
If your plan is growth, the choices you make about order fulfillment can be a key factor that makes or breaks your business. At Red Stag, we have witnessed firsthand the ways that fast and accurate shipping and great customer service can build an eCommerce business over time. We’ve also experienced the ways that backups in order fulfillment can drag down an eCommerce startup and stunt its growth. That experience was what gave our founders the passion to create an order fulfillment provider to offer best-in-the-industry service for our customers.
For small eCommerce businesses and startups, selling on Amazon is a great way to break into the market. When you are ready to move beyond packing and shipping orders in your garage (or your spouse wants the space back), Fulfillment by Amazon (FBA) is a logical startup choice.
With FBA, you get extra Amazon benefits, such as free shipping to Prime members, which add to the appeal of your products in the Amazon marketplace. Your stock will be stored in Amazon’s large network of order fulfillment centers around the country. Amazon will decide where to warehouse your products and will handle customer service and returns.
As your business grows, however, the downsides of FBA can start to outweigh the benefits. Amazon’s Seller Forums are full of complaints about order fulfillment issues, including poor customer service when inventory issues arise, misplaced stock, poor reporting, and high fees. In addition, FBA has rationed warehouse space during the Christmas season in recent years, making it hard for Marketplace sellers to keep their products in stock during the busiest selling season of the year.
Amazon is a huge company that deals with thousands of sellers. FBA plans are one-size-fits-all; they don’t offer sellers the type of personalized attention and service that your business will get at an independent order fulfillment center.
In addition, once you branch out and start selling on other platforms or launching your own eCommerce site, you may find that a fulfillment solution tailored to your business is necessary to meet the needs of your growing customer base.
When it comes time to choose an order fulfillment center, search with the care you would take if you were bringing on a new business partner – because that is what you are doing. Your 3PL provider works for you, but the type of services they provide will have a direct impact on your customers’ satisfaction levels, the smooth operation of your eCommerce business, and the dent that fulfillment puts in your profit margin.
Here are three things to consider in your search for an order fulfillment services provider that can meet all your needs.
Your goods may arrive from Asia into a West Coast port, but it probably doesn’t make sense to ship to your customers from near this arrival point. eCommerce customers expect fast and inexpensive shipping; the location of your warehouse will determine your ability to provide this vital service.
If you think of the continental United States as a square, West Coast shipping hubs like Seattle, Los Angeles, and San Diego are at the corners of the square. Now picture the shipping range from your order fulfillment center as a circle radiating out from the warehouse location. That circle represents the area to which a warehouse can ship orders in two days or less. When your fulfillment center is in one of these corners, most of the circle falls in the ocean or across the border.
A more centrally-located warehouse can reach the majority of the states with two-day shipping. At Red Stag, we sited our first warehouse in Knoxville, Tennessee, and our second warehouse near Salt Lake City, Utah. Between these two locations, we can provide two-day shipping for our customers to more than 99% of US.
To move goods from the West Coast to the rest of the country, look for 3PL providers with order fulfillment warehouses in states like Utah and Nevada.
It’s important to do a cost/benefit analysis as you choose your order fulfillment services provider. You will incur additional freight charges to ship your products from the port to a fulfillment center in a more centrally located state. This will be offset by reduced shipping charges on orders.
It’s obviously cheaper to ship a pallet or a whole container than it is to ship one small box with one or two items inside. If you break down the cost of the freight to move your stock to a warehouse that can offer two-day shipping to more of your customers and look at the cost per item, you’ll probably find that the extra freight charges are more than offset by the savings in shipping costs.
If you offer free shipping, this savings goes directly to your bottom line. If your customers pay the cost of shipping, your bottom line still gets an indirect boost: lower shipping costs will reduce friction at the checkout and lead to more sales for you.
If you don’t currently offer free shipping, your reduced shipping costs may give you more flexibility to provide this incentive for your customers to click the buy button.
Order fulfillment is a way to fulfill your customers’ desires. That fulfillment will keep them coming back and buying from you again and again. Make sure the order fulfillment warehouse you choose has experience with packing and shipping products that are similar to yours in size, weight, and fragility, so they understand how to best pack and ship your products.
Choose an order fulfillment provider that offers the add-on services you need, like customization or kitting. Make sure their inventory management system communicates well with all your sales platforms and internal systems.
Don’t settle for the industry standard when it comes to inventory loss (shrinkage) and shipping errors. At Red Stag, we reimburse our customers for any products we lose in our warehouse (it’s not many) and for any errors we make in picking and shipping orders. It’s what any good business partner would do.
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