A company selling products to consumers via telephone, television, mail, and Web sites often outsource for fulfillment services. A fulfillment provider's services may encompass several or all of the steps necessary to fulfill a customer's order from beginning to end.
Fulfillment processes include taking orders, housing products, locating products on shelves, packing products, and shipping products to customers.
Other services that may not readily come to mind which fulfillment providers employ are credit card processing, reordering of products, sending email order confirmations, etc.
Depending on the size of their venture, companies will look to fulfillment services to handle all of the pertinent processes, or perform some services in-house while outsourcing for others.
Individual Fulfillment Services
Order processing: The provider will field the order from the customers whether it is ordered by phone, mail, or Web site.
Return processing: Returns often occur; fulfillment providers can handle returned, exchanged, or damaged items.
Storage: Smaller companies need a place to store their products and fulfillment houses handle this need.
Credit Card processing: Many customers pay for products via credit, and fulfillment services can process these payments for other companies.
Assembly: Some products require assembly before shipping. This is service provided by fulfillment providers. Fees are contingent on the complexity of the process.
Inbound calls: Some fulfillment providers handle inbound phone calls to take orders, handle inquiries, and to address other customer concerns.
Contract packaging: Certain products need specialized packaging. Fulfillment providers provide this service per company specification.
Rebates/Sweepstakes: Companies will often present rebates to customers or engage in sweepstakes to garner interest. Fulfillment providers can handle the processes necessary to engage in such endeavors.
Benefits of Fulfillment Outsourcing
- Outsourcing affords a business the ability to focus on other areas of their business. Running their business this way affords the company time to focus upon other, day-to-day processes of business.
- Outsourcing relieves a company of the concern related to staffing. The fulfillment service handles the assessment of staffing in relation to slow and peak sales times rather than the business having to address the issue.
- Outsourcing promotes controlled costs. Having outsourced the necessary processes, a business can better ascertain how much fulfillment-related processes will cost them.
- Housing products becomes a big concern. Fulfillment houses relieve the problem by keeping your products in their warehouses.
Selecting a Fulfillment Provider
Cogitate on what services you would like the fulfillment providers to handle. Certain providers handle some to all of the previously discussed steps in the fulfillment process. Most steps have individual charges, so it is necessary for a business to premeditate as to what services will be done by them, and what processes will be adopted by the fulfillment service.
Ask a potential provider for references. It is wise to search for a provider which has had success with a business in your industry. When speaking with the references, inquire about any negative episodes related to the provider and how the provider addressed and rectified them.
Think about the geographic location of the provider. While some companies may find it comforting to work with a fulfillment provider close to them, it may be wise to look to the middle of the country in regards to shipping costs; it will cost the same to ship to both coasts as well as northern and southern extremes within the country.
Depending on the nature of your product, certain seasons may warrant more or less manpower. Be sure to relay any pertinent information to the provider as to when you will expect high and low demands of your product and ask them how they plan to handle those situations.
Before signing on any contract, be sure to understand all fees and exactly how the fulfillment provider will service your company and your products.
Fees Associated with the Fulfillment Process
Set-up fees: Fulfillment providers charge set-up fees in order to prepare them to adopt your business and prepare their systems for your products. The volume and complexity of your account will determine the high or low cost of the initial, set-up fee.
Order processing fees: Processing fees may be applied according to each parcel ordered or the volume of orders in a certain period of time (week, month). Sometimes boxing and shipping material fees are applied extra.
Order processing minimums: Some fulfillment providers will establish processing minimums. Providers that work with well-established companies may instate a processing minimum for start-up companies, so even if you are not getting orders, you will be paying fulfillment fees.
Return processing fees: Some providers will charge an extra fee for addressing returned items. Find out how the provider handles these situations; especially in reference to items that customers acquire after the return.
Storage fees: The amount of space your products require will reflect on your provider's storage fee. Some providers charge per cubic foot, per pallet, or by some other method of measurement.
Credit Card transaction fees: Some providers will handle credit transactions in exchange for a certain percentage of the total transaction.
Reception of merchandise fees: Some providers will charge to check for broken boxes, amount of merchandise, and to track shipments.
E-commerce/Shopping Cart service fees: A company may opt to run their own shopping cart from their Web site or use the fulfillment provider's e-commerce solution. Many companies choose to use the fulfillment service's programs so the provider can acquire orders quickly without error in translation.
Assembly fees: Fulfillment providers will assemble your products based on an individual or hourly fee. Providers also monitor and order parts and components so you are never out of stock.
Inbound call center fees: Fulfillment services can field phone calls so your company will not have to do this in-house. Charges can be applied per-minute or per-call.
Growth capacity fees: Some fulfillment houses will charge additional fees if your company grows at a rapid pace leaving them scrambling to accommodate your needs.
Minimum contract period: Some fulfillment providers may attempt to lock you into a six-month or one-year contract. This is not a wise decision if you have not worked with the provider before, even if they have good references, they may not foster a good relationship with your business.
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