What to look for in a Fulfillment Center?
Picking a fulfillment center can be difficult but it’s important to spend some time and do your research. Luckily, there’s a lot of options and you’re bound to find one that fits your requirements. There’s a lot of factors to consider but I think the biggest one is the fulfillment center’s proximity to your customers. It’s important to get orders to customers in time. You also have to consider the customization options the fulfillment center offers. Every business is different and you’ll probably have your own needs as well. We also can’t forget pricing. The cost you’re paying for fulfillment needs to be worth it and justified.
In this article, you’ll find a lot of things you should look for when searching for the right fulfillment center. It will be difficult to find one that has each and every thing but I doubt there’s a business that will need every feature either. Check it out:
Proximity to Customers
If you are a business located in Canada but your customers are in the states, it’s probably a good idea to look for a fulfillment center in the states. It’s a good idea because:
- Cheaper shipping
- Your customers will get their products faster
- Customers won’t have to pay duties/tariffs.
Fulfillment centers usually have multiple locations too. If you’re a business located in New York but your clientele is in California, you may want to look at options on the west coast.
Worldwide / International Shipping
Most fulfillment centers only ship within their specific country. Some fulfillment centers can ship everywhere in the world. If everything else was identical, I would go with the one that can also ship international. With this, you have the option of expanding into new markets without having to double down on inventory costs. Selling internationally can add a lot of new orders to your business.
Most fulfillment centers have integrations that will connect to the main online marketplaces like Amazon, eBay etc. They will also integrate with your online store whether it’s WooCommerce, Shopify, Magento etc.
You want to make sure the fulfillment center connects to your specific store or marketplace. If you don’t see it on their website, you can always call or email them to make sure. It’s a crazy space. Certain fulfillment businesses will only work within certain marketplaces. Others will do custom integrations with each and every one of their clients.
Nobody likes initiation fees. They’re annoying. Sometimes they’re necessary depending on how deep the level of integration is with the fulfillment center. It’s very possible your integration requires a lot of extra work on the fulfillment center’s side. There’s other times where fulfillment centers try to cover their marketing costs with initiation fees and that I’m not a big fan of.
I’m not saying you shouldn’t pay for this but it’s important to know what you’re paying for.
This is a big problem in the fulfillment industry. Most fulfillment centers have a cap on how many unique SKUs (items) they will store from an individual business. Some cap at 50, some cap at 500. There’s very few that don’t have a cap.
The reason they do this is because ideally they want items that sell a lot. They might be charging high pick & pack fees and they make more money if your product sells more.
The more products you have, the more space it will take up and that means the more time the pickers have to spend to prepare the order. If the fulfillment center offers cheap storage, they probably don’t want products sitting at their warehouse that don’t sell.
What matters for you as the seller is that the fulfillment center doesn’t discriminate. I think the job of a fulfillment center is to help businesses compete with the big players.
Not everyone sells on marketplaces or online stores. It could be that your customers place orders through an online form. In this case, you will need the option to create manual orders with the fulfillment center you are using.
There’s probably times where you need to send replacement orders to customers. Having the ability to create manual orders is essential. There should be an option to either create orders manually or by uploading spreadsheets.
I think this is one of the most important things to have in a fulfillment center. To me, this means they are giving you a high level of control (which is really important in your position)
A fulfillment center can have all the offerings you want but ultimately it comes down to the cost. If a fulfillment center is not affordable for you, you can’t move forward. Most fulfillment centers are transparent about their pricing. You can check out their website and find how much they charge for services. Generally, fulfillment centers will charge you for the following:
Picking & Packing
Based on your order volume, pricing will vary. You can quickly estimate how much a fulfillment center will cost you per order based on your order volume. You can then compare pricing across fulfillment centers that meet your needs to see who offers the best pricing. It doesn’t always come down to pricing because most fulfillment centers will be in similar range but it is important to consider when making the decision.
Most fulfillment centers do a good job with this. They have published prices on their website for the services they charge. I think this saves both parties a lot of time. As the seller, it’s annoying to fill out all your information online just to get a quote you’re not happy with. It’s also a great feeling knowing you’re paying the same as everyone else.
Extra Services / Customization Options
This one is key. Your business is different from other businesses which means your products need to go out a certain way. Perhaps you’re selling items that are big, heavy, fragile or all of the above. You’d need a fulfillment center that can support these kinds of products.
I know there’s fulfillment centers that won’t deal with certain kinds of products such as Food Products or Batteries etc. This doesn’t mean that nobody will. There are even fulfillment centers built specifically around “Temperate Controller Products” or Lab Products. It’s a cool industry and you’ll find what you’re looking for if you look deep enough.
Besides this, you can also have them do special tasks like bagging products, inventory counts and some will even do quality control. You will need to contact them individually to find out what they can and can not do. Just get in touch with them and make sure.
