How often do you find yourself stressed with selecting the product from your shelves, finding the right box, and running to the post office? This is where I was three years ago. Quilty Box was started in my spare bedroom. Each month my wife and I would lay out product, pack boxes, fill up our car, and head to the post office. Quickly the spare room changed to the living room and then the whole basement—that’s when my wife asked me to find another solution. I found a fulfillment company a few states away and they started picking, packing, and shipping our orders. Relief! I could concentrate on growing sales and taking care of my customers.
That is until products were being missed and orders were being shipped incorrectly. Once again, I had to find a better solution. So, I rented a warehouse, hired a college student, and started building our own fulfillment center. The first year went very well and I realized if we could do it for ourselves so well, then we could do it for others too. And so, Big Sky Fulfillment was born. Our team has grown as has our facility, but we are always committed to our customers – shipping their orders quickly and accurately and being a resource for them as they grow their e-commerce stores.
Fulfillment, or 3PL (third party logistics), companies offer a wide range of services. At the most basic level, they store your inventory and ship out your orders when your customers hit the ‘buy’ button on your website. More comprehensive companies will help you with inventory management, designing packaging, product photography, and even basic customer service. You can usually find a regional company or you can use a large company with warehouses across the country. The cost of the service is usually reasonable for basic order fulfillment, usually between $2.50 and $3.50 per order. Companies charge a per-order fee, storage fees, and other fees depending on the level of service you have.
Kitting for subscription boxes.
Photo courtesy of Patrick Claytor
But, there are other benefits above not having to find the time to ship your orders. Fulfillment companies have large shipping accounts and often they have negotiated rates with UPS, USPS, FedEx, and other carriers. These savings are passed on to you. Some companies change the shipping charges on their website to reflect the savings. Others keep the shipping charges the same and use the difference to cover the fulfillment fees.
Fulfillment companies are also faster at getting orders out the door. We typically have orders sent out the next day—some orders even go out the same day. Other companies have overnight and weekend shifts to stay ahead of high volume shopping times. Was Black Friday and Cyber Monday more stressful than fun for you? Most orders coming through our warehouse at Big Sky Fulfillment during this busy time were shipped out the same day and none went past that Tuesday. We will work on the weekend so our customers can focus on customer service and managing marketing campaigns.
That brings me to the biggest benefit of all: your time. You are in business to help your customers and (most likely) to get more customers. Without having to pack and ship orders, you can devote more attention to social media, marketing, product development, or even slipping away to your craft room and having a much needed break.
The economics of fulfillment companies make the most sense when you are shipping more than 250 orders per month, but that could change depending on the fees or size of the fulfillment company. Here is a basic comparison of 250 orders:
|In-House||Monthly Costs||Fulfillment Company||Fees|
|Rent – 400sqft @ $15sqft/yr||$ 500.00||Storage Fees||$ 250.00|
|Labor – 20 orders/hr @$25/hr||312.50||Order Fees – $2.95ea||737.50|
|Boxes – 75c/ea||187.50|
|Fill material, tape, labels||50.00|
|Shipping – USPS Priority @ $12.50ea (average)||3,125.00||Shipping – USPS Priority @ $7.50ea (average)||1,875.00|
|Total||$ 4,175.00||Total||$ 2,862.50|
|Per Order||$ 16.70||Per Order||$ 11.45|
Outsourcing your fulfillment might not make sense in a few scenarios. If your products are each unique and one-of-a kind then you would be better off keeping them in-house. Another scenario would be if your products are personalized for each order. You should also consult your tax advisor when looking at locating your inventory in another state. Some states consider this ‘nexus’ and you would need to register your business in that state and pay sales tax. Check with your insurance company as well to make sure your inventory is insured when it’s located separate from your business address.
National Flash Sale order fulfillment.
Photo courtesy of Patrick Claytor
In business, we can’t do everything all the time. Take a look at your plans and evaluate how outsourcing your order fulfillment would affect your business and happiness. Take your time and interview multiple companies. Visit them if you can to get a sense of how they operate. Packing and shipping products is an integral part of your business but it shouldn’t have to be a headache for you.