Fulfillment Means Letting Go to Grow

Learn whether outsourced fulfillment is a good fit for your online sales operation.

by Auctiva.com staff writer
- Apr 18, 2011

Have you ever walked into your eBay room determined to get something done, only to be overwhelmed by the sheer volume of boxes, packaging peanuts, tissue paper and inventory you have yet to prep and ship? If only your fairy godmother could magically appear, pack your items in bubble wrap and print the postage for you.

Well, if you had a fairy godmother, she might not be of the magic wand-waving variety, but rather someone who has a storage unit for you to use, or an employee or two to take care of your packaging needs. That is, the answer to your hopes and wishes could be a fulfillment service.

Fulfillment services store, pack and ship your products for you—so you can focus on other aspects of your business and restore a little order to your home. Do we have your attention? Well, then let's get rolling and take a closer look at what these services can do.

Is fulfillment right for you?

The draw of fulfillment services is easy enough to spot: Someone does a big chunk of your work for you. You ship your items to the fulfillment company, which stores them for you. When items sell, the staff retrieves the right products, packages the items and ships them out. This frees up your time to scout for new inventory, create attractive and professional listings, optimize your keywords, design that new Web store, build your social media presence and other aspects of your business you may have been neglecting.

Auctiva Product Analyst Rebecca Miller puts the appeal another way: "Selling online is like having a big yard," she says. "Each summer you have to plant flowers, water the yard, mow the grass, but eventually you get tired or don't have time to tend to it yourself. That's the day when you hire a gardener, a landscaping company, or, in this case, a fulfillment service to do it for you. All you do is pay them and you get to enjoy the benefits of the beautiful yard."

Outsourcing becomes viable as soon as your time is scarce enough that you're not able to promote the business as you'd like

However, there are several factors to consider before jumping into a fulfillment arrangement. First off, you need to decide if you're spending too much time filling orders, have limited space or are employing someone to help you with your sales.

"If you are working from home and have spare time to pack orders, then it'll be cheaper to [store, pack and ship items] yourself—and to begin with, you'll gain valuable experience about the process," says James Hyde, operations director of Six, a fulfillment company in the U.K. "Outsourcing becomes viable as soon as your time is scarce enough that you are not able to promote the business as you'd like, or you are looking at leasing an industrial unit or warehouse."

Sellers should also take into account what they could accomplish if they didn't have to focus their energies on fulfilling their orders, says John Lindberg of eFulfillment Service, a U.S.-based company that works with about 400 online stores and eBay sellers.

Ask yourself, do you currently have enough time to look for new inventory, market and optimize your listings? Or do you find yourself struggling to find a balance between processing and shipping out orders and adding new inventory? If you are, a fulfillment service might be right for you.

Pay money to save money?

Fees for fulfillment services vary, and typically depend on how much inventory you have and how many shipments you make a week. Fulfillment services usually provide quotes via their Web sites.

Now, don't let the idea of having to pay for these services intimidate you. As the saying goes, sometimes it takes money to make money. But fulfillment services can also help you save, especially if you're currently employing someone to help you with your orders. That's because when you use these services you don't have to buy packing supplies, boxes, tape, postage, etc.—or store them. You simply send your items to the service, and they use their supplies and their employees to package your items and ship them out. And they can help you track your orders, too.

Not just for large sellers

Now if you're wondering if your business is too small to entertain the idea of a fulfillment service, Hyde and Lindberg say it's not really about the size of your business, it's about the amount of time and money you spend fulfilling orders.

eFulfillment Service works with 400 online stores and eBay merchants, who have fewer than 2,000 orders a month. "Our warehouse design, operating systems, control panel software and our fee structure are all designed specifically for smaller Web stores and eBay merchants who want to outsource their order fulfillment. Above all, we keep everything easy, affordable and honest," Lindberg says.

Six also serves many eBay sellers. Some of these are large companies just starting out with very low volumes and limited storage space. "Others are home sellers, who are selling 30-plus items a day and are struggling to cope with storage space and time," Hyde says. "Having everything just happen automatically and seeing online inventory and sales reports lets them start managing their business again."

Make sure the company has good customer service and will be as detail oriented as you are when it comes to your business

Bee Aj, known as root2tip on eBay, began using Six in January. She sells hair extensions and wigs and says the lack of space in her two-bedroom flat was the main reason why she looked for a fulfillment service. "The alternative was to hire out office space or a warehouse, but my research proved this would have cost considerably more than using Six' services," she says.

And with a baby on the way in June, Aj also likes the idea that she'll be able to continue with her sales even when her little one arrives. "I did not like the idea of having to close my eBay shop in its prime," she adds.

Some trade-offs

Lindberg of eFulfillment Service acknowledges sellers do give up some control over their inventory when they work with a third party for fulfillment and put their items in someone else's hands. So it's important when looking for the right company to make sure they have good customer service and will be as detail oriented as you are when it comes to your business, he says.

Ask a representative or account manager to give you a tour of their services. Don't just take their word on what they do and how they do it. Also be sure to ask straight out what happens if one of your items gets damaged while it's in storage or en route to your customer. And, what happens if one of your products goes to the wrong person? Who's responsible for the shipping costs?

Find out if you can send samples to the company, or companies, you're considering working with to ensure they'll be able to package items to your standards. "Agree on packaging specifications in advance for any items that are delicate, breakable or unusually sized," eFulfillment advises.

And definitely ask if the service integrates with the marketplace where you'll offer your items to ensure your orders will be fulfilled quickly. This means not only telling the company's representative where you sell right now, but also were you might be selling in the near future.

If the benefits seem to outweigh the downsides after all of this, then give it a try! Many fulfillment services offer a free trial so you can see how it all works. After that, you can weigh the costs against the benefits and decide if you want to sign up.

"Independent e-commerce merchants are up against the growing threat of online retail giants like Amazon.com and Walmart.com," Lindberg says. "The key to success for the independent is keeping costs low and creativity high, and fulfillment outsourcing can be a big step in the right direction."

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