Subscription Box Kitting
Subscription box businesses need to prepare their shipments ahead of time. Everything is custom for them. They have custom boxes, their products and also have promotional inserts as well. This means they need to be put together a certain way. Most won’t do this for you but there are fulfillment centers that specialize in kitting.
If you’re a subscription box business, make sure the fulfillment center can support this.
If you’re a subscription box business, you have recurring orders that need to go out on certain days. Check with the fulfillment center to see if they’ll ship your packages in batches on certain days.
Even for non-subscription box orders, you can have orders that you want going out on certain days. This is not a normal feature of subscription boxes to have but if it’s important to you, make sure they provide this.
Returns Handling/RMA Processing
This one is great. Just like fulfillment, returns handling can become an operation of its own.
Modern day fulfillment centers will offer you the option to accept returns at their address. They can accept all your returns and store them until you’re ready to have them shipped back. Or, they can inspect and process returns for you based on the information you provide.
If returns are something you’re tired of taking care of, find a fulfillment center that will.
Control /Ability to Modify Orders
This one is real. The opportunity cost of using up a fulfillment center is giving up control over your orders. No matter which fulfillment center you choose, you will have to sacrifice some degree of control - it’s simply inevitable. I say inevitable because you won’t just be able to open up a package to modify an order if the customer needs you to do this. The items aren’t even in your hands, they’re at the fulfillment center.
At ShipHype, my goal is to provide sellers with every tool they need to experience the same degree of control they have when fulfilling on your own.
You need the option to be able to modify orders. There’s going to be times when your customers call in and want to make changes. They either want to cancel an order, remove items or add additional. In all cases, you want the fulfillment center you’re using to be able to facilitate this.
Fulfillment software should also be accessible from all devices. Sometimes you’re in a different city or on vacation and might not have access to your personal computer. Even in those times, you want to be aware of what’s going on. Make sure the fulfillment center’s software is easily accessible.
Shipping via Parcel vs LTL vs Lettermail
Some fulfillment centers ship parcels only. This makes sense because 95% of eCommerce orders go out as parcels. There’s going to be times when you need to send your items using LTL (Pallet) service. It’s very possible you sell in wholesale as well and need the fulfillment center to process those orders as well.
There’s a small percentage of fulfillment centers that can process lettermail orders as well. This one is cool because certain eCommerce sellers use lettermail service to save on shipping. It sounds crazy but it’s true. They’re saving a lot of money doing this.
In any cases, based on what kind of shipments you’re sending, you want to make sure the fulfillment center you’re using can support that.
Super important. Does your fulfillment center ship orders the same day or the next day? Or is it the case that they don’t ship orders until the 2nd or 3rd day?
There are businesses for whom that could work for but it won’t work for most eCommerce businesses. Customers in eCommerce want their products ASAP and as a seller it’s in your best interest to make that happen. 3PLs that ship orders the same day will usually have a cut-off time posted on their website.
Late Cut-off Time
Late Cut-off times are important because it means more orders can go out the same day. If a fulfillment center has a 12PM cutoff time, it means that all orders received before 12PM will go out the same day.
If a fulfillment center has a cutoff time at 3PM, it means orders before 3 will go out the same day.Comparatively, the fulfillment center with the later cut-off time will be able to ship more orders the same day.
Contracts are the opposite of flexibility. Nobody likes being tied into a contract. One the reasons people look towards fulfillment centers is because of the flexibility they bring. Being locked into contracts kind of defeats the purpose.
It’s not always a bad idea to have a contract in place and it all just depends. It depends on the deal you have set up with the fulfillment center. It could be that they’re promising you better rates if you choose to go into a contract. But if all else was equal, I’d lean towards a fulfillment center that doesn’t lock me in.
No matter how simple your business is or the fulfillment center you’re using, you will have problems. If you don’t have problems, you will have questions. If you don’t have questions, you will have feedback. The point is, you’re going to need to speak to somebody. When you do need to do this, the last thing you want is to be put on hold for the next available agent.
Ideally, find a fulfillment center that will provide a dedicated rep to manage your account. It’s the reps job to make sure everything is nice and dandy and your account isn’t running into any issues. It’s also nice having a point of contact whom you can get in touch with at any time for your questions.
Insurance (for products)
Your inventory is worth money. You want to make sure it’s protected. In case of theft, a fire, an earthquake, or any other unexpected circumstance, you want to make sure your products are protected. Check with the fulfillment center to make sure they provide options.
Most 3PLs will let you add their address on to your insurance policy.
Insurance (for shipments)
Depending on what you’re shipping, you might want to be protected on that shipment. Check with your fulfillment center to see if they provide insurance on the packages they ship. This is a service that’s purchased directly from the carrier so you’ll need to check if they extend these services over.