One of my earliest memories as the owner of a brand new ecommerce website was of my colleague Kerry sprinting down the road after the post van to stop a parcel going out with an incorrect address.   Like many small online businesses, we had crammed all of our stock into a tiny storeroom and were picking and packing orders for children’s gifts ourselves.

Eventually, however, we outgrew the storeroom and resented time spent packing because it took us away from marketing our business.

The cost of premises and fluctuations in the number of orders each day made setting up our own warehouse uneconomical so we turned to a fulfilment house.  The expectation was that we would download our orders to a new partner each day who would store our goods and send them out as needed.

It sounded so easy!  Now two years on, we are at our second fulfilment house having left our first choice after only a few painful months.  Moving to fulfilment was the right choice but here are a few lessons we have learnt on the way.

Comparing Apples with Pears

Each fulfilment house has its own method of charging which makes it hard to work out which option will be the cheapest.  Broadly, however, they divide into two camps.  One group charges very little to pick and pack your goods but then have standing monthly charges for account managers and IT support.  The second group have higher picking and packing charges but may have lower or even no charges for on-going support.

Based on the number of parcels we send out, standing charges work out really expensive per parcel and it was more economical to avoid them but pay more for picking and packing.  Of course, we aspire to grow to a size where standing charges are spread over a zillion parcels per month but we have a way to go!

Other charges which we learnt about were the cost of returns, goods in, stock taking and mark ups on postage and packing.

Are We a Valued Customer?

The first fulfilment house we chose was huge.  They dazzled us with stories of sending out hundreds and thousands of orders a day from readers’ offers in national newspapers.  Because of their size, their courier rates were enticingly low and I guess we were flattered to be alongside the “big boys”.

What both we and the fulfilment house quickly learnt was that varied orders of all shapes and sizes from lots of individual customers were less easy to fulfil than multiple identical orders using designed for purpose packaging.  And, with customers many times our size, competing for the attention of our account manager, it was hard to get noticed.

So we have moved to a fulfilment house which has a mixture of very large and smaller customers.  We are still not one of the biggest accounts but at least we are in an environment where our voice is heard and any problems dealt with quickly.

Information on Tap

One of the biggest benefits of moving to a fulfilment house was the availability of information.  Beforehand we had maintained manual stock records.  This worked because our range of products and number of orders was low.  With more products and orders, the system would have fallen apart and we would have had to invest in stock control software.

With our fulfilment house, information on stock is provided to us daily.  I know how many sets of children’s gardening tools we have sold so far this month (or this year) and I can confirm stock levels for customers in an instant.

Perhaps even more importantly, accurate stock levels which take into account sales on eBay and Amazon as well as our website are uploaded daily.  There was, however, a cost for this.  To integrate our website with that of our fulfilment house cost several hundreds of pounds.  In hindsight, however, well worth the investment.