What to Look for in Fulfillment Companies Before Signing

At this stage, you have likely determined why you need to outsource to a fulfillment partner. The next essential step is to narrow down what to look for in a fulfillment provider. Whether you are hiring an ecommerce fulfillment company for the first time or thinking about switching to a new fulfillment company, there are key variances to hone in on. You want to reap all the benefits of choosing the right ecommerce fulfillment company.

Owners and managers of commercial businesses must examine several key factors before forging a partnership. Assessing costs, services, and scalability can be challenging before signing on the dotted line.

Your end goal is to find a fulfillment provider that will benefit your ecommerce business in the short and long term. You will want to educate yourself before signing. Think about what your company needs today and three years out, as moving from a fulfillment company is difficult. 

Your ecommerce business's profitability is contingent upon your partnership's success. This will significantly impact the factors you deem most relevant: shipping costs, customer satisfaction, and overall business efficiency. The following is an expert guide for online retailers in signing with the optimal fulfillment partner.

Understanding the Role of Fulfillment Companies

What is a fulfillment company?

When researching a fulfillment partner, it’s essential to manage expectations. You can start by making sure that you know exactly what a fulfillment company is. In doing so, you can assess how you may leverage their specialized services to level up your ecommerce business.

A fulfillment partner is a service provider managing a business's supply chain operations. Third-party fulfillment, or 3PL, means hiring another company to handle the order fulfillment process. A fulfillment company should bring with it a wide range of industry expertise in these key areas:

• Inventory Management
• Order Fulfillment Operations
• Warehousing
• Customer Care
• Value-added Services (ex. kitting, labeling)
• Shipping
• Returns Processing

Superior fulfillment companies understand that “it’s not just a box.” Every box represents a person - and the fulfillment of your brand promise.

It’s also important to point out that fulfillment companies don’t all share the same business model. Some may possess assets like warehouses, while others act as a middleman and broker the services. Be sure to ask the right questions regarding years in the business and financial security. You want to engage with an ecommerce fulfillment company that is seasoned and stable.

Why Partner with a Fulfillment Company

As consumer preferences and market standards evolve, fulfillment has become increasingly important in the e-commerce and logistics arenas. Many online retailers partner with one (or several) efficient and reliable fulfillment center(s).Through these partnerships, ecommerce businesses report a wide range of benefits, such as:

• Increased efficiency
• Fulfillment cost savings
• Savings in shipping costs
• More time to focus on core business goals

What’s more, ecommerce businesses show elevations in customer satisfaction. Customers enjoy faster shipping, accurate order processing, and easy returns with professional fulfillment.

In today’s fast-paced digital world, customers want accurate orders and quick shipping. Working with the right 3PL gives you a strong edge, helping your company standout from the competition.

Key Factors to Consider When Choosing a Fulfillment Company

Range of Services Offered

Online retailers have several factors to consider when selecting the right partner. A well-vetted 3PL warehousing partner can significantly impact your supply chain efficiencies. Companies in the research phase should assess these wide ranges of benefits:

Inventory Management: Don't overlook the importance of inventory management. Inventory control is key.

A bad system can lead to catastrophic revenue loss. Good inventory control helps a business avoid overstocking and running out of stock.

It lowers holding costs and boosts operational efficiency, which also leads to happier customers. Good inventory management also provides accurate tracking, efficient ordering processes, and optimal stock levels.

Shipping and Handling: Since medium to large ecommerce fulfillment companies ship millions of packages a year, they can negotiate volume discounts with shipping carriers. The more packages a fulfillment company ships, the greater the shipping discount. The benefit to you is that the fulfillment partner passes these lower shipping rates on to its clients.

You will want to take a close look at domestic and international shipping costs. By leveraging the right 3PL, a company can often reduce its outbound spending by 15% or more.

Returns Processing: As online retailers know, returns, sometimes referred to as reverse logistics, are part of a product's lifecycle. With a robust returns management system, a fulfillment provider can quickly help you recoup value from returned goods. An efficient and customer-friendly returns system allows staff to return goods to inventory and resell them immediately.

Scalability for Growing Your Business

To scale your business successfully, you must choose the right fulfillment partner. It is extremely important to have a fulfillment provider with the infrastructure to meet your shipping needs. Capitalizing on both technology and infrastructure is critical to scaling effectively. 

Ability to Scale: As is the case with many retailers, you have seasonality or cyclicality of sales. Enlisting a fulfillment partner that can handle a large influx of products to meet your seasonal demands is necessary.

Because of their large infrastructures and resources, expert ecommerce fulfillment partners can quickly respond to changes in demand. They do this with little to no extra cost. By outsourcing to a 3PL, you can easily and flexibly scale operations up or down depending on fluctuations in consumer demand.

