Fulfillment Service - Things a Buyer Should Know About their Fulfillment Service
Understand Turn around Times of a Fulfillment Service -
Before you choose a fulfillment service, understand the process for fulfilling an order from start to finish. Many fulfillment service companies vary in their turn around time. Many will charge more for faster turn around times, or will provide the customer an option to pay more for a faster turn around.
YOU CAN OUTSOURCE EVERY STEP OF PRODUCT FULFILLMENT SERVICE-
A fulfillment service can warehouse your products, manage your inventory, take your orders, process payments, package and mail your products, and even communicate with customers throughout the process. You can choose to outsource every step of the process, or keep some tasks internal such as order details, or have a virtual assistant handle the process.
What About Credit Card Processing? -
Ask how long it takes the funds to be put in your account after a credit card is authorized. This can range from 1-30+ days which can have a huge impact on your cash flow. There are different rates depending on your type of business. For example, a retail business with signatures will have lower rates than a phone order, because there is less risk of a dispute. If you are a newer company or have lower credit, your fulfillment service may set a maximum monthly charge to reduce their risk of a high dispute rate. You can get past this by placing a bond with the fulfillment service company.
The Warehouse Maters -
Assume that weather can be very hot, like in Arizona or very cold, like Alaska or humid, like Florida. If you have a product that needs climate control, ask about the options your fulfillment service can provide such as chilled or climate controlled ware houses. If you are shipping perishable items or say, chocolate, the last thing you want is your product sitting in a non-temp controlled warehouse in Arizona in the middle of summer. Shipping is also important. Will you need a lift gate to lower pallets, do you have oversized products or products that need to be shipped with dry ice? Make sure to communicate your delivery sizes and walk through the loading and unloading process with your fulfillment service and any special treatment you product may require.
Shipping with a Fulfillment Service -
Shipping can be very expensive if it’s not optimized. Fulfillment service centers ship in large quantities, so they are likely to have pre-negotiated discounts. Find out where fulfillment service and shipping centers will be located to see if they are close to your customers. Ask what shipping rates they can get for you and then try to negotiate your own deal. Shipping can be negotiated at high volumes and you never know which fulfillment service can get a better price.
Insurance -
Discuss and document with your fulfillment service who is responsible if something happens to your product while they are managing it. Ideally, you want your fulfillment service to be responsible, AND you want your insurance to cover it as well.
Contract terms -
Most fulfillment service companies will want to lock you into a longer term contract. This is not bad if everything works out, but you may want to include a termination clause if they are not performing up to the standards you agree to. However, there are some smaller companies, such as Best West Direct in Phoenix, AZ that you may want to go with, who can provide service with out a long-term contract.
Communication and Customer Service -
Communication and Customer Service -
More pro-active communication with customers on the fulfillment end will typically lead to less time and money spent answering customer questions. Build automated customer communication and order tracking services into your process with the help of your fulfillment service in order to keep customers informed. Talk to each company’s references to test the quality of their work. Are they on time? How many complaints do they receive each month? How easy are they to communicate with? Chances are if it is easy for you to communicate with your fulfillment service, it is easy for your customers to communicate with them as well. Set metrics to measure your fulfillment service’s performance and hold them to those standards.
Fulfillment Service Fees -
Expect to have a contract with multiple types of fees built in. Set-up fees, processing fees, return fees, storage fees, credit card processing fees, assembly fees, etc. Fulfillment service centers will want to be compensated based on their costs, so expect any extra service that costs them money, to cost you money. Make sure to receive detailed estimates before you start, and a detailed invoice after so everyone’s expectations are in line.
Cash Flow -
When you start doing business with a fulfillment service company, you will want to pay them after you get paid, especially if your credit card orders take several weeks to process. On the other hand, they will most likely want to be paid sooner. If you can’t negotiate ideal payment terms in the beginning, it is reasonable to build in a structure with more favorable terms over a period of time, once a credit history has been established.
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