If you sell online you’ll appreciate that as your business grows, a greater proportion of your time or that of your employees, may be spent on fulfillment and packing orders.
This can prove time consuming and therefore at some point, you may seek to explore alternatives.
This in itself can make sound business sense as the time spent on fulfillment could be better deployed in profit generating areas such business development and innovation for example however, in some cases outsourcing may be a false economy; so we’ve pulled together our top 10 considerations which we hope will act as a reference should you wish to go down this route
There are many considerations, so this is by no means exhaustive and we are happy to hear your experiences too.
1.How Easy Are Your Products To Compile, Pick and Pack?
Picking and packing a t-shirt is a lot simpler than having to pull together 15 different small components to make a card making kit for example.
The more complex your product the greater the margin for error, which may lead to the wrong items being dispatched and the resultant customer service issues. Prior to considering fulfillment you may want to do your own assessment as to how long it takes you to get orders ready and rank the products by time taken and number of components.
This may then assist you in either simplifying your product structures or influence whether you outsource at all. If you do decide to proceed with outsourcing these products, bear in mind the associated training and guidance that will need to be provided to the agency teams along with the possible cost implications especially if charged to pick and pack each component.
2. What Level Of Personalisation Do You Require?
Personalisation has become increasingly relevant in order for brands to stand out so if your items require that extra special touch such as a handwritten note or a bespoke element, then a fulfillment agency may either not be able to accommodate your requests or charge you to the extent that it becomes non viable. With the exception of a few specialist centres, the outsourced model works best with standardized, easy to fulfill items so bear this in mind.
3. Has The Fulfilment House Worked Successfully With Craft Businesses Before?
Many fulfillment houses work well with large, simple items however the craft and hobby business can be more complex; requiring a much higher level of understanding and appreciation. For example a small area of a warehouse can hold many thousands of items for example small buttons with slight variations on each. If one bag is misplaced it can take weeks, months or years to find so attention to detail is key.
Working with a company that has already developed processes for managing small components will reap dividends as the learning curve for one who has not, may prove too steep.
From labeling every bag so that items can be identified, especially in the event of returns, to an appreciation that the end user is likely to need the product to form something else, are all things that an experienced fulfillment house will have learned. Sadly the craft sector is not always a profitable operation for many fulfillment companies so you may have a short, shortlist to work from.
4. Is There A Shared Cultural Fit Between Your Company And The Fulfillment House?
Most fulfillment companies whether large or small will assure you that they can manage most businesses of varying sizes. However you may wish to look deeper to establish what their values are in relation to your own. Will they deal with any queries you have quickly and courteously or see your call as an interruption to their day?
Do they adopt a philosophy of continuously seeking to improve or just accept that errors are inevitable? Think about your own values, what are the deal breakers and must haves and use this as part of your selection criteria.
Fulfillment is the ultimate “moment of truth” for your customers so any company has to be an extension of your own. Speaking to referees is also a good idea, however, try to ensure that they are similar businesses to your own and aim to assess at least 3 who have been with the company at least 2 years.
5. Do Staff Have Good Attention To Detail and Are They Rewarded Accordingly?
Fulfillment, even with the advent of technology is not an overly complex operation. In essence it involves someone reading an order, going to the location the order is based at, selecting it, preparing it for dispatch, and issuing it within a set timescale.
But at every one of those stages there is an opportunity for error if the individual concerned does not have, or is not incentivized to evidence, good attention to detail. There is no substitute for a real life test, however, some questions you may want to ask prospective fulfillment houses are;
“How are staff recruited?
“What tests are taken to establish their accuracy and attention to detail prior to employment?”
“What are the levels of staff turnover over the last 2 years and why did they leave?”
“Will there be a dedicated team working on my products?”
“ Will I be able to train and communicate directly with them?”
“ What rewards are provided when staff do well?”
“What remedies are offered when staff make mistakes?”
“ Will I be compensated if items are incorrectly picked and issued?”
You may also want to add a performance measure into a contract that stipulates that if customer complaints or errors are above a certain level, you are recompensed or can exit the contract with no penalties.
6. Are they Supportive and Receptive To Your Innovation And Changes?
Business is driven by change, so you may want to ensure that if you decide to change your product range, that you’ll be able to do so quickly and easily. We know of an instance where a fulfillment house tried to charge a craft business owner for retrieving their own discontinued stock, so make sure it is a term of any contract that you can inspect and access your goods at any time and that title always remains with you.
7) How Quickly Do They Process New Deliveries?
Whether you’re are trading off or on line you’ll appreciate the risks of running out of stock. In some cases there may be a time lag between stock issued to a fulfillment house and their readiness in receiving and processing it. We have heard of fulfillment companies taking up to 4 days to register new deliveries on a system which could lose you valuable sales whilst items are shown as out of stock.
8) How Do They Cope With Peaks In Demand?
It’s easy to sometimes assume that companies dedicated to a particular field will do a better job than you can, however, this all depends on how good they are at contingency planning. We all know that Christmas is a busy time, but you may want to explore how a prospective company would handle unexpected peaks; for example if you received press attention and orders increased by 700%? To this end you may want to incorporate a minimum service level agreement that sees a percentage of orders cleared each day.
Make sure you also understand the growth plans and strategies of the fulfillment company and are kept informed about new clients and developments so you can monitor if there are any resultant impacts on your business. Most businesses, your own included, need new clients to survive but your job is to make sure they maintain a focus on existing ones too.
9) Is It Truly Cost Effective?
This is an area where we would advise you spend a considerable amount of time. There are many cost implications of outsourcing that you need to consider which may include set up costs, pick and pack costs per item, costs if an item is considered to be a kit, labeling, postage, returns, storage and admin to name but a few.
You should also make an allowance for breakages and losses and you may require additional insurance in the event that the warehouse where your stock is stored, is subject to a break in. In some cases all costs will still be cheaper than having a direct employee but not always, especially if you see costs rise in other areas such as customer service.
The most cost effective operation is where products are sourced from a 3rd party, already labelled and sent directly to the fulfillment house without your interaction. This does not always apply to craft businesses, particularly if you manufacturer or add value in some way yourself.
10) So Is It Worth It?
The answer to this depends on what your objectives are. We advise that you set realistic goals and do extensive research before you sign any contract. The old adage if it looks too good to be true it usually is, applies here just like anywhere else so don’t be swayed by impressive technology or fancy testimonials – this is an operation where core skills such as common sense, attention to detail and a focus on continuous improvement are more important than the latest software.
You may want to set goals around the time you’d like to save, the cost benefits you’d like to realise and the customer service ratings you would expect; all linked to a check point of say 3 or 6 months after implementation, and make sure you have access to the data that allows you to assess the results!
If you’re used to spending hours in a post office queue everyday, imagine the time savings along with the benefits of being able to go on holiday and have your entire end to operation run by itself. For many this is a reality and outsourced fulfillment is a dream come true. For the craft business owner, a greater level of due diligence is required due to both the nature of the products and their relative importance to the end user.
Managed carefully, fulfillment can be a vital extension of your business but it has to built on a solid, co-operative framework with a partner that fully understands and appreciates the unique nuances of the craft sector.
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