Every business starts out small, especially E-Commerce stores. No matter how big the industry leaders are today, most of them all started in someone’s garage or apartment and facilitated their growth via smart partnerships, investments, and choosing the right distribution methods. But at the beginning, it was just a founder, some friends, and all hands on deck. You, as an entrepreneur with an online store, are most likely taking care of everything on your own, including order fulfillment and shipping. As you scale up, however, you’ll find that you may no longer be able to handle everything yourself. It’s a beautiful, but terrifying, place to find yourself in.
Your early days saw you overseeing everything; inspecting every physical product, lovingly packing it with your own two hands, and sending it out. As you grow, you start to find yourself spread too thin between order fulfillment, marketing, customer support, and all the other tasks an E-Commerce entrepreneur has to deal with. This may mean it’s time to entrust parts of your business to someone else - a third-party logistics (3PL) company. Now it’s time to find the right fulfillment partner that you can trust.
There are many companies out there that provide these services, and if this is your first time researching a 3PL, you need to do your due diligence. The last thing you need is to ship your goods to a warehouse, having them stocked, then finding that you don’t care for their service, and have to get it all back and start again. This can get time-consuming and incredibly inconvenient. So what should you be looking for to ensure that it will be the right solution for your E-Commerce business?
Research The Services They Provide
Before you get any deeper into researching a particular company, you need to ensure that your potential future partner can actually handle everything that your store needs. The basics are given: warehouse space, order fulfillment, shipping, etc. Every business is unique though, so you may need to ensure that they can meet any specific requirements you may have. Depending on what you sell, some creativity might be in order from your fulfillment partner, to adapt to your needs, or offer some non-standard shipping options.
Even if you don’t need anything outside of the box just yet, it’s worth exploring the landscape to see what various fulfillment providers offer. You never know what the future might hold, and it’d be good to find a partner at the onset that can adapt to your needs. As well, researching the different capabilities of fulfillment partners might also give you some new insights and ideas on how to expand your business.
Ideally, you’d want to work with a fulfillment company that can easily help you monitor your stock levels and manages your inventory, based on what you’re comfortable with. There’s no sense in working with someone who has a different philosophy about safety stock than you do. The right partner will keep you apprised of how much of each product you have left in the warehouse, and when you’ll need to replenish it to ensure that your order and fulfillment flow is problem-free.
Even more critical, are integration and automation. There’s no sense in investing in a solution that requires you to manually upload your orders and synch your inventory.
Keep in mind, however, that if it’s just you selling from your own website, one supplier will do. If you have a multi-platform presence, then more than one fulfillment partner will be involved with your business and you’ll need to sort out how to keep track of all your inventory across your omnichannel.
What Can You Afford?
While it’s of paramount importance to find a fulfillment partner that doesn’t break the bank, keep in mind that the more affordable options are that way for a reason; they might not be as robust as you had hoped. On the other side of the spectrum, you also need to take into account that the pricing isn’t always straightforward. It’s best to understand the scope of their pricing and rate structure, and what you’ll actually be billed for. Make a note of any recurring monthly or annual fees, any per-order or per-transaction fees, and anything that might not seem straightforward at the onset.
This isn’t a decision to undertake lightly, even if they have every solution on your “must-have” list. An offer that seems too good to be true most likely is. There could be hidden costs or minimum amounts that are triggered if your order fulfillment or storage costs don't meet a certain threshold. On the other hand, if you’re shipping a lot of products, you should expect to pay more. The right partner, however, can be negotiated with to adjust their pick-and-pack fees as you scale up.
The best thing to do is have a strong grasp on your predictions for your future growth. This will be an important component of effectively pricing out different companies. Taking into account future forecasted income vs. per-order and storage costs, you’ll be able to draw an accurate picture of how your fulfillment partner can fit in. The more of an accurate grasp you have on your projections and calculations will help you to be more precise in your evaluations of what expenses a 3PL company will create for you and what you can expect in return.
Where Will Your Fulfillment Centers Be?
Today, customers are receiving their orders in record time. Thanks to the precedent set by Amazon Prime, it’s not outlandish to have a product delivered the next day after it was ordered. Obviously, this is due to the proximity of the fulfillment center - the closer it is to your customer, the shorter the distance that your goods have to travel. For example, the E-Commerce giant has over 200 facilities in just the USA alone, to maintain its nationwide distribution channel, and 110+ across Europe, South America, Asia, and Oceania.
But it’s about more than just speed; it’s about to cost as well. There are many shipping companies that can get a package from one corner of the globe to the other in record time, but it will cost you. Hence, partnering with a fulfillment company that has warehouses in your target market, such as Southeast Asia, for example, will have large benefits in terms of speed and price. A wise E-Commerce entrepreneur shouldn’t overlook how important it is to have fulfillment centers close to where your customers are.
Keep in mind that as many as 53% of shoppers have said that the speed of delivery is what determines their E-Commerce vendor selection, while 25% have canceled their order based on slow shipping speeds.
Know Your Shipping Costs
In tandem with the above point, a huge advantage of working with a 3PL is that you’ll have access to better shipping rates and options, compared to what you’ll get by yourself. The larger fulfillment companies have negotiated special shipping rates, based on volume. By partnering with them, you’ll get to tap into these rates as well. Hence, when evaluating partners to work with, pay attention to their partners as well - their carriers and the range of options for shipping that they can offer.
These considerations are key when evaluating partners and trying to convert your E-Commerce visitors into customers. According to a study conducted by Arvato SCM, 83% of E-Commerce customers wanted a cheap, or free, shipping cost when they were shopping. Close to 54% of those that wanted a low-cost delivery, said they would abandon their shopping cart if the shipping fees were too high.
