One of the most time- & resource-consuming parts of online retail is order fulfillment. From inventory to shipping to quality control, it can be expensive and overwhelming to do it yourself. In fact, outsourcing fulfillment is inevitable for many Canadian ecommerce businesses as they manage growth.
Typically, the fulfillment (or third party logistics) company will manage inbound shipments, distribution, warehousing, order fulfillment and shipping to customers. Many do much more than that. Order fulfillment companies have been customizing their services with ecommerce in mind.
Most Canadian small businesses were introduced to third party fulfillment through Amazon.ca, which launched fulfillment in Canada in 2012. They’re less familiar with other fulfillment providers, but awareness is growing with the growth of online business in Canada.
Their choices are also growing. For example, Canadian ecommerce platform, Shopify has introduced the Shopify Fulfillment Network in Canada to improve the order process for small businesses. Ebay is launching Managed Delivery fulfillment services here in Canada. Additionally, you’ll find many independent third party logistics (3PL) providers offering an impressive number of services, along with full integration with major ecommerce platforms (like ShipBob).
Some of the first concerns that online merchants have, revolve around timing.
Is it Time to Outsource Fulfillment?
Most indicators are obvious, but the specific timing can be tough to nail down when you’re in the thick of things. Keep the following indicators in mind as you grow, and be ready to act before you reach a critical breaking point. It might be just one problem has become big enough to make the transition to third party fulfillment, or several combined.
You Need an Expert
Whether it’s receiving shipments in the US or reducing packing materials, third party fulfillment companies are experts at optimizing the process. They can do more, and they can do it better, faster and cheaper. That level of expertise can be priceless for Canadian startups.
In-house Fulfillment is too Expensive
One of the first lessons we learn in selling products online, is the shipping costs in this country can quickly cripple a small business startup. From storage to staff, order fulfillment can get really expensive, really fast. While you will have to pay fees to a third party for order fulfillment services and warehouse storage, it’s a fraction of the cost of doing it in-house. Do some calculations now, so you’ll know when it’s more profitable to outsource.
You’re Falling Behind
Canadians are becoming more demanding when it comes to shipping speed and that starts with getting the order out the door. All orders should be shipped within 24 hours. It’s the one point of the process that is entirely under your control and consumers will note it when they track their shipment. If you’re missing that 24 hour deadline, it’s time to hire more people or consider a fulfillment company.
Shipping is Taking too Long
We tend to wash our hands of shipping after the package leaves our business. If it’s a shipper delay it isn’t our fault, right? Maybe not, but if it takes too long it will still reflect poorly on you. One benefit of the larger fulfillment companies, is they often have multiple warehouses spread strategically around Canada or globally. That can shave several days off of your delivery time and save you money too.
The logistics of shipping outside of Canada can be intimidating and expensive. This is where third party fulfillment really shines as an easy solution to a rather complicated problem. You can certainly learn how to do it yourself, but you don’t have to implement it without expert assistance and guidance.
How to Outsource Order Fulfillment
There are two general ways to outsource fulfillment:
- You arrange for inventory to be shipped to the fulfillment company, either from you or directly from a wholesaler.
- You use drop shipping suppliers to provide the inventory and handle order fulfillment.
Before you approach fulfillment companies, you should identify and outline your requirements.
- Analyze your current performance
- Outline your current fulfillment costs
- Examine your existing shipping relationships
Then it’s just a matter of doing the legwork. Ask around for referrals and do some Googling. When you find a good candidate, ask any questions you may have and request references.
Following are some questions to ask global or Canadian fulfillment companies before making a final decision:
- Are they located near your business? Do they have a centrally-located warehouse or multiple warehouses?
- Are there numerous transportation and warehousing options available to choose from?
- Do they specialize in your industry or vertical?
- Do they have a modern technology platform that works with your ecommerce platform, and syncs with your inventory management system?
- If required, do they offer integrated solutions for Amazon and other marketplaces or retailers? Do they offer Amazon ‘prep & ship’?
- Can they meet the specific needs of your customers?
- Can they scale their operations to fit your changing business needs?
- Do they offer direct-to-customer and direct-to-retail fulfillment and distribution services?
- How fast can they get orders out and into the hands of your customers?
- Do the shipments appear to come from you? Can you include branded packing slips, information, coupons, etc.?
- Are shipments insured? Is your stored inventory insured?
- What is their track record and reputation? Can they provide high-quality industry references? How do they rank on rating sites and the BBB?
- If they will manage returns, how will they do so?
- How much will it cost in total, including set-up fees, shipping/receiving costs, pick-and-pack fees and warehousing fees?
Are you ready to outsource order fulfillment for your Canadian ecommerce business? Please post any questions in the comments below or join us in the Online Business Canada Facebook group.
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Melody McKinnon's formal education is in business management, which she enhanced with more than 60 certifications revolving around business, marketing, health, general sciences and writing. In 25 years of working online, she has owned or managed both educational and ecommerce websites. Her book, 7 Recession Proof Online Businesses to Start From Home, is available on Amazon.
Melody has worked with many businesses & brands in a multitude of capacities. She can often be found on CanadiansInternet.com, CanadianFamily.net and AllNaturalPetCare.com, as well as other quality digital publications. Her content has earned reference links from highly-respected websites, magazines and university textbooks.