What to Look for in Ecommerce Fulfillment Companies
Running a successful ecommerce business goes beyond offering great products and having an online store. Fulfillment is a critical part of the customer experience and businesses that fail to deliver their products efficiently and reliably risk losing customers. However, handling the fulfillment process in- house can be a significant challenge, particularly for small and medium-sized businesses.
This is where ecommerce fulfillment companies come in – they offer a range of services that help businesses store, process, and ship their products to customers quickly and accurately. In this blog, we’ll discuss what to look for in ecommerce fulfillment companies to help you make the right choice for your business.
Types of Fulfillment Companies
Regarding ecommerce fulfillment, there are three main types of companies that businesses can choose from: third-party logistics providers (3PLs), drop- shippers, and self-fulfillment.
3PLs are companies that specialize in providing end-to-end logistics solutions for businesses. They offer a range of services, including warehousing, order processing, shipping, and returns. 3PLs can handle all aspects of the fulfillment process, from receiving products from manufacturers to delivering them to customers.
Drop shippers, on the other hand, hold no inventory but fulfill orders on behalf of businesses by shipping directly to customers. They work as intermediaries between the business and the manufacturer, allowing businesses to sell products without ever having to handle them.
Self-fulfillment involves businesses handling their own fulfillment processes. This means businesses must have their own warehouse, staff, and logistics processes to handle everything from receiving orders to packing and shipping products to customers.
Each type of fulfillment company has its pros and cons. For instance, 3PLs offer end-to-end solutions that can save businesses time and resources but can be more expensive than other options. Drop shippers are cost-effective, but businesses have less control over the fulfillment process. Self-fulfillment gives businesses full control but can be time-consuming and require significant upfront investments.
Services Offered by Fulfillment Companies
Ecommerce fulfillment companies offer a wide range of services to help businesses efficiently and effectively manage their fulfillment processes. These services include:
- Order Processing: This involves receiving and processing orders, picking and packing products, and preparing them for shipment. A good ecommerce fulfillment company will have efficient processes to ensure orders are processed accurately and quickly.
- Inventory Management: Fulfillment companies help businesses manage their inventory by monitoring stock levels, tracking product movements, and providing regular inventory reports. This helps businesses avoid stockouts, minimize excess inventory, and ensure products are available when customers need them.
- Shipping: Fulfillment companies offer a range of shipping options, from standard ground shipping to expedited options like overnight or two-day shipping. They also work with multiple carriers to ensure businesses can choose the best option for their needs.
- Returns: Returns are an inevitable part of ecommerce, and fulfillment companies help businesses manage them efficiently. They handle the entire returns process, from receiving returned items to restocking inventory or disposing of damaged goods.
Each service is essential for an efficient and effective ecommerce fulfillment process. By outsourcing these tasks to a fulfillment company, businesses can focus on other aspects of their operations, such as marketing and product development.
Technology and Integration
Technology plays a critical role in ecommerce fulfillment, and ecommerce fulfillment companies are no exception. They rely on technology to manage inventory, track orders, and streamline the entire fulfillment process. Two critical systems that play a crucial role in ecommerce fulfillment are warehouse management systems (WMS) and order management systems (OMS).
A WMS is a software application that helps businesses manage their warehouse operations. It helps businesses track inventory levels, monitor product movements, and optimize the use of warehouse space. Businesses can improve accuracy, speed up processes, and reduce costs by using a WMS.
An OMS software application helps businesses manage their orders from multiple sales channels, such as websites, marketplaces, and retail locations. It helps businesses track orders, manage inventory, and process returns. By using an OMS, businesses can streamline their order fulfillment process, reduce errors, and improve customer satisfaction.
Integration with your ecommerce platform is also critical for streamlining the fulfillment process. Integrating your ecommerce platform with your fulfillment provider’s systems ensures that orders are automatically sent to the fulfillment center, inventory levels are updated in real-time, and tracking information is automatically updated on your website. This saves time, reduces errors, and provides a seamless customer experience.
Ecommerce fulfillment can involve a variety of costs that businesses need to be aware of. These costs typically include:
- Storage Fees: These fees cover the cost of storing products in a warehouse. Storage fees may be charged based on the space used or the number of units stored.
