Whether you’re outsourcing fulfillment for the first time or looking for a new 3PL, expect a lot of questions when you talk to prospective partners. As the saying goes, the devil is in the details. The best product fulfillment houses will be just as curious about your business as you are about theirs. They need in-depth information about your products, markets and operations to determine if they’re a good match for your company and arrive at an accurate price for their services.
Here are 10 key questions a potential fulfillment partner should ask at the onset. Your answers should lead to still more questions and evolve into a lengthy and detailed discussion. If that isn’t the case, you should probably move on to the next potential partner.
1. What are your primary sales channels? B2B, B2C and direct selling are very different channels.
B2B fulfillment involves high frequencies of similar orders. Inventory is stored and shipped by the pallet or case, and there is less labor involved per sellable unit due to the bulk nature of the business.
B2C orders vary according to the needs and whims of the buying public and typically involve more SKUs. Pick and pack fulfillment requires more staff and time, so labor comprises a significant portion of costs.
In fulfillment for direct selling, order volumes can double or triple on subscription renewal days, and after conventions, new product introductions and special promotions. Orders may be bulk-shipped to party planners or delivered to individual buyers. Package presentation is a priority, and invoices or individual notes and offers are often included.
Do the product fulfillment houses you’re considering handle the type of business you’re in?
2. What kinds of products are you selling? Warehousing set-up and equipment needs vary, depending on what and how you’re selling.
Warehousing for bulk (B2B) products requires racking built for pallets and cases, forklift trucks to move them, and large spaces for receiving inbound freight and staging outbound freight.
In B2C fulfillment warehouses, each product type, or SKU, is stored in its own slot or bin, all organized to maximize picking efficiency. The setup includes lots of pick faces for picking single items into totes or carts, as well as space for preparing small package shipments. There may also be various levels of automation to speed the picking process.
If you sell food, beverages, or health and wellness products, you may also need temperature-controlled storage to ensure the safety and efficacy of your products, along with an advanced warehouse systems to manage FIFO, LIFO and other inventory management protocols.
If you sell high-value items, you need extra warehouse security, like mesh cages or a separate locked room, coupled with access control, cameras and other security measures.
Finding a 3PL with experience in your industry will ensure the right storage and handling for your products, as well as a better understanding of ordering cycles and customer expectations.
3. How many SKUs do you have? How many months of inventory do you typically carry? More SKUs require more space and labor to track and manage receivables and fill orders. Also, the higher your SKU count and the more inventory you have on hand, the higher your storage costs.
4. Can you provide historical data on average units per order, best-selling products, seasonal trends, etc.? Historical order data will help a potential fulfillment partner estimate how much space and staff your account really requires and whether those requirements fluctuate throughout the year. That, in turn, allows the provider to scale up or down to save you money while meeting the KPIs that matter to your business. The best product fulfillment houses will understand the critical importance of this data to fulfillment services pricing. The rest won’t.
5. What commerce platform do you use? Seamless integration between your system and a 3PL’s warehouse management system is critical to business success. Whether you use your own in-house shopping cart, a platform like Shopify, or an ERP system, a proactive fulfillment house will ask for details sooner rather than later.
6. What kind of pack-out do you need? The answer to this question will have a major impact on costs for labor and packaging material. Plain brown boxes may be fine for some products, but if you’re looking for options, better product fulfillment houses offer a variety of ways to spice up your presentation without putting a dent in your bottom line.
When reducing costs is more important, a good 3PL can help you save you money by:
Shipping supplements or other goods that come in hard containers in bubble mailers or polybags.
Using the most cost-effective packing materials to protect your products.
Right-sizing parcels to avoid unnecessary DIM weight charges.
7. What are your current delivery service levels and do delivery commitments require multiple distribution centers? Most sellers feel pressured to match Amazon’s two-day delivery standard. But even a centrally located warehouse can’t ship to all regions within that timeframe. A 3PL should be able to help you compare costs versus projected revenue to determine the optimum number of warehouses in your fulfillment network.
8. What parcel carriers are you currently using on your own account? Are you willing to switch to the account of your fulfillment partner? Fulfillment 3PLs like Amware negotiate with parcel carriers based on their aggregate freight spend across all customers. There can be a huge cost advantage to shipping under your 3PL’s parcel account.
9. What issues are you experiencing with your current fulfillment operation? You’re looking for a 3PL because something isn’t up to snuff in your current fulfillment program. Are there problems with order speed or accuracy? Do you experience frequent backorders because stock runs out? Are shipping costs cutting your profit margins to the bone? The best product fulfillment houses are problem solvers. Whatever’s wrong, they want to know. Switching fulfillment partners won’t help if the true nature or source of the problem isn’t addressed.
10. How do you see your business evolving in next 1 to 5 years? If your business is growing, it’s likely that your product line, volumes and order profile will change over time. By asking about your plans and projections early on, a good 3PL can scale to match your needs, supporting you with the appropriate capabilities at each stage of your company’s evolution.
If you’re looking for a new product fulfillment house, consider Amware. Our nationwide fulfillment network includes 15 facilities in 6 major markets.. We employ a full arsenal of corporate-wide, continuous improvement tools and techniques to maximize efficiency, minimize errors and manage costs for our clients. And our customer-centered work culture, flat organization structure and dedicated account teams provide personalized service to every one of our clients.