Shipping fees are the thing that will make or break your fulfillment solution, and by extension, your business. Given how crucial cheap and/or free shipping is to a potential customer, it bears an investigation on how you as an E-Commerce store, can provide this within your partnership.
Make Sure There’s Adequate Customer Support
It’s a basic point, but one that bears highlighting. While you don’t want to encounter problems, it’s inevitable that you will. While you have a firm grasp of the customer support for your E-Commerce store (whether it’s you or an outsourced service provider), you also need to be able to address a customer’s order. You have to be sure that you can get through to the fulfillment company to solve the issue.
This is about more than just having an email address and an account manager. You need an emergency number or a live chat option, and an expectation that you can reach them at any time, within reason. A problem can appear at any time of the day, and if you’re not located in the same time zone or continent, then that is a huge gulf to navigate.
A prudent suggestion would be to test this element while researching your partners. Check how quickly a fulfillment company gets back to you via various channels and how satisfied you are with their answers and speed.
What Are Your Branding Options?
The most important thing in your store is your product. The second; how it’s packaged. To build your brand, any small details that you can incorporate into the look and delivery of your product can go a long way. In most cases, 3PL companies are “white label” - which means their branding doesn’t show up on the packages that customers receive. This allows you to customize your order and make it seem like it came directly from you, to retain that original, authentic, hand-packed product experience you started off with.
It'd be worth investigating what kinds of branding options your potential partner can offer, and if you can supply specific, customized packing materials for your orders. Also, make sure that you know if this comes with additional costs or not. It’s a little, but meaningful, gesture for both you and your customers.
A Helpful Checklist Before You Start
Know Their Service Level
- How fast does your 3PL fulfill customer orders (Outbound), and how fast will new arriving stock be inbounded and available for sale (dock to stock)
- Aside from the average lead time (e.g. outbound orders are processed in 24hrs), the Service Level is important because it indicates consistency. E.g. at Locad, more than 90% of orders are outbound and dispatched in 24hrs.
- Watching out for Service levels is critical because it is the best measure of the customer experience you provide, consistency will be a great lever of customer satisfaction.
- Also keep in mind that on most marketplaces, you are on-time fulfillment directly impacts your seller rating, which in turn drives your visibility on the platform (catalog ranking) and therefore directly impacts your sales.
- As you know, E-Commerce comes with a big seasonal fluctuation of order volumes.
- As you grow your business, flexibility is key. When sales surge, you don’t want fulfillment to be the bottleneck. And at the same time, you know that forecasts are not always 100% accurate so your fulfillment partner needs to provide flexibility both ways.
Ability to Scale Up
- Is the fulfillment partner able to scale up as you grow your business? The best relationships with logistics partners grow over the years, so when selecting a partner now, try to find one that can still be by your side when the business grows.
Integration and Automation
- A crucial aspect of fulfillment is seamless integration with your sales channels.
- Orders: does your logistics partner provide a system that integrates with your sales channels? The automated flow of orders from your sales channels to the warehouse management system of the logistics partner is critical. Avoid any setups that require manual upload of orders, it will lead to inconsistencies and order cancellation.
- Equally critical is the real-time syncing of inventory from the warehouse to your sales channels. This is critical especially if you sell across multiple online channels. If the inventory is not synced, customers may place orders for products that are already out of stock, causing cancellations and frustrated customers.
Fair and Transparent Pricing
- Fulfillment costs are a major cost driver in an E-Commerce business so you want to get competitive rates.
- Even more important is a fair and transparent pricing scheme, do you clearly know what you expect to pay at the end of the month or is there a lot of fine print and hidden fees?
No Hidden Fees, Lock-ins, or Balloon Payments?
- Stay flexible and avoid long-term contractual commitments with breakup fees and balloon payments.
Locad: A Fulfillment Partner You Can Trust
Finding the right fulfillment partner is one of the most important tasks you can undertake, as it has serious implications for your business and for your growth. You shouldn’t be afraid to take your time and really invest in the research. This is a partner that will become responsible for your company's name and reputation. It’s not a light decision, and you may be required to take a leap of faith to entrust your business to a third party. But it’s worth the effort.
That’s why you should include Locad as your fulfillment partner.
For everything that we’ve outlined above, Locad is the answer. We offer a wide variety of solutions to help you graduate from doing it all yourself to tasking a 3PL to distribute your products all over the world, while you focus on growing your business. Locad offers a supply chain as a service product that provides you on-demand warehousing, multi-channel fulfillment, and international distribution. Via a simple technology platform, we offer a holistic approach to managing the backend infrastructure of your E-Commerce business.
We know that the growth of your business is paramount to you, hence we pride ourselves in not only our flexibility with distribution and warehousing to meet your unique needs, but also with the full-service offerings that we make available to you including Order & Inventory Management, Demand/Supply Planning, Back Office Workflow Automation, and Order, Inventory & Sales Analytics. Everything you need to ensure that you’re in the right hands and your products can be delivered to your eager customers.
Our platform can give you oversight across your multiple sales channels and consolidate your inventory pool. We offer real-time visibility of your sales, inventory, and your KPIs while using our distributed fulfillment network to shorten the last mile and bring your products closer to your customers. Thus, enabling your delivery to be cost-effective and timely.
Whether it’s just you and your website, or your partner with Shopify, Woo, Amazon, or Lazada, we can work efficiently with you and our platforms to offer a best-in-class experience across the globe. Whether you're looking to ship domestically or internationally, we have the pedigree and the experience in multi-platform E-Commerce to deliver you the results you need and facilitate your growth.
Contact us to learn more about how we can offer a seamless experience to you and your customers.