Published July 2005

Filling orders the easy way

Dear BizBest: We're a small, four-person firm that sells products by phone, mail order or online. As business picks up (thankfully!), I'm spending more time on order fulfillment — packing, shipping and tracking — but less on building the business. I'm told an outside order fulfillment service can help. Can it? — Unfulfilled

Dear Unfulfilled: When it comes to shipping and fulfillment solutions for small business, it is definitely NOT one size fits all. Key variables include the type, weight, size and destination of the items you ship, along with customer needs and expectations.

Don't take fulfillment lightly. It is often the final touch-point with your customer, and poorly packaged items or slow, botched or overly pricey shipping can be a real turnoff. You don't want to make a bad final impression and risk losing future sales to the same customer.

Outsourcing fulfillment can be a big time saver. Your products, labels, barcodes and other unique packaging can be stored in the fulfillment company's facilities. Then, when orders are placed — either through you and your Web site, or perhaps direct to the service — the fulfillment firm can pack and ship the items and perhaps handle customer service and returns as well. Keep a close eye on the costs.

Using outside fulfillment adds an expense you may not have factored into your budget. But you also should consider the costs you are avoiding by using them, such as storage space, payroll and your own time.

If you charge customers for shipping and handling, you may be able to recover all or a portion of it. Aim to break even on the shipping cost side. Some small companies try to make a profit on shipping, but risk alienating customers who are savvy about shipping costs.

List shipping and handling costs separately from the cost of the goods, and calculate the charge by weight, not the cost of the merchandise. Both steps will garner greater appreciation from customers.

Make sure what the fulfillment firm offers is aligned with your needs. Here are some keys to outside fulfillment success:

• Volume and commitment. If your shipping needs are tiny, outsourcing fulfillment won't make sense. This works best for businesses that have an existing order flow and a commitment to ongoing marketing.
• Good support. The fulfillment house you select should have the capacity to support both you and your customers. If you have "back office" questions involving your products, someone should be readily available to answer them. Plus, customers should be able to get information on order status easily.
• Internet savvy. Using an outside fulfillment service works best if both you and your business are Web savvy. Orders via your Web site, for example, can be routed directly to the fulfillment center. And you can track and manage your inventory, order history and other details through an online account. Orders also can be sent by e-mail or in an order spreadsheet. These features are part of what makes it so appealing.
• Good communication. Look for a sales consultant willing to educate you on the finer points of fulfillment. Get written cost estimates up front and familiarize yourself with industry practices.
• Capacity and restrictions. Ask about minimum and maximum order quantities, error rates and any restrictions on the types of products they will ship. Some, for example, only ship via UPS and the Postal Service and don't handle oversize items. If you have branded packaging, find out if they will use it.
• Reporting and tracking. Find out what information will be available to you and when.

Here's where to find additional help on fulfillment outsourcing solutions:

• The Mailing and Fulfillment Service Association, a professional organization for mailing and fulfillment companies, offers a search feature on its Web site that can help you locate a fulfillment house that's right for you. It also offers helpful advice on how to find and work with a fulfillment service company. Visit www.mfsanet.org or call 800-333-6272.
• While there are hundreds of shipping and fulfillment services nationwide, a few to consider include UPS (www.ups.com), iFulFill (www.ifulfill.com), Intershipper (www.intershipper.com) and Turnaround (www.weship4you.com).

Daniel Kehrer (dan@bizbest.com) is founder of BizBest (www.bizbest.com), which publishes "The 100 Best Resources for Small Business."

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