Checklist: What factors should you consider when scaling fulfillment?
Customers expect reliable, timely order processing, no matter what size your business is. Outsourcing fulfillment is one way to help meet these expectations and provide a good customer experience. As you consider fulfillment options, keep the following factors in mind:
What’s the size of your ecommerce business?
The scope of your operations will determine what type of fulfillment is right for your business. If you’re just starting your ecommerce business
or handling a low volume of orders, shipping orders from your place of business might be feasible.
As your ecommerce business matures, instead of processing orders yourself, it might make sense to secure dedicated storage space and/or leverage a fulfillment service. Either way, it’s important to have the right amount of inventory available to satisfy orders during peak shopping times.
What products do you sell?
Does your business sell small parcels of new and used books? Or do you regularly package large orders of heavy equipment? The type of products you sell could determine what support you require from a fulfillment service.
This is especially true of shipping. Keep in mind not all types of shipping are available for all products.
In the U.S., certain products have transport limitations. Shipping for bulky or large items will typically cost more. Hazardous materials or dangerous goods, also known as hazmat items, typically must use ground shipping.
How many sales channels does your fulfillment service need to serve?
Order management is the process of tracking and fulfilling customer purchases across all sales channels.
If a fulfillment service cannot process orders from one or more of your sales sources, then it may not be the right match for your business. Working with one fulfillment service is ideal for simplicity, but more than one might be needed to cover all your sales channels. Alternatively, you might want to reevaluate your sales channels and consider removing or consolidating some.
A central monitoring system on customer orders is a crucial part of order management. It will allow you to record all customer orders, shipments, and returns (for example, read about how FBA order tracking works
). Knowing the status of each customer order is especially helpful when dealing with customer service calls. Order tracking can also allow you to analyze customer purchasing behaviors.
Be sure to monitor how a fulfillment provider processes your orders. Work closely with your fulfillment service to manage orders from all your sales channels. Above all, you need to be able to immediately spot issues such as insufficient stock levels or delayed shipments.
How well can you track supply levels?
Inventory management is the process of tracking your stocked goods. Ordering, storing, and restocking any products running low are all part of inventory management. Use a fulfillment solution with the ability to track inventory levels to avoid accidentally selling an out-of-stock product.
Successfully managing your inventory requires staying agile and stocking the right number of units your business needs. Too many, and you risk paying more storage costs or overstock fees. Too few, and you can run out of stock and miss out on sales revenue.
If you sell perishable items with a limited shelf life, or seasonal items with demand that changes with consumer trends, be sure your inventory management plan takes these variables into account. Your fulfillment solution should provide up-to-the-minute reporting on sales and inventory. It should also allow you to monitor your inventory status on demand.
Who will answer customer questions?
Every business needs a system for dealing with customer questions. Some fulfillment partners like FBA can take on customer service. Others don’t, so you’ll want to check into this when you evaluate fulfillment providers.
Do you want to outsource customer service or keep it in-house? Either method comes with a cost. A fulfillment service that also responds to order inquiries can free up you and your resources to focus on other matters. But some businesses prefer to build their own customer response team.
How convenient and affordable is your shipping?
Shipping time is among the top factors customers weigh when deciding whether to buy a product from you or one of your competitors. In a recent survey, nearly 84% of people
polled regarded shipping as an important part of their online shopping experience.
Shipping is an essential step in creating a good customer experience and staying profitable. A daily run to the post office may be feasible for smaller operations, but customer needs and expectations will likely change as your brand grows.
Fulfillment services typically have fast and affordable shipping rates due to the large volume of shipments they process. But every fulfillment service will offer different rates, and those rates may fluctuate based on product type, order location, and other variables.
Also, if you use a fulfillment service, consider the cost and time to deliver your inventory to a distribution center. Learn more about how businesses send and replenish inventory with Fulfillment by Amazon
Where will you store your products?
A sound storage system will ensure quick and easy access to products once customers place orders. The right solution likely involves a safe, temperature-controlled environment, with well-labeled shelves and bins for easy retrieval.
Proximity to customers is another factor when considering inventory storage. A distributed network of fulfillment centers can reduce shipping costs, if your customer base is geographically broad.
How will you process returns?
Every business with an ecommerce channel needs a way to process returns. Standard returns processing can help provide an easy way for customers to ship items back to your business premises or the fulfillment center with prepaid address labels. It should also incorporate a notification system to let customers know when they can expect replacements or refunds.
