How to Choose The Right Fulfillment Service for eCommerce
The success of an eCommerce venture is directly tied to its fulfillment services – as fulfillment is a fundamental part of running a smooth online operation. Fulfillment services are the core of online retail, as they play a critical role in bridging the gap between a prospective customer’s virtual cart and their doorstep. The right fulfillment center will make the shipment and delivery of goods a seamless process – which, in turn, will lead to improved customer retention, and a better business.
That being said, the eCommerce logistics landscape can be tough to navigate, and there is immense pressure to meet (and exceed) high customer expectations, provide fast and efficient shipping services, and manage inventory effectively. Because of these inevitable challenges associated with running a digital marketplace, choosing a strong fulfillment services company to partner with is of the utmost importance.
There are countless shipping and fulfillment services out there, which is why we’ve compiled this simple guide to help you navigate the logistics scene, and determine the best partner for you.
The Benefits of Using a Fulfillment Service
As an eCommerce business owner, the advantages of partnering with a strong fulfillment service provider are multifold. Above all, though, optimizing your company’s logistics will undeniably lead to increased efficiency and growth.
While you’ll need to make an initial investment to hire a fulfillment service, partnering with a logistics company will ultimately save you valuable time and money in the long run. By outsourcing tasks like order processing, packaging and shipping, eCommerce owners can focus on core operations – including marketing and product development. Moreover, using a fulfillment service means you can forgo the costs associated with independently managing logistics – which requires a warehouse or storage space, packaging materials, plus personnel to manage the complex logistics systems and operations.
Not to mention, given that fulfillment centers typically have several clients, they receive better rates with carriers than individual companies. As such, shipping is cheaper – and faster, too. Logistics companies have warehouses that are strategically located, which enables quicker delivery to consumers.
Most fulfillment centers are a one-stop-shop for all things logistics. They come with a wealth of knowledge and logistics expertise. Staff are adept at managing inventory, optimizing shipping routes and handling unforeseen challenges – which can naturally be overwhelming for eCommerce entrepreneurs who aren’t necessarily familiar with the shipping space. Outsourcing fulfillment ensures that the supply chain runs smoothly, gaurenteeing reduced errors and increased customer satisfaction.
In all, using fulfillment services offers an array of benefits to eCommerce owners, including that it saves them time and money, and offers a superior consumer experience.
Understanding Different eCommerce Fulfillment Models
There are three central eCommerce fulfillment models, including self-fulfillment, dropshipping and third-party fulfillment. We’ve outlined all three so you can get a better understanding of the logistics landscape, and determine the right path forward for your company.
Self-Fulfillment
Self-fulfillment – also known as in-house fulfillment – is the practice of independently managing your eCommerce businesses’ fulfillment processes. It can be a good starting point for small businesses shipping a relatively low number of orders, as it offers business owners a high degree of control over their operations. Particularly in the early phases of a business, it can be helpful for company leaders to have a solid understanding of inventory management, quality assurance and customer interactions. Having this level of control enables businesses to tailor their processes to the needs of their customers.
On the flip side, though, the responsibility associated with self-fulfillment can become taxing, especially as a business grows. Managing every aspect of the supply chain demands a lot of time and resources, and during periods of rapid growth, it’s difficult to give logistics the attention it deserves.
As mentioned above, self-fulfillment can be more costly in the long run, as fulfillment centers typically leverage economies of scale and are able to negotiate more favorable rates with carriers. In short, self-fulfillment can be operationally intensive and expensive – but serves a purpose when a company is just starting out.
Dropshipping
Simply put, dropshipping is a business model in which the seller of the goods takes customer orders without holding any physical inventory. A separate company holds the products, and ships them straight to the consumer. It’s a more streamlined approach to eCommerce, as the business owner doesn’t need to deal with any logistics head-on.
Dropshipping has risen in popularity in recent years – and for good reason. It’s a unique model that allows entrepreneurs to acquire retail partners with their own supplier or manufacturer that deals with storage, picking and packing and shipping of the products.
Perhaps the most salient benefit of dropshipping is that it requires minimal upfront investment, since there’s no need to purchase or stock inventory. This significantly lessens the risks usually inherent in starting an eCommerce business. Additionally, dropshipping also allows for more flexibility, as business owners are able to test a wide range of products without committing to stock. In order to run a dropshipping operation, all that’s needed is an internet connection – meaning entrepreneurs can run their businesses from anywhere.
Despite its many benefits, though, dropshipping does have its drawbacks. For one, it typically has lower profit margins, as business owners will need to pay wholesaler’s fees and shipping costs. Quality control is another obstacle, as business owners can have limited oversight, which can lead to customer dissatisfaction.