- Pick and Pack Fees: These fees cover the cost of picking and packing products for shipment. Pick and pack fees may be charged based on the number of items or orders fulfilled.
- Shipping Fees: These fees cover the cost of shipping products to customers. Shipping fees may be charged based on the weight of the package, the shipping method selected, and the destination.
Different ecommerce fulfillment companies structure their pricing differently. Some charge fixed fees, which remain the same regardless of order volume, and others charge variable fees depending on the number of orders fulfilled. Some companies charge per-item fees, which are based on the number of items shipped.
To accurately calculate your total fulfillment costs, it’s important to consider all of these fees and how they apply to your specific business. Here are some tips for doing so:
- Estimate your monthly order volume and calculate your storage needs to determine storage fees.
- Consider your average order size and estimate the number of items per order to determine pick and pack fees.
- Research shipping rates for the carriers used by your fulfillment provider to estimate shipping fees.
- Look at each fulfillment provider’s pricing structure to determine which one is the most cost-effective for your business.
By carefully considering these factors, you can accurately calculate your total fulfillment costs and choose a fulfillment provider that meets your needs and budget.
Customer Service and Reputation
Customer service is a critical component of the ecommerce fulfillment process. When customers have questions or concerns about their orders, they expect quick and accurate responses from the business. Fulfillment companies that prioritize customer service can help businesses meet these expectations and maintain positive customer relationships.
To ensure that a fulfillment company has good customer service, businesses should look for providers that prioritize:
- Responsiveness: A good fulfillment company should be easy to reach and respond quickly to customer inquiries.
- Transparency: Customers appreciate clear communication about their orders, including tracking information and any potential delays.
- Accuracy: Fulfillment companies should prioritize accuracy in their order processing to avoid errors that can lead to customer dissatisfaction.
In addition to customer service, a fulfillment company’s reputation can also affect a business’s reputation. If a fulfillment provider consistently makes mistakes or delivers poor service, it can reflect poorly on the business and lead to negative reviews or lost customers.
To research and evaluate ecommerce fulfillment services, especially their customer service, and reputation, businesses should:
- Read reviews and ratings from other businesses that have used the provider.
- Look for any red flags, such as consistently poor reviews or a history of customer complaints.
- Ask for references or case studies from the fulfillment company to learn more about their experience working with businesses similar to yours. It could be asking for something as simple as the number of fulfillment warehouses they have.
- Evaluate the company’s website and social media presence to see if they prioritize customer service and communication. Customer reviews are an excellent indicator of the overall service.
How to Choose the Right Fulfillment Company
Choosing the best fulfillment company is a critical decision that can impact your business’s success.
To make the right choice, businesses should consider several key factors:
- Types of services offered: Look for order fulfillment companies that offer the services you need, including order processing, inventory management, international shipping, customer support, and returns.
- Technology and integration: Ensure that the fulfillment company uses technology such as WMS and OMS to streamline the fulfillment process and that they can integrate with your ecommerce platform.
- Fulfillment costs: Understand the different costs associated with order fulfillment services, including storage, pick and pack, and shipping fees. Look for a fulfillment company that offers transparent pricing and fits within your budget.
- Customer service and reputation: Choose a fulfillment service provider that prioritizes customer service and has a positive reputation in the industry (like FedEx fulfillment).
Frequently Asked Questions
What are ecommerce fulfillment companies?
Ecommerce fulfillment companies are third-party logistics providers that handle the storage, processing, and shipping of products for online businesses.
How do ecommerce fulfillment companies work?
Ecommerce fulfillment centers receive orders from online businesses, pick and pack the products, and ship them to customers.
What services do ecommerce fulfillment companies offer?
An ecommerce order fulfillment company offers a range of services, including order processing, inventory management, shipping, and returns.
Ecommerce fulfillment companies play a crucial role in the success of online businesses. By outsourcing fulfillment services to a reputable company, businesses can streamline their operations, improve customer satisfaction, and focus on growing their business. When choosing a fulfillment company, businesses should consider the types of services offered, technology and integration, fulfillment costs, and customer service and reputation. It’s important to do your research and choose a fulfillment company that meets your unique needs and budget. By choosing the right fulfillment partner, businesses can set themselves up for long-term success.