As part of the returns process, you may need to inspect items to ensure they are undamaged or unworn, restock products as necessary, and document or discard defective products. The ability to track returns and faulty items is also useful in product planning. Look at dissatisfied customers as one of the best ways to discover flaws in your manufacturing or product design.
Four ways to reduce returns
Ecommerce businesses can see a higher rate of returns in part because customers buy products without seeing the items in person. Here are a few simple measures you can take to limit returns and exchanges:
Do you need fulfillment software?
Small ecommerce businesses may handle the order fulfillment process with manual admin processes and organized spreadsheets. Larger operations will require sophisticated fulfillment software. Certain programs can benefit businesses of any size with tools for organization and fulfillment tracking.
Some fulfillment software solutions allow you to unite your ecommerce ordering system and automatically forward orders to fulfillment centers.
You will also need up-to-date inventory levels to restock products or offer discounts to offload stagnant inventory.
The Marketplace Appstore offers software to improve your ecommerce logistics
Applications from Amazon and third-party software providers that can help you automate pricing, manage inventory, conduct product research, improve customer response time, and more.
Do you want to sell internationally?
Ecommerce is a global activity. If you want to reach international customers, research special sales conditions
such as regulations, tariffs, and taxes. You will also need to build a process to ship your orders across the world reliably.
A fulfillment service will likely help with these complexities, but if you want to fulfill worldwide orders, check to ensure how your fulfillment provider manages international shipping.
For example, Amazon operates stores on multiple continents, and serves customers in more than 180 countries worldwide.
Does your fulfillment service offer distributed warehousing?
To shorten shipping times, you will want to find a way to store your products in a location as near as possible to both your store and the customers who will place orders with your business. For some sellers, this means using multiple fulfillment centers to ensure each order’s quickest delivery.
This fulfillment strategy is known as distributed inventory because you send merchandise to multiple locations. By dividing shipments and placing them with various distributors, you can shorten the delivery routes to all customers who place orders.
The FBA Inventory Placement Service
uses this method to get your products to customers as quickly as possible.
Can your fulfillment provider bundle products?
Making it easy for customers to select add-on items through your online store is a good way to increase your cart values. Your fulfillment process should anticipate what products are likely to be purchased together and prepare them in advance.
Common types of include pick and pack fulfillment and kitting assembly.
Pick and pack fulfillment
When an order is placed, warehouse workers select it from storage and prepare it for shipping. A reliable warehouse management system makes this process quick and efficient by pre-packing items that frequently ship together.
Kitting and assembly
For items sold in a set, like product samples or cosmetics, a fulfillment service that offers kitting and assembly could be important. In the kitting process, packing specialists pre-bundle products that arrive separately at the storage center into single units and assemble them for quick shipping. Kitting gives customers the flexibility to save money on items, which may increase your average order value.
Can your vendor provide subscription fulfillment?
Many businesses offer their products through a subscription service, a popular model that can come with logistical challenges.
Subscription boxes may include multiple items from different storage locations. You may pack the products yourself or outsource the process to a fulfillment service, where packing specialists will tackle this step. Either way, the presentation of the final product to the customer is important.
Not all distribution centers can process subscription products. If your business sells subscription packets, be sure to check this component before you decide on a vendor.
Grow your business with Amazon Subscription Boxes
Amazon Subscription Boxes enables qualified sellers to list, sell, and manage their subscription box products through a trusted Amazon experience.
What do fulfillment services cost?
Typical costs for a fulfillment service will vary based on your operations’ scale and complexity and your business’s nature.
Here are common types of fulfillment costs:
- General administrative expenses
- Product costs
- Larger items and products which require assembly or special handling might cost more to fulfill
- Some providers may charge for each shipment you send, no matter the size
- Receiving costs
- Some providers may charge per unit or on an hourly basis
- Other vendors charge per palette or unit
- Inventory storage costs
- Some products incur costs while they sit in a facility
- You can be charged for dead space if you don’t use all of your available storage space or fill palettes completely
- Pick and pack costs, also called fulfillment charges
- These are the costs incurred as fulfillment specialists pick, pack, and ship your items
- Kitting costs
- Special fees charged when items require light manufacturing or specific preparation at the distribution center, for example, subscription boxes or relabeled cases
Exact costs differ from one fulfillment provider to another, so be sure to research and understand the full cost of each option you’re considering.
Review Fulfillment by Amazon fees
to estimate the cost of FBA fulfillment services.