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Considerations When Choosing an Outsourced Fulfillment Solution

Will Schneider

Whittling down a list of dozens of fulfillment solution providers to a select few who have what it takes can feel a little overwhelming, but ensuring you have clarity on five critical success factors will make your decision-making process most effective.

The ubiquity of the Internet and proliferation of smartphones has compelled both new and established brick-and-mortar stores to create e-commerce channels. The aim is to cater to the growing number of customers that expect online shopping options.

Going online means your business is less limited by geography in the shoppers it can serve. However, the scale and reach of an e-commerce operation can place substantial strain on your existing logistics infrastructure. While it may be possible for your business to pack and ship the e-commerce orders itself, this can become unmanageable as the volume and diversity of orders grows. 

Outsourcing order fulfillment to a third party might be just the answer you need to this headache. While there are certainly benefits that come with working with a third party logistics provider (3PL), not every 3PL is created equal. If you are going to reap the advantages of outsourced fulfillment, you have to take a number of factors into consideration.

Short- and Medium-Term Needs

Evaluate your current fulfillment needs and then realistically extrapolate growth over the next couple of months or even a few years into the future. Even though you may be able to stay on top of your order flow today, chances are that your fulfillment infrastructure could be outstripped fast. You may need more space, more hands, more packaging and more trucks. If you aren’t ready to scale quickly, then any rapid growth could catch you off-guard.

Look for an outsourced fulfillment solution that will comfortably accommodate your medium-term growth. The last thing you need is to find yourself stuck with a weeks-long backlog of orders and staring at customer complaints. Falling short on deliveries can only tarnish your brand and its reputation.

Solution Provider’s Reputation

To avoid getting sucked into order chaos that’s not of your doing, take time to research the reputation of the outsourced fulfillment solutions you are considering. Make the most of the Internet. Google the company’s name and skim through the first 4-5 pages of results for any negative links.

Where available, check out the business’ Google Reviews, Facebook Reviews and Better Business Bureau Reviews if available. Visit the company’s Facebook profile to gauge comment sentiment. Of course, you will run into some negative comments and reviews. What you are looking for is a trend. If a fulfillment company comes up short regularly, that will be easy to notice after some brief online research.

Solution Provider’s Experience

There are no shortcuts to expertise. It is realized through practice and experience. While it’s possible for a newly launched fulfillment solution to be exceptional in their quality of service, it’s perhaps not a risk you’d want to take. Remember, if the fulfillment solution provider is bedeviled by incompetence and inexperience, your customers will put the blame squarely on you. Your brand may suffer irreparable damage as a result.

Ask to see the fulfillment solution provider’s quality control protocols, industries served, services offered and their expertise in global, federal and state shipping laws and regulations. Have a detailed conversation with any references provided of former and current customers.

Visit the Warehouse

It’s one thing for a fulfillment solutions company to enumerate all the good things they can do for your retail business. It’s entirely another to see them in action. Nothing can replace an actual visit to the warehouse when choosing a fulfillment solution. And if the provider is legitimate, they should have no qualms about you visiting on reasonably short notice. If you can’t physically visit the facility, ask for a virtual tour.

Observe the operations and confirm that they walk the walk and talk the talk. Check how the business handles warehouse safety, security and emergencies. In the absence of robust and actionable business continuity and disaster recovery plans, your business’s order flows could be deeply impacted without a viable immediate alternative in the short term.

Understand the Total Cost

Cost will certainly be a major factor in your choice of a fulfillment solution. Once you’ve identified the fulfillment providers who tick all the right boxes, you will probably rank them based on the one that’ll cost you the least, all other factors constant. Before you do a price comparison though, make sure you are comparing like for like.

Cost structure will usually be represented in item form. For instance, shipping labeling fees, packaging fees, shelving/stacking fees and storage fees. Look at the charges in the context of your current and short-term order value and volume to determine who will really cost you the least. Pay attention to how fulfillment errors are handled as well as who bears the chargeback fees.

Whittling down a list of dozens of fulfillment solution providers into a select few who have what it takes can feel a little overwhelming. Whereas there are numerous questions you could ask, ensuring you have clarity on the five factors above should make the decision-making process a tad easier.

About the writer: Will Schneider is the founder of insightQuote, a match-making service for B2B services, and writes informative posts about fulfillment services at FulfillmentCompanies.net. He is passionate about helping businesses find the right solutions to improve their operations. When not working, Will enjoys coaching youth basketball.

Join the #retail, #ConnectedJourney and #SmartStore conversations on Twitter at @RetailNext, as well as at www.facebook.com/retailnext.



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