Key Points:
- When you outsource fulfillment to a company like Fulfillrite, they’ll hold on to your inventory and fill orders on your behalf
- Every business will have different needs to meet according to their customers, the products they ship, and the volume of orders they ship
- Once you're set up with a fulfillment center, little maintenance is required
Running a small business can be very difficult. You're constantly juggling a wide variety of responsibilities all while trying to grow your company. This is true even in eCommerce, where dreams of passive income are widespread. Orders may come in online… but you still have to fulfill them!
Or do you?
Many eCommerce businesses opt to outsource order fulfillment. Globally, third-party logistics made over $800 billion in revenue in 2017, a figure that’s likely grown since then.
Order fulfillment is what Fulfillrite, an Easyship partner, does best. We help small businesses fill orders so they can spend time growing! We'd be happy to help you in this regard.
But first, we'd like to teach you all about order fulfillment. In this article, we'll answer many of your top questions, including:
- What is order fulfillment?
- Why is outsourcing fulfillment popular?
- What services are available?
- What's not order fulfillment?
- How do I know when I need third-party fulfillment for my business?
- What services do I need?
- How do I find the right fulfillment center for my business?
- How do I get started with a fulfillment center for the first time?
- How will I work with a fulfillment center on a regular basis?
Here’s a closer look at the answers to those questions!
Table of Contents
What is Order Fulfillment?
At its heart, order fulfillment is a simple concept. When you outsource fulfillment to a company like Fulfillrite, they’ll hold on to your inventory and fill orders on your behalf. While this is something you can do on your own, there are a surprising number of benefits to outsourcing.
Why is outsourcing fulfillment popular?
For one, filling orders on your own is time-consuming, complex, and can lead to excessive overtime. Why waste your small business's finite resources on something which can be easily outsourced?
Some may be concerned about costs, but surprisingly, outsourcing fulfillment can help you there, too. Storage isn't free, whether inventory stays on the premises of your business or in a storage unit somewhere. Additionally, postage fees add up, and companies like Fulfillrite are able to negotiate lowered rates by merit of the number of orders we ship. Fulfillment centers like Fulfillrite benefit by passing the savings along to clients.
In addition to the above, there are many side benefits. You can easily keep tracking of inventory levels even while outsourcing fulfillment. What's more, you don't have to bother with the hassle of maintaining your own inventory data. On top of that, there are a number of value-added services which we'll go over in the following section.
What services are available?
Unsurprisingly, order fulfillment companies specialize in order fulfillment. Next question!
Okay, in all fairness, there’s a lot that goes into order fulfillment. It's not as simple as one item going into one box with one label to one person. In fact, you often have to use pick and pack services, which involve picking different items and packing them into a single box for a single recipient. Theoretically, this is simple. In reality, it requires careful organization and coordination and can be deceptively tough to manage if you're not well-versed in supply chain operations.
Let's say you're not quite ready to use order fulfillment on a regular basis, though. Let's say you have a bunch of orders from a Kickstarter campaign or a flash sale and you need someone to help you get 5,000 boxes out the door very quickly. Order fulfillment services can help you with that, too, including with crowdfunding and special order services.
There are also many more value-added services that order fulfillment companies can provide. Some of these include:
- Warehousing inventory
- Managing inventory data
- Returns management
- Kitting (creating prepackaged bundles of items often purchased together)
- Customs guidance for international shipping
- Labeling (attaching barcodes and other labels to product boxes)
- Amazon fulfillment prep services
- Shopping cart and crowdfunding site integrations (automatically pulling orders so you don't have to send them to the fulfillment company)
- General knowledge and assistance about a wide variety of supply chain management questions
What's not order fulfillment?
For all the wonderful services that order fulfillment companies provide, it's worthwhile to remember that there are a few services that they typically do not do.
For one, fulfillment companies are not freight forwarders. They do not coordinate the movement of your items from the manufacturer's facility to the warehouse. For jobs like that, you are best served by contacting a company such as Shapiro.
Additionally, fulfillment companies don't actually deliver goods to your customers' houses. Indeed, that is the job of carriers such as UPS, FedEx, DHL, and various countries' postal systems. We prepare packages for the carriers and they take them from our warehouse.
Lastly, fulfillment companies do not typically provide supply chain management services. They don't tell you how to acquire materials or how to maintain inventory levels. They don't tell you whether your sea freight should go through the Panama Canal or the Suez Canal.
