Pick, Pack and Ship
For entrepreneurs, coming up with a great product is a great start – but it’s only the start. Then there’s marketing and sales to drive demand and ultimately – but most importantly – packaging and shipping of goods to customers.
Timothy Young, owner of specialty food company Food for Thought in Honor, said that lattermost detail is something many startups overlook.
“When we were a younger company we underestimated the cost of order fulfillment,” said Young. “I think that’s true of a lot of startups. They don’t realize the cost of (someone) filling orders rather than doing creative work or sales.”
Food For Thought, which produces organic and wild-harvested food items such as jams and pickled leeks, is now in its 20th year. Young’s wife Kathy is a part-time employee dedicated to filling orders, with help at busy times from other staffers.
Young said many companies, particularly small startups, don’t have the advantage of having a flexible part-time person to fill the orders. He sees advantages to companies hiring outside firms to fill their orders.
“I think more and more are farming out fulfillment,” he said.
Steve Bulger hopes the trend continues. He is the sales and marketing manager at eFulfillment Service in Traverse City, which assists companies across the country and beyond.
There are many reasons proprietors and companies hire a fulfillment service provider. Many find it easier, some find it less expensive, others just don’t have time or the space.
“Some have a full-time job,” said Bulger. “Some don’t have the room – for example, they live in an apartment in New York City.”
That’s when they turn to a firm such as eFulfillment Service. “We warehouse inventory for people who sell online,” said Bulger. “We work with a lot of startups.”
The company’s software integrates with the ordering software of its clients. When a customer purchases an item from a client company through the web, whether on Amazon, eBay or the company’s own site, the order is processed and filled at eFulfillment.
“We work with about 600 (clients), 70 percent in the U.S., 30 percent in Canada, Europe, Australia,” he added. “There’s a growing percentage in Latin and South America.”
Bulger said many of the foreign companies want to break into the market stateside.
“They’re established in their own country but want to make inroads in the United States,” he said.
For those companies, it makes more sense to work with a fulfillment company, Bulger added, than to ship from their home country or establish their own office, warehouse and shipping facility in the U.S. eFulfillment opened its doors in 2000 in Interlochen, and has since moved to a new larger facility in Traverse City with 170,000 square feet.
DIY PACK & SHIP
But here in northern Michigan, many small, local companies still fill their own orders. Whether they sell food products, clothing, or athletic equipment, they find it easier – or believe it more cost-effective – to do their own packing and shipping.
Nate Farran is the director of operations for M22, which sells branded clothing promoting northern Michigan. He said his company ships 30 to 40 pieces a day.
That’s no longer the challenge it was when their fulfillment facility, office and retail store were all one in the same. Now they have separate buildings.
“It’s been great for us to expand,” he said.
The opposite is true at Naturally Nutty, which produces nut and seed butters. With one facility in Williamsburg for creating, storing and shipping, owner Katie Kearney said employees typically wear two hats.
“Employees spend one to three hours a day fulfilling orders,” she said.
Meanwhile entrepreneur Pete Edwards makes daily trips to the post office. Edwards runs his unique ski-walking pole business from his home in Empire. The vast majority of his business is done online, through his own website as well as retail sites like Amazon and eBay.
When orders come in, Edwards is immediately on the case. “We ship so fast,” he said. “Amazon says three to four weeks, and customers get them in three to four days,” he said.
Edwards packs and ships the orders himself, including printing the labels and then sending them out.
“I work two shifts a day with a hike or skiing in between,” he said with a laugh. “I love Priority Mail.”
Bulger and eFulfillment Service share that need to get the orders out. Only for them, it could be ski poles one minute, food products the next, and then tools, towels, clothing or books. “It’s important to get the order out the door,” Bulger said. The company then emails the tracking information to the customer so they know when to expect delivery.
5 Signs It’s Time To Outsource Order Fulfillment
All too often, online sellers view order fulfillment as a simple, basic task rather than a competitive advantage, according to Steve Bulger, sales and maketing manager for eFulfillment in Traverse City. In some cases, doing it in-house can lead to costly inefficiencies and inhibit business growth.
Bulger outlines five signs it may be time to outsource order fulfillment below:
1. You don’t have enough time
Entrepreneurs are generally good at marketing, sourcing products and/or business development. And since there’s only so much time in the day, when you spend that time picking, packing, and shipping products, it can lead to significant opportunity costs; that is, the cost of not doing something else to grow your business.
2. You’ve run out of space
Take a look around your warehouse. Is it big enough to house new inventory as your business grows? How about your staff…will they be able to handle the growth, or will you need to hire a bigger warehouse crew? When you outsource your order fulfillment, these are things you don’t have to worry about. Whether your growth is rapid or more gradual, your operations will be able to effortlessly scale with your business.
3. Your fixed costs are too high
Many online sellers experience sales spikes and lulls throughout the year. As these occur, certain costs, such as warehouse rent and labor, remain fixed. With this model, as sales go down, your order cost goes up, as your fixed costs represent a larger chunk of your total fulfillment costs. By outsourcing your order fulfillment to the right partner, fixed costs move to a variable model, which means you’re able to maintain a more consistent and predictable cost per order throughout the year.
4. Your technology is inferior
Technology isn’t always cheap, nor is maintaining it. Many online sellers find that, when they keep their fulfillment in-house, a big chunk of their total annual budget gets devoted to maintaining and upgrading technology and warehouse equipment. Because of this, it’s not uncommon for ecommerce sellers to use outdated software and hardware to manage their fulfillment operations, which can lead to errors, delays, and inefficiencies. By outsourcing, you pass that buck to your fulfillment provider.
5. You lack the expertise
What is your error rate? How fast do you get orders out the door? Do you consistently put your items in the right-sized box? Did you choose the best carrier and ship method based on the package size, destination, actual weight, and dimensional weight? Order fulfillment isn’t always easy, and there’s a lot to keep up with. By outsourcing, you’re able to take advantage of your partner’s expertise to ensure orders are arriving on time and at the lowest cost possible.