Technology and Infrastructure: Advanced technology is the backbone of order fulfillment operations. This technology helps to streamline any company’s supply chain, enhancing efficiency and accuracy while minimizing cost. Top 3PLs will leverage powerful state-of-the-art technology such as these:

• Warehouse Management Systems (WMS)
• Automation and Robotics
• Transportation Management Systems (TMS)

Take your business to the next level. By partnering with a fulfillment provider that has best-in-class systems and deep insights, you will win in the realm of ecommerce. Select carefully and smartly.

Cost Considerations and Transparency

Understanding Fulfillment Costs

Order fulfillment costs are the sum of the total charges and expenses that start with receiving inventory, product storage, order processing, picking, packing, and shipping inventory. Value-added services such as kitting, assembly, and returns management are usually additional costs. Your fulfillment partner will be well-versed in the industry, studying carrier rates and programs. Use them as a valuable resource to your advantage.

The following breakdown of costs will be applied based on your specific item and order characteristics:

• Storage Fees
• Pick and Pack Fees
• Shipping Costs
• Warehouse Receiving
• Managing Inventory
• Standard or Custom Packaging
• Kitting and Assembly (if applicable)
• Return Management and Processing

Some providers will offer rate cards which are convenient but may not be in your best interest. 3PLs that provide standard pricing are making assumptions that often lead to pricing adjustments in the future. Or, these assumptions may be overly conservative, resulting in higher costs to you. It is essential to consider every angle when shopping for a vendor and comparing cost differentials.

The net-net is that an experienced fulfillment company will take the time to understand the full scope of your needs. They will be able to identify opportunities to add value, all while providing you with fact-based pricing. Deep insight into the market and knowing what programs are available to you are integral in negotiating the right price with the right fulfillment provider.

Transparency in Pricing

The variance in costs between in-house fulfillment and third-party fulfillment can be staggering. However, this does not mean that one is better than the other. It often depends on a company’s stage of growth and long-term goals.

In-house fulfillment is often a good choice for businesses in their early stages. It does not require large warehouse space, and the process is quite simple.

As a business grows, the services of a 3PL become increasingly valuable. A 3PL saves online retailers money and time as they will not have to own and maintain their own infrastructure. A fulfillment partner provides retailers with room to grow without having to completely rework their entire supply chain.

Reputable fulfillment providers offer cost reporting that shows itemized charges in detail. Pricing should be transparent with no hidden costs. You need to ensure that your contracts have clarity, and pricing structures are intact. Identify upfront whether the fulfillment provider will charge you for storage, handling ,or shipping to ensure their pay structure aligns with your budget.

In today’s day and age, returning customers are the customers most likely to purchase. The improved order accuracy that a 3PL provides is paramount. Ecommerce fulfillment partners leverage technologies that ensure precise inventory tracking, automated picking and packing, and real-time order updates. The benefit is the elimination of human error which will significantly increase customer loyalty and yield returning customers.

 Evaluating Fulfillment Providers

Reputation and Reviews

When researching and evaluating fulfillment providers, start by identifying your specific needs. You will want to assess storage space, shipping speed, and integration with your sales platforms.

To determine if your prospective fulfillment providers have a solid reputation in the industry, you can look at reviews on trusted websites, industry forums, and social media. Pay particular attention to the fulfillment provider's experience with businesses of your size and type. Specialized expertise is essential.

84% of shoppers will not buy from the same retailer again after a poor experience. For a customer, the receipt of the wrong product is highly disappointing and will likely result in their not purchasing from you again. By outsourcing your order fulfillment to the right provider, you can expect higher rates of repeat business.

Following, assess the technology and system integrations of your short-listed providers. You can also evaluate customer service responsiveness by reaching out with questions or concerns.

Prospects should have easy-to-use tools for order tracking, inventory management, and reporting. Consider additional value-adding services they may offer, such as custom packaging, returns handling, or international shipping. Finally, ask for references or case studies from similar businesses to verify their claims and assess how well they can meet your specific requirements.

Service Level Agreements (SLAs)

Service Level Agreements (SLAs) with fulfillment providers are the first step to setting clear expectations between both parties. These agreements should outline quantitative metrics of performance. For example, you will want to monitor and benchmark order processing times, shipping accuracy, and inventory management standards. Defining these expectations in clear, measurable terms will be mutually beneficial.

Frequent monitoring of SLA performance is key to a) ensure compliance and b) identify areas for improvement. This can be done through tracking systems, reporting, and performance reviews. The maintenance of open communication is crucial to resolving any discrepancies immediately and to enforcing compliance. All of the above are mission-critical to attain high-quality service.

‍Technology and Integration Capabilities

Fulfillment Company Systems

Technology drives everything in today’s world of fulfillment. As you are abundantly aware, system capabilities evolve constantly. This in turn drives efficiencies, decision-making, and the customer experience.

It is of the utmost importance to align with a fulfillment partner that leverages advanced systems. Progressive fulfillment companies recognize the criticality that modern technology brings to their clients. Many in the consumer direct space have worked hard to build order-management platforms that will bolster the sales cycle. But this doesn’t mean they are robust, efficient, PCI compliant, or capable of making cost-saving decisions.

