Choosing fulfillment and warehousing services is a huge decision that no company takes lightly. Deciding to outsource a complete aspect of operations is a difficult choice to make, and it's an impossible one without the proper research.
Fulfillment is the broad area of service that starts at product manufacturing and generally ends when the product is in the hands of the consumer. There are many steps in the process, including storage and shipping of the product, either individually or in bulk.
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3rd Party Fulfillment is generally completed by a fulfillment house. This house delivers items or products a person has ordered from a company to them, as requested by the organization. These companies will store your company’s items, receive the orders and ship the packages. Items can be anything from perishable to non-perishable. Chemicals can also be stored by the 3rd party fulfillment company. Each facility is different, so when choosing, you’ll need to make sure they support your items.
The benefit of the 3rd party fulfillment company is that they will take care of the shipping and packaging for you. Shipping is generally completed by another courier service, such as USPS or DHL. There are a few benefits to using a 3rd party fulfillment company.
• You don’t have to deal with customer orders
• You don’t have to package your items
• You don’t have to ship your items
• Lower shipping costs
• Lower shipping material cost
Companies that fulfill orders have workers called “pickers” who complete customer orders. These workers find the item in storage to prepare it for packaging and shipping. A “packer” is another employee that is in charge of packing the order and making sure all items are present from the order. From here, the item will be shipped.
Lower shipping material costs and lower shipping costs come from the company being able to ship in bulk. Some companies make it possible to negotiate for flat-rate shipping, so you pay one cost, no matter what the weight of a product is.
Although these 3rd party fulfillment companies are helpful, they do have some disadvantages.
• Less control.
• Product damage/loss.
Fulfillment companies give you less control of the order you’re sending to your customer. Sometimes, you may not see the order, especially if it is done through an automated system. If there are errors, such as poor handling times or procedures, as well as problems with the shipping process, the company is not likely to receive the bad reputation. You will.
Product loss is another issue with 3rd party fulfillment companies. They are not generally held accountable for product loss that occurs due to shipping or product damage that they aren’t directly accountable for. It’s important to make sure the company accounts for each piece they hold, so that they will be more accurate and will be held accountable for product loss from damage.
3rd party fulfillment houses have various costs. However, you will generally only pay per item or per order. Pricing is based on a number of things, including the following.
• Processing credit/debit
• Managing returns
• International document preparation for shipment
• Client reports
• Inspection for returns
• Chargeback response
• Customer database updates
• Customer credits
• Bank deposits
• Customer service
• E-mail customer service
• Processing fees
When you look for a company, you may want to use bundled pricing if it is offered. This would be pricing per order, instead of per item. Per item can cost more, as the fee applies no matter how many things are shipped to the same location.
In conclusion, a 3rd party fulfillment company can be of benefit to your company if you have many things to ship and you have many orders coming in. They will take care of the storage of the product, the packaging of the product, and the shipping. The company can be beneficial to you if you’re looking for flat-rate fees for shipping and bulk rates. Simple per-order costs and per-item costs can help you keep your items selling and your profits rising.
However, like any business, the 3rd party fulfillment companies can have their disadvantages. You’ll have less control of what ships out to your customer. You won’t be able to make sure every item is packed nicely or that every order goes out on time. This can put your company’s reputation at risk. Damaged goods and poorly packaged items can come out of the profits of your company. Many of these 3rd party fulfillment companies won’t take responsibility for loss or damage, so you’re leaving your goods in their hands with a good deal of trust.
Payment to a 3rd party fulfillment company can vary dramatically, and is impossible to quote due to the way they ship. To find out what costs they will charge you, you’ll need to call them and ask about what fees for processing and customer service, as well as other factors, they charge. Each company will vary because some charge per item or per order. This will make a difference in how your business pays out for services, so it’s an important factor to look at. If multiple items are going to the same place, you may want to look for a flat-rate service, to save on mailing weight.
One of the most important aspects of retail and wholesale business is ensuring your products are properly stored and shipped to your clients. It doesn't matter if you are shipping retail centers and stores, directly to the clients, or a combination of both, it is imperative for your company's reputation that client orders are shipped on time and accurately. For many companies, the use of 3rd party fulfillment has been incredibly useful in ensuring those needs are met. There are many advantages to using this type of system and many companies find the process saves a great deal of money and is convenient to their needs.
A 3rd party fulfillment agreement involves a wholesale or manufacturing company making an agreement with a 3rd party warehouse and distribution center. The center agrees to store and distribute the wholesale company's products for competitive price. In return, the distribution center is responsible for all aspects of the warehousing and shipping including order picking and accuracy as well as speedy, reliable delivery. Of course, most of these agreements can be customized to meet the specific needs of the hiring company, as well as the company's clients.
More information is available from the resources listed by Business.com.
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