How to Choose the Best eCommerce Fulfillment Service for Your Business in 2020
Whether you’re getting ready to outsource your fulfillment for the first time or switch fulfillment companies, it’s important to choose the best eCommerce fulfillment for your business.
To do that, you’ll have to do more than call the company whose ads you’ve seen online or pick the one with good reviews. Properly vetting your next third-party logistics provider will require a bit of research and time, but, in the end, the effort will pay off.
After all, your fulfillment company is an important partner in your eCommerce business as it drives customer loyalty, positive reviews, and repeat sales.
To find the best fulfillment service for your business, you’ll need to look at several factors:
- Does the fulfillment company have monthly order minimums? If so, will your order volume meet those minimums?
- What is the typical parcel weight shipped from the fulfillment warehouse? Is it similar to the weight and size of your products?
- Does the warehouse have an order-to-SKU requirement (the ratio of orders shipped to the number of individual SKUs)? If so, does your business meet the required SKU breadth ratio?
- Where are the company’s warehouses located? Will your products reach your customers quickly?
“The best eCommerce fulfillment company for you will have experience with products like yours and warehouses designed to handle your items safely and efficiently. Make sure the company provides integrations for all your sales channels. Ask about just-in-time kitting and customization, if that will help your business. Find an order fulfillment company that will expand what you can do with your eCommerce business.”
– Jake Rheude, VP of Marketing, Red Stag Fulfillment, a 3rd party fulfillment company for online merchants and internet retailers.
Let’s dive deeper into factors you should consider.
1. Monthly Order Minimums
Look for a fulfillment company that is ready and willing to work with your monthly order volume – whether that is small or large. Some companies depend on high-volume sales to make a profit. Others sell a small number of high-value products. If your business is a startup, your monthly order volume might be hard to predict.
The best eCommerce fulfillment companies have monthly order minimums that range from no minimum to 1,500 orders per month.
2. Typical Parcel Weight
A fulfillment warehouse that can efficiently ship kayaks might not be set up to process clothing orders and vice versa. Everything from the width of the aisles to the packaging equipment in a fulfillment center is engineered to process certain types of packages. The fulfillment company you choose should be set up to ship parcels that match your typical order weight.
This is particularly true if your items are oversized, heavy, or bulky. Most eCommerce parcels weigh 10 pounds or less, so most of the best companies generally handle products in that range.
3. Order-to-SKU Requirements
SKU breadth is the number of SKUs that you store on your outsourced warehouse shelves. ShipBob will work with clients that have an order-to-SKU ratio of at least 5:1. For Fulfillment.com, that ratio is 7.5:1. The other order fulfillment companies on the best of list don’t have order-to-SKU requirements.
An example of this ratio may help to understand the math. If you stock 50 products with ShipBob, you need to ship 250 orders each month to meet the company’s SKU breadth requirements. The fewer SKUs you sell, the lower your monthly minimum orders can be to still meet the required order-to-SKU ratio.
4. Fulfillment Warehouse Locations
Customers want shipping and delivery to be affordable (or free) and fast. Warehouse locations determine how quickly your products can reach your customers. Location also determines the number of shipping zones your orders will travel through. Fewer shipping zones equals lower shipping costs.
Your ideal number of fulfillment warehouses will depend on your business model. If you ship a high volume of orders or if your customers put a high value on quick delivery times, you may want to choose an order fulfillment company with many warehouses, including locations near large US population centers. If you ship a lot of orders to customers both inside and outside the US, a company with international fulfillment centers might simplify your order.
However, there is a trade-off between the number of warehouse locations and the amount of inventory you need to carry to stock multiple warehouses. Managing inventory across several fulfillment centers can also be challenging, especially for small businesses. A good rule of thumb is to ship your products from the minimum number of fulfillment centers needed to provide the level of fulfillment services you want.
Finding the Best eCommerce Fulfillment Company for Your Business
This guide should give you a head start in your search for your ideal fulfillment partner. After you narrow your search, contact the companies that seem like the best fit for your business.
Ask about special services. This is particularly important if you ship fragile, high-value, or hazardous products or if your items need cold storage. The best eCommerce fulfillment company for you will have experience with products like yours and warehouses designed to handle your items safely and efficiently.
Make sure the company provides integrations for all your sales channels. Ask about just-in-time kitting and customization, if that will help your business. Find an order fulfillment company that will expand what you can do with your eCommerce business. In the end, the best partner for you is one that provides reliable service and helps you find ways to increase customer satisfaction.
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