A progressive architecture ensures compatibility with ecommerce platforms. It begins with an integrated web platform that incorporates:

• Order management
• Payment processing
• Order fulfillment
• Advanced Reporting and Business Intelligence (BI)

Technology allows all this to occur in a cohesive manner and lets clients view and interface with the data online. Then, it continues with shipping via logic-based optimization to support customizable goals that balance cost and transit time. You should expect a seamless integration with existing systems.

Data Security and Privacy

Any businessperson knows that “data is the new oil.” So, when it comes to safeguarding customer information, data security is a serious business.

Your fulfillment provider plays a crucial role in handling sensitive customer data through their management of your inventory, order processing, and shipping. A reputable fulfillment company is experienced in maintaining data security points to ensure compliance with privacy laws. Protecting data and ensuring the trust of your customers are vital.

A reliable partner implements robust security measures, including encryption, access controls, and frequent security audits. You should make sure that their processes and systems are in compliance with industry standards to prevent data breaches and unauthorized access. All fulfillment providers should be up-to-speed with all regulatory requirements.

Third-party fulfillment companies rely on advanced technology infrastructure to ensure seamless operations, from inventory management to order tracking. You can rely on their powerful systems to effectively manage real-time data synchronization, cloud storage, and automated workflows. To maintain security, your ecommerce fulfillment provider should have the following in place:

• Encryption protocols
• Multi-factor authentication
• Continuous monitoring

A reputable 3PL will have the systems in place to protect sensitive business and customer data. Their processes will reduce both errors and delays. You can expect systematic updates of fulfillment software and a solid infrastructure - to address emerging threats. Finally, you can expect that their systems will remain resilient and compliant with the latest security standards.

Customer Support and Communication

Responsiveness and Availability

The recipe for success is simple: the latest technology coupled with superior customer support. Customer care plays a critical role in the success of your business. Some fulfillment companies operate Contact Centers and offer Customer Care as a service.

Look for a fulfillment partner that has a 100% US-based contact center solution in place. Working with a US-based partner often means that customer support operates in the same time zone as your customers, making it easier to resolve issues promptly. Native English-speaking representatives can effectively address inquiries, manage returns, and handle complaints.

Lastly, the fulfillment provider should have tight communications across all channels. Multiple support channels should be in place to offer targeted support. This is the key to protecting your brand and increasing its lifetime value.

Consider what outsourcing Customer Care to a fulfillment partner can do for your business. You can focus on your core operations, knowing that your customers receive top-notch support from professionals who tout the know-how and have a vested interest.

Proactive Problem Solving

In the world of ecommerce fulfillment, anticipating issues is paramount to your success. Your team needs to proactively identify problems and then immediately take action to rectify them. Professional fulfillment companies will provide what is commonly referred to as a “Client Success Manager”, who serves as your main point of contact.

Your CSM will get to know your team and your business thoroughly. This professional knows the ins and outs of the fulfillment landscape and will serve as your liaison within the organization. They will be your proponents, using any feedback that you provide to improve your service levels.

Generally speaking, your CSM will respond to your questions and requests within 30minutes. Best of all, CSM should be part of a cross-trained team, so you will never encounter a disruption in service when your CSM is away. A fulfillment partner’s Client Success Manager takes an active role in guiding your business to success. The key takeaway here is that with superior professional service, you will save time and improve your own customers’ happiness and loyalty.

Conclusion

Summary of Key Points

There are many attributes that mark a genuinely excellent fulfillment provider. The best partners offer a wide range of services. Top-tier providers have cutting-edge technology and tools to ensure your products move swiftly, accurately, and efficiently through the pipeline.

Your expectations should be high when it comes to customer support. The benefit of an ecommerce fulfillment provider is unyielding support. You should have a close relationship with your chosen partner and a key contact to champion your needs throughout the process.

By leveraging powerful technology, an extensive infrastructure network, and the ability to scale, a 3PL can significantly reduce operational costs, free up resources, and enhance customer loyalty. You now know the categories of costs and storage fees to expect and that these should be fully transparent. When you join hands with the right partner, you will enjoy substantial time and cost savings, allowing your company to flourish and direct resources toward growing and innovating.

Order Fulfillment is a cornerstone of a product company’s success. In today’s fast-paced, digital world, where customers expect consistently accurate fulfillment and fast shipping, partnering with the right 3PL can produce a unique competitive advantage. It can even set your company apart from its competitors.

Final Takeaway

It is crucial to assess which ecommerce fulfillment provider is the right partner for your business. Consider carefully your company’s stage of development and future plans.

Companies should not make the decision to team up with a 3PL lightly, as it is an important decision. Evaluate what your company requires at present and project towards the future. Thoroughly research to ensure that the 3PL provider aligns with your company’s specific needs and goals.

If you are ready to explore how a fulfillment company can transform your business, contact a2b Fulfillment. With nearly 25 years of experience in ecommerce order fulfillment and warehousing services, we offer tailored solutions to meet your unique needs and goals. Contact us today to discover how we can help your company achieve new heights.