As an e-commerce business owner, you’ve thought long and hard about shipping costs and customer expectations.
Wisely, you have decided that partnering with a great fulfillment company who will consolidate and handle all of your inventory management, warehousing, picking, packing, and shipping, is the right next step. You’ve done your research and narrowed it down to just a few fulfillment centers that fit your criteria and specialize in your product type.
But there’s another consideration in settling on a fulfillment partner.
It’s clear that customers want their orders now. Sooner, if possible. You’re pretty sure that long distance expedited shipping can be expensive, but your domestic customer base spans the U.S. With fast shipping times on your mind, a feature on one of the fulfillment sites catches your eye: “Multiple Warehouse Locations.” Clicking on it, you read that this company “has multiple warehouses strategically located across the country, so your orders are always within a 2-day shipping zone.” They go on to tout the cost savings to you, and make the not-so-subtle suggestion that their national dominance is an indication of their strength and success.
It seems like the perfect set up for you. Multiple location, fast shipping, cheap.
But wait. What does “multiple warehouse locations” really mean? Aside from the truly global companies (read: Amazon) that invest tens of billions in building and operating numerous fulfillment centers, most fulfillment companies do not truly have “multiple warehouses”.
What they actually have are multiple fulfillment partners, and one fulfillment center.
See, they know that offering multiple locations is a big draw for the reasons outlined above, but the expense of owning and operating extra locations is prohibitive. So they form alliances with a few competing fulfillment companies in other parts of the country, whereby each fulfillment center accepts products from their partners, then executes the fulfillment services for them. They communicate with one another about the progress of the orders, at which time your fulfillment company gives you receiving, tracking, and pricing information per the data they’re receiving.
Ok, you might be thinking, if it works, why not? Is there a downside? Should I care that this fulfillment company is only partnering for fulfillment services rather than doing everything themselves?
Ultimately that’s up to you, but here are a few things to consider, and alternative suggestions, so you’re armed with the information you need to make the right decision for your company.
- Customer expectations. Yes, your customers want speed. But there are other, super important factors in customer satisfaction. Simply put, they need the right product – and they need it to arrive in perfect condition. Nothing turns customers into one-timers faster than receiving the wrong product or receiving a damaged item. In the fiercely competitive online space, where, let’s face it, there are literally thousands of other options for the consumer to shop, a disappointment like that can devastate your chances of repeat business, and harm the reputation you worked so hard to earn. Your fulfillment operation is on the front lines of this critical piece. In choosing a fulfillment center, you are looking for a partner with as close to a zero-error track record as possible. You need to entrust your customers’ product expectations to a company who packs and ships with impeccable care and quality control. The fulfillment center you are considering might well do all that, but you have no control or research available on their After researching customer reviews for a fulfillment partner with a stellar track record, make sure you’re not just rolling the dice on your brand equity and customer satisfaction by using a company you don’t even know.
- How many middlemen? If you can, you would hand deliver every item to each customer yourself. That way, you can know with complete certainty that the item arrived on time, and intact. Working with a fulfillment partner shouldn’t mean giving up control of this information. A truly extraordinary fulfillment company will be seamlessly integrated with your own ecommerce software, allow total transparency of product location, shipping status, and inventory levels. The only way to truly rest assured all that is happening, is for the fulfillment team to be directly connected to their own shipping operations, and to you. The more middlemen that are introduced into the supply chain, the more control you are giving up, and the greater chance there is for information to be lost in the transfer. Think airline travel: the more connecting flights you have, the greater the odds of arriving at your meeting in Dallas while your luggage circles the conveyer belt in Des Moines. Software breakdowns and glitches are issues that can have a ripple effect across the supply chain. Reliance on every individual company’s software working perfectly and in total sync with all the others introduces risks you’d rather not take. (It’s the reason we at Fulfillrite have our own in-house development team and proprietary software rather than relying on third party systems. If there’s ever a problem, we’re on it.)
- Responsiveness and customer service. Change of address. Mislabeled products. Damaged items. These are some of the things that keep business owners up at night. Just how well can your fulfillment center deal with these issues when the products are not physically there with them? How much of a priority is your customer’s return to a fulfillment center that doesn’t know you and is merely performing services for a different company? Your customers don’t want to wait for you to track down the returns or figure out what got damaged when. Don’t underestimate the importance of knowing that you have a direct line to a responsive team who are literally hands on with every item they ship. Look for a team that personally handles your products, storage, and returns, and who are there for you in real time, and on location.
In short, the concept of multiple warehouse locations sounds great, but in practice, it’s quite a bit more complicated.
Before you decide on the necessity of multiple locations, speak to your fulfillment center of choice and discuss costs and options for long distance deliveries. Your product type might qualify for rates and delivery times you didn’t even realize were possible, making the hassle, expense, and gamble of multiple warehouse locations unnecessary.
If you determine that you do need more than one warehouse location, to serve east and west coast customers for instance, you might be much better off choosing two separate fulfillment partners on the two coasts, with one location each. Inventory management software like Skubana can help you organize your inventory and integrate with your fulfillment partners as well, taking the guesswork out of managing your fulfillment relationships.
You can work with partners of your choosing and still rise to your customers’ expectations.