January 28, 2020

10 Questions to Ask When Choosing a Fulfillment Partner

First, start with a question for yourself: What are you looking for in an ecommerce fulfillment partner? It can be tempting to pick one of the first companies you find or search based solely on price, but it can be a great exercise to focus on what you actually want from your fulfillment partner and what’s important to you and your business.

Why are you looking in the first place? Are you growing and desperately trying to scale? Are you unhappy with your current partner and looking to switch? Narrow in on what you need and focus your search that way.

10 Questions to Ask When Choosing a Fulfillment Partner

What Performance Metrics Does the Fulfillment Partner Focus On & Incentivize?

Just like every workplace has its own culture, so will each warehouse. Every warehouse will have its own way of measuring success and incentivizing their employees to meet and exceed those goals. While speed seems to be the most desirable trait lately, not all warehouses incentivize speed over everything else.

It’s true that many warehouses focus on speed and volume, growing their client bases quickly and shipping out inventory as fast as possible, however, some warehouses focus instead on accuracy, growing their client base more slowly, and shipping out the right order every time. The way the warehouse is managed will affect how your product is treated and it should align with your core values.

Do They Have a Long-Term Contract Agreement?

Long-term contracts a relic of a bygone age, when customers were expected to lock themselves into cumbersome agreements designed to punish users rather than incentivize providers to be the best. When given the choice with a service as critical to your success as fulfillment, it’s better to err on the side of caution and have an easy way to cancel if the service isn’t up to your expectations.

In all seriousness, you never want to be stuck with a fulfillment partner that isn’t meeting your standards, and you always want to be able to pack up and go if necessary. A long-term contract can be acceptable if there is a clear “out” if service isn’t up to par, but a better option is a month-to-month or other short-term agreement.

Do They Offer a Service Guarantee?

A fulfillment company should be able to offer you a service guarantee—and this guarantee can encompass several areas of their service. For example, it should include how quickly your orders will be shipped, but can also include inventory accuracy, order accuracy, and order receiving time. If they can’t provide guarantees, you shouldn’t work with them—and there should be clear penalties for not meeting their guarantees.

How Do They Calculate Accuracy?

There are a variety of different ways to calculate metrics—and every company wants to be seen in the best light. Understanding how they calculate order accuracy will help you better understand what their order accuracy percentage actually means. Calculating order accuracy should be done by dividing the number of verified accurately-picked orders by the total number of picked orders over the same period of time.

How Do They Ensure Accuracy?

Inaccurate orders are one of the worst things that can happen to a fulfillment company and their client. After all, it’s the client that bears the brunt of the unhappiness of their customer, and you can easily lose business if your fulfillment partner makes a mistake. Therefore, it’s in your best interest to understand how they ensure that orders are accurate.

Does the company implement checks at multiple points to make sure the order is correct? Do the employees use barcode scanners to verify the product? Do they use continuously-updating warehouse management software? Find out what they do to make sure every order is picked, packed, and shipped to perfection.

What Happens When They Make a Mistake?

The margin for error might be small—and with some companies, it’s smaller than for others—but in the end, every fulfillment company needs to have a plan for when they make an error. A grumpy customer isn’t going to care that it wasn’t your fault that they received the wrong item, or that it showed up late. Talk to the fulfillment company and ask what their process is for dealing with errors. Will they pay for the shipment of a new product? Refund the cost of the item and shipping? Make sure you know what they plan to do to make it right and take that into consideration when you make your final decision.

Do They Offer Bulk Shipping Discounts?

Most fulfillment centers work with the same major companies—FedEx, DHL, UPS—to handle shipping. The question is which fulfillment company has negotiated the best rate with these providers so that they can pass those savings on to you.

What Are Their Minimum Order Requirements?

This will be a pretty simple way to tell if they’re a good fit for you and your business and if they’re willing to work with you. Depending on their fee model, the ideal fit changes. If a fulfillment center charges a flat per-order fee, they will probably have a high minimum order requirement (MOQ) and possible penalties for months when your numbers fall below that threshold. It’s less common to find a fulfillment center that imposes order maximums, but this can happen if they are dealing with a shallow labor pool. Factor this into your final decision.

Where Are Their Warehouses Located?

Location is a primary factor in determining the cost and speed of fulfillment. If a majority of your customers are in Southern California, you want to make sure that you have west coast fulfillment centers to keep your inventory as close as possible to them. In this case, working with a fulfillment center in Michigan is probably not the best fit.

Do They Offer Additional Services like Kitting, Customer Packaging & Returns?

At the end of the day, there’s so much more to product fulfillment than picking items off a shelf and shipping them to customers. If you sell multiple SKUs on your website it might be advantageous to have the possibility of kitting them together. Likewise, the need for flexibility when it comes to working with custom packaging or handling returns is something you should consider. Even if right now you use standard generic packaging or would prefer handling returns yourself, partnering with a fulfillment center that can do all of that will give you more options in the future should you change your mind.

The One Question You Shouldn’t Ask

Now that you’re armed with the knowledge of what to ask when you’re shopping around for a fulfillment center, consider the one thing you shouldn’t ask: “Is this the cheapest option?”

Certain things in life are not worth skimping on. A service that’s as critical to the success of your business as product fulfillment falls into that category. You’ll want to work with a partner that ticks off as many boxes as possible—high accuracy rates, good guarantees, ideal location, etc. Those advantages might cost a bit more, but the end result of investing a bit more upfront for better service will translate to better results down the road.

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