How much of your company’s budget is devoted to order fulfillment? Are you comfortable with that amount?
Order fulfillment is probably the surest and most telling indicator of a company’s health. Companies that are prospering experience fulfillment problems largely as a manifestation of their growing pains. On the other hand, companies that are hurting or that need improvement to their business model can indentify problems with fulfillment as the first serious symptom of trouble. In other words, home based and ecommerce business companies can expect to encounter fulfillment and logistics management issues no matter their degree of health.
At some point in the ecommerce business’ lifespan, the time will come in which a decision must be made: whether to outsource its order fulfillment, mail order fulfillment, and distribution fulfillment to a third party product fulfillment company. The advantages to making the switch are numerous, but business owners owe it to themselves to practice due diligence when selecting an order fulfillment house.
How Fulfillment Outsourcing Works
The third party fulfillment service company typically deducts a percentage of every product warehoused, process, shipped, and tracked on behalf of its client ecommerce or home-based company. This percentage is sometimes negotiable in the preliminary partnership agreement. However, that agreement is legally binding and must be obeyed and agreed upon by both the fulfillment service company and the client business.
This percentage is also sometimes flexible. The fulfillment service company may offer a lower percentage to a potential client company as an incentive to enlist its services. Later, as the client company grows and prospers, the percentage may be adjusted to a higher rate of service. These plans and incentives typically vary from company to company.
Making An Informed Selection
Small business owners wishing to outsource their logistics management, warehousing, and other fulfillment needs to a fulfillment service company should commit to as much research as possible, for their own sake as well as for the sake of the business. Using a third-party fulfillment service company requires a certain amount of trust, and for issues of peace of mind the business owner must remain confident they are making the right decision in their choice.
Business owners are encouraged to visit small business chat rooms, forums, and message boards when researching their potential fulfillment service company choice. They should ask for references, both from the fulfillment service company itself and from colleagues and fellow business owners.