Expanding Your Business through Fulfillment Services

What is Fulfillment?
Fulfillment typically refers to the act of storing, receiving orders, packaging, and shipping ordered items to end consumers. Web stores and even large merchandisers use fulfillment services to get their products to customers.

What Does a Fulfillment Services Provider Do?
Fulfillment services providers fill orders for a business. This means that the provider will receive an order from a business, put the ordered items together, and then send the order to the end customer. The shipping methods vary based on the provider or sometimes customer preference.

Some large chain stores may have a fulfillment services provider ship the orders directly to one of their locations for customer pick up. Others choose to have the orders drop shipped directly to the customer.

Along with filling orders, the providers offer space in their warehouse for the items stocked by the original company. This provides the businesses using such providers with a cost effective method to have items in stock, yet not need to pay for their own warehouse space.

What Other Services can a Fulfillment Services Provider Offer?
Fulfillment providers may offer other services in addition to just filling orders. Some companies may offer a call center for taking orders, customer service, package tracking, and other services. These services will each have their own fee. Package deals can drive the cost of outsourcing down and are ultimately less expensive than keeping a devoted warehouse, trucks, and staff on site for many businesses.

The storage fees for providers will vary and are typically based on a per pallet price. Length of storage may be determined in the original contract. Renewals will extend the storage time and may offer negotiation of fees if there are indications that an item is in higher or lower demand than expected.

How Can This Benefit Your Customers?
Using a fulfillment company can help increase your customers’ profitability. For instance, when sales are high, such as during seasonal holidays, your customers will not have to hire extra staff and then lay them off during a slower time; instead the surges in sales are handled by the fulfillment provider. This can be quite cost effective as fulfillment providers may have warehouses all over the country which allows for streamlining shipping costs. A warehouse in one region can handle all shipping orders for their region and so forth for other regions of the country (or world).

Viability
Becoming a fulfillment services provider is a new way to become more viable in today's market. You can market fulfillment services to your existing customers and help them reach a broader audience. This service will also help your customers save time, money, and resources because they will not need to worry about hiring extra employees, storing products in a home office, setting up a shipping provider for pick up, and more.

As a fulfillment provider you can strengthen your relationship with your customers by offering them stability and allowing them to focus on what they do best—making sales.

What to Charge the Customer?
The costs associated with a fulfillment provider will vary. There are storage and shipping costs along with a per transaction fee. These transaction fees are not high, usually between 8 percent and 12 percent per transaction. This fee allows you (the fulfillment provider) to make a profit as you have your own costs to consider—staffing, machinery, warehouse rental or upkeep, and packaging for shipping.

Industries that Use Fulfillment Services Providers, are:

• Automotive
• Banking
• Cosmetics/Beauty
• Compliance
• Consumer
• Education
• Engineering
• Energy
• Financial
• Food and beverage
• Government
• Healthcare
• Insurance
• Manufacturing
• Media
• Online
• Pharmaceutical
• Real estate
• Religion
• Retail
• Technology
• Telecommunications
• Transportation (Travel)

Final Thoughts
Before becoming a fulfillment provider, think about how it will affect your business. Do you have the space to store products onsite? Is it cost effective in your situation? Do you already have enough demand to justify becoming a fulfillment provider? As with any business decision, it makes sense to put all parts of the problem to scrutiny before jumping into a new situation. If becoming a fulfillment provider can help your company, then the math will often show the numbers right away. Identify how much competition is in your area. Talk to your top customers to see if they are happy with their current fulfillment provider. Just because you have the space to become a fulfillment services provider shouldn't be your only consideration. Make sure you have the right resources, such as technology and staff. Remember, before a customer chooses you they will be looking for reliability, shipping speed, and customer service.

Would you like to learn more about becoming a fulfillment services provider? Click here to download an additional resource to receive more tips on finding success in warehouse and inventory management.