Definition: The process of receiving, packaging and shipping orders for goods
While any company selling products directly to consumers through
the mail must deal with fulfillment, this term is most often
associated with e-commerce. Once your website is up and
running--and you're getting tons of orders--you need a way to
promptly fulfill and ship those orders. Entrepreneurs can either
outsource the fulfillment and distribution process or set it up
in-house.
Full-service fulfillment companies offer up an end-to-end
solution: They take your products from warehouse shelves, pack
them, hand them to shippers and then send an automated e-mail
response to your customers to let them know their packages are in
transit. They can also handle your credit-card processing, supply
current inventory levels to your website, reorder products, offer
call-center services, send notices of shipping and handle returns.
There are literally thousands of these companies to choose from,
but experts say the best way to find one that suits your needs is
by word-of-mouth. Ask computer-savvy friends or talk to the
employees who manage your website and ask them for referrals.
If you're using your hosting company for shopping cart and
credit-card functions or doing this in-house, you can just use some
of the fulfillment companies' options--such as pick-and-pack,
returns processing and customer service support. If you're shipping
a small number of orders, you may want to fill your orders
yourself.
To do this, you'll want to use the major package delivery
companies--Federal Express, UPS or the U.S. Postal Service, since
they're considered the most reliable. All these carriers offer
downloadable software on their websites that allow you to track
customer orders and also begin shipping immediately. However, the
downside is that you'll either have to go to your local post office
to ship the packages or schedule pickups with whichever delivery
company that you eventually choose.
So should you outsource? One e-commerce distribution and
logistics expert advises that outsourcing to a fulfillment company
only makes good financial sense if the entrepreneur has more money
than time. If you have no cash to spare, then you should do it
yourself. But if you can make more money by spending your time on
other things, you should look to outsourcing.
Before you choose a fulfillment company, however, make sure that
it wants the business of a small company (many do not) and that
it's reliable. And no matter what type of fulfillment operation you
set up, it shouldn't cost more than 10 percent of sales, plus the
actual shipping costs.