Fulfillment Houses: eCommerce Retailers' Secret Weapon

What is a Fulfillment House?

A fulfillment house is a company whose primary business is the logistics of taking and processing your orders right up to final delivery to the customer. Most fulfillment houses provide warehousing services, on-line order entry/tracking, pick and pack services, as well as, shipping and mailing services. A mailing house is typically a complete outsourced, end to end solution to fulfill your orders.

Why are Fulfillment Houses so Popular?

With the tremendous growth of the internet and on-line retailing over the past decade, it’s made it very easy for virtually anyone to start an online business. All you need is a product or products to sell and a website. The internet has empowered many small business owners to start to make real money on the internet. However, the back-end of on-line retailing isn’t as simple as setting up a website. Someone has to store your products, receive orders, process them, provide economical shipping options and manage the day to day flow of orders and goods to customers. This is where most ecommerce retailers get bogged down. Order fulfillment is a complex task, best left to experts. It’s also very capital and overhead intensive. Two things a small business cannot afford. This is where Fulfillment Houses come in. Fulfillment houses provide this service as a full outsourced solution, at a reasonable cost, with little or no overhead investment.

Benefits of a Fulfillment House

There are many benefits to an ecommerce retailer to outsource the fulfillment process to a third party. Some of the key benefits are summarized below.

Reduced Overhead

Investing in a warehouse and distribution facility is an expensive proposition. Add up the costs of people, rent, equipment, software, insurance, heat, hydro, etc. it can be very expensive, especially if you’re just starting out. The other issue with on-line retailing is that it’s usually very seasonal, around events and holidays. However, the costs of operating your own distribution warehouse are a constant all year long. If you choose to outsource, you only pay for what you use.

Improved Cash Flow

Seasonality is a huge factor for an on-line retailer to deal with. Cash comes in giant lumps around major holidays and shopping seasons, but expenses continue all year long. Having to lay out cash for employees, rent, insurance, etc. all year long, is a real drain on cash flow. When an ecommerce retailer chooses to outsource fulfillment, the cash outlays are matched with the incoming cash. Outsourcing offers retailers an excellent way of managing and improving cash flow.

Speed of Implementation

Let’s say an internet retailer wants to launch a new product line, or just start up. While the process of building a website and marketing the products on-line may be pretty straight forward, launching a distribution facility with a proper fulfillment plan is not. It takes time to hire people, put the facilities and technology in place to start the order fulfillment process. An internet retailer who chooses to outsource order fulfillment can start up in no time, leveraging an existing fulfillment house’s facilities, technologies and distribution network. This makes it easy for an internet retailer to enter the market at light speed!

Access to Technology

A modern fulfillment house is full of technology. Technology is key today in reducing picking, packing and shipping costs. A typical fulfillment house will have a front end web based interface for their customers that is completely integrated with their back-end pick and pack operation. Order fulfillment houses typically have barcode pick and pack systems, inventory control systems as well as logistics and shipping systems. There is a huge investment in technology required to keep costs as low as possible. Most small business and ecommerce retailers can’t afford the expense and the time required to set up these systems. The better choice is to rent them by outsourcing to a fulfillment house.

Access to Expertise

There is a great amount of expertise required in the fulfillment process. Think of all the specialized knowledge that’s required: operating a facility, people management, equipment maintenance, safety programs, legal compliance, logistics, shipping, insurance. Much of this expertise and specialized knowledge takes years to acquire. Why not gain access to it by outsourcing to an expert!

Less Headaches, Peace of Mind

Many internet retailers get into the business because they like to sell and market products. Many also get into the business for the flexible hours and the allure of a business that can be operated from anywhere with a WIFI connection. However, the reality of order fulfillment requires a 24/7 presence that comes stress and headaches. Trucks don’t show up on time, replenishment orders get delayed, customers sometimes get an incorrect product. All these customer service functions have to be resolved immediately if a business is to continue operating. These situations are stressful and time consuming. By outsourcing the fulfillment function to an order fulfillment house you alleviate these headaches and keep your schedule flexible to travel and enjoy the fruits of your labour!

Is a Fulfillment House Right for You?

If you enjoy selling and marketing more than the headaches that come with fulfilling the orders, then you should definitely consider outsourcing. In addition to the key benefits outlined above, outsourcing allows you to work “on” your business instead of “in” your business. This is a recipe for success!

Next Steps

Dare Marketing is an experienced, full service fulfillment house. Dare Marketing can help you reduce costs, overhead, and increase cash flow and profits. Book a free consultation with one of our fulfillment experts today and we’ll help you put together a great fulfillment plan that will drive your business.