Additionally, the dropshipping market has become increasingly saturated, which makes it more difficult for entrepreneurs to stand out.
Third-Party Fulfillment
The final fulfillment model is third-party fulfillment, which refers to the practice of outsourcing logistics processes to a separate fulfillment company. Many of the broad benefits of using third-party fulfillment services – such as Amazon FBA (fulfilled by Amazon) – have been outlined above.
More specifically, though, third-party fulfillment services allow for enhanced scalability, expertise and efficiency, as well as greater customer retention. Unlike small businesses, third-party fulfillment companies often have access to the latest and greatest technological advancements and logistics software, which enables staff to fulfill orders faster and more effectively. In all, outsourcing logistics services will save most companies money (and time, which is also important!) in the long run.
How to Choose the Right Fulfillment Service
Not all fulfillment service providers are created equal – and choosing one can be challenging. It’s important to consider various factors, including industry experience, pricing, location, services offered, customer support, technology, data and analytics capabilities, and scalability. Let’s go over what each of those things means.
Industry experience: The needs of every eCommerce business are different, and when selecting a fulfillment service, it’s crucial to understand whether the logistics provider has experience working in your specific industry. For instance, if you run a makeup company, it would be best to choose a fulfillment service that has experience in the beauty industry – which will allow them to understand the unique challenges your company might face.
Pricing: Of course, evaluating your provider’s pricing model – and comparing it with others – is paramount when choosing the right fulfillment service for your eCommerce company. Before committing to one, make sure you understand the storage fees, order fulfillment costs, as well as any additional charges you should expect to face.
Location: Depending on where the majority of your clients are situated, it’s important to choose a logistics provider with strategically located fulfillment centers. Proximity plays a big role in shipping times and costs, so keep that in mind when making your pick for a logistics provider.
Services offered: Many fulfillment companies offer a suite of services – while others don’t have the same variety. Consider the needs of your eCommerce company (and how those needs could ultimately evolve over time), and make sure your fulfillment service provider offers a comprehensive solution. Some must-have services include: order processing, packaging, shipping and returns management.
Customer support: Given that you’ll be outsourcing your logistics operations, knowing that your fulfillment service provider is accessible is a must. We recommend reading company reviews to ensure the provider has strong customer support and customer service capabilities. If a problem pops up, you want to be able to depend on them to solve it swiftly.
Technology integration: Your fulfillment provider should have top-of-the-line technology that makes it a cut above its competition. This will ensure your eCommerce platforms seamlessly integrates with the logistics side of your business, and your customers have real-time tracking options.
Data and analytics capabilities: Data is a huge decision driver in the world of eCommerce, and understanding the numbers behind your business will help you grow. Choosing a fulfillment service provider with robust data and analytics capabilities will help you understand the needs of your customer base better, thereby informing strategic decisions and optimizations.
Scalability: When selecting the right fulfillment service provider for your eCommerce company, keep the future in mind. If your goal is growth (and it should be!), consider the provider’s ability to scale operations alongside your business. Having a flexible and scalable fulfillment service provider will ensure that any fluctuations in your company’s logistics needs can be accommodated.
Top Fulfillment Providers
When comparing Stalco with other top fulfillment providers – including ShipBob, ShipWire and RedStag – it’s clear that we offer a number of unique benefits and advantages to our clients. For one, Stalco is unbelievably flexible and adaptive, and our customer support is unparalleled. We offer same-day order fulfillment, and we eliminate all of your duty-related costs. Not to mention, we have the lowest shipping rates – guarantee. Stalco is a Health Canada Site Licensed facility for storage, shipping and labeling, and we specialize in pick’n Pack services, as well as inventory management and returns processing. Plus, you can save up to 40% on your product costs using our free Duty Drawback service. If that sounds interesting to you, we urge you to request a free quote on our website today!
Steps to Choosing Your Fulfillment Partner
If you’ve made it this far in the article, you should have a solid sense of how to choose the right fulfillment partner. In summary, it begins by assessing your own business needs. Once you have a robust understanding of the logistics your company needs to thrive, then you can compare providers – focusing specifically on factors such as industry experience, scalability, pricing and customer support. Don’t be afraid to ask questions; the more information you have about each fulfillment company you are considering, the more likely you are to make the right selection for you and your eCommerce company.
Conclusion
As an eCommerce business owner, navigating the logistics landscape – and choosing the right fulfillment service provider – is essential to business success. The importance of this decision can’t be overstated – so choose wisely!
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