How do I know when I need third-party fulfillment for my business?
We've put a lot of thought into this question. In fact, we've even written other articles about it! To summarize our beliefs neatly, though, simply ask yourself the following six questions. If you say "yes" to any of these, you could benefit from outsourcing order fulfillment.
- Is your customer base growing faster than you can keep up with?
- Do you have trouble shipping orders in a timely manner to the right place?
- Are your employees working overtime to ship packages?
- Is your business becoming so complex that it's hard to understand?
- Are shipping costs eating away at your profits?
- Have you run out of storage space?
Answering "yes" to any of these questions is a strong indicator that you should outsource fulfillment. Trying to do too much in-house is inefficient, and fulfillment operations are among the easiest to outsource.
What services do I need?
In truth, there is no one-size-fits-all solution when it comes to order fulfillment. Every business will have different needs to meet according to their customers, the products they ship, and the volume of orders they ship.
That said, at a minimum, there is a certain set of services that just about every client of ours uses. Order fulfillment is chief among them, along with the ability to monitor data and integrate their shopping site with our fulfillment system. In short, this covers everything needed to ship orders as they come in and monitor inventory levels.
Many businesses benefit from value-added services. For example, if you forget to print a barcode on your box, companies like Fulfillrite can fix that for you. Similarly, if you'd like to include coupons or other marketing materials in the box, companies like ours can add those on your behalf. If you need help with customs, fulfillment companies are full of knowledgeable staff who can point you in the right direction. You may also benefit from the Amazon prep or kitting services we described earlier in the article.
How Do I Find the Right Fulfillment Center for My Business?
Choosing the right fulfillment center for your business is no easy task. We also recently wrote a long-form piece with Easyship on this subject. Ultimately, the decision will be yours to make, but there are some factors which we recommend you consider.
First and foremost, look for reviews online. TrustPilot, Google, Yelp, Shopify, and other major review sites frequented by eCommerce business owners will tell you a lot. You don't even have to waste time requesting more information if a company's reviews are poor. Pay close attention to comments regarding the timeliness of shipments, communication, and fee structure.
Second, once you've narrowed down your choices, talk to somebody within the company. Make sure their communication is accurate, timely and polite. Make sure you’re okay with contracts, if there are any long-term contracts. Have someone walk you through the whole fee structure.
Check out their software, too. You're going to be using your fulfillment company's software whether you like it or not. If it's a pain to use, you might want to try another company. Similarly, make sure they have a neat process for returns - you'd be surprised how often this is overlooked!
How do I get started with a fulfillment center for the first time?
If you decide to outsource fulfillment, you’ll need to do a little bit of setup to make sure you’re able to communicate your business' needs. Every fulfillment center has its own processes and will step you through its own onboarding process. A few factors remain constant no matter where you go.
First, you will need to clearly define SKUs. Short for "stock keeping unit", an SKU is nothing more than a type of shippable item. Every product you sell will have its own SKU. If you sell shirts, each size and color combination will be an SKU. If you sell bundles of items, each bundle of items will have its own SKU. Once you define SKUs, you will be able to clearly indicate to your fulfillment company exactly what you mean when you say "ship this to that person."
You will also need to send items to the fulfillment center so they can ship them. This will require arranging a freight shipment and notifying the fulfillment center with an ASN. That's short for "advanced shipping notice" and is simply a form that describes what items you’re shipping, the quantity to be shipped, and other simple attributes.
How will I work with a fulfillment center on a regular basis?
Once you're set up with a fulfillment center, little maintenance is required. That is, after all, the beauty of outsourcing fulfillment! After the initial setup, you essentially have five responsibilities:
- Make sure you maintain any integrations between your shopping sites and the fulfillment center.
- Monitor and track your inventory.
- When inventory levels get low, order more inventory and send it to the warehouse.
- Keep in touch with customers.
- When you release product lines, make sure your fulfillment center has the necessary information.
Final Thoughts
Outsourcing order fulfillment is an easy way to simplify the operations of your small business. The benefits are myriad and getting set up is not very difficult. Once your new fulfillment processes are established, it’s much easier to scale your business!
Need help filling orders for your business? Contact Fulfillrite today to request a free quote.
About the author
Brandon Rollins is a Marketing Consultant at Fulfillrite. His main areas of expertise are online marketing and supply chain management. He also runs Pangea Marketing Agency and Pangea Games.
