Guide to Outsourcing Fulfillment

Choosing the right outsourced shipping partner

1-888-SHIPWIRE

www.shipwire.com

Guide to Outsourcing Your Fulfillment

1-888-SHIPWIRE 2185 Park Blvd. | Palo Alto, CA 94306

Table of Contents

Introduction

What Is Order Fulfillment?

When Should You Outsource Your Shipping?

Grow International Sales Cost-Effectively Using ‘Local”

Warehouses

Pros & Cons Of Outsourcing Fulfillment

Choosing An Outsourced Order Fulfillment

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IntroductionIn this guide you will find guidance to help you select an outsourced shipping partner to help you grow your business.

It will help you approach your shipping business systematically and understand pros and cons of outsourced shipping.

This guide is to help, regardless of whether you chose Shipwire for your fulfillment.

What is Order Fulfillment?Most generally, the process after a buyer order has cleared payment. Taking the prod-ucts, packaging them for shipment and getting the correct package to the buyer in a timely manner.

As your business grows you may find that this process becomes incredibly time-consum-ing, costly, as well as distracting when you want to focus on growing sales. This is where outsourced order fulfillment services start to look compelling.

In a nutshell, outsourced order fulfillment is defined as storing your inventory in a third-party warehouse (3PL or third-party logistics) where you route your orders for process-ing. This outsourced fulfillment provider will take your order then pick, pack, and ship the order to your customers in a way that you define.

Other options come into play when you want to make order fulfillment as cost-effective as possible. For example, geographically optimizing your inventory placement to lower shipping costs and fulfilling international orders. We’ll get into some of these consider-ations shortly.

You send merchandise in bulk to Shipwire’s warehouses in the US, Canada & Europe

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Your customer shops on your website & pays you directly. After payment, the order is automatically sent to Shipwire.

Shipwire packs & ships the order from your inventory, & sends tracking information

If needed, your customer can return the product directly to Shipwire’s warehouses


When Should You Outsource Your Shipping?If you are asking yourself, “When is the right time to outsource my order fulfillment?” … Then the time is likely upon you. Here are some other factors to consider:

Your Level of Experience

Do you know how to get a product from point A to point B accurately, for the lowest price, with the least margin of error? Can you do it thousands of times with similar accuracy? Can you automate your business by integrating your Web store or shopping cart with your warehouse or order fulfillment solution?

Business Growth Plans

Are you experiencing a stage of business growth or want to have capacity to scale into? Are you concerned your business will need additional staffing, warehouse space and software infrastructure to grow? Outsourcing order fulfillment can lay the infrastruc-ture for your business growth.

Order Volume

Perhaps you are already falling behind in your orders or are expecting a sales spike in the next 6 months. An order fulfillment solution can scale better as your business grows.

Eliminate Shipping Errors

Often with “do-it-yourself” shipping, as orders increase, so do shipping errors. Overworked employees, increased working hours, and WMS (warehouse management solutions) designed for lower volume, start to break down. Mistakes cost your business big: expensive returns shipping, restocking times, reshipping costs and general hassles. Each error can cost you 3-4 times your per-order pick-pack-ship costs; assuming you can retain the customer.

Product Type

Not all products are right for order fulfillment. Outsourced order fulfillment is best for non-perishable items bought by the lot, pallet or container and sold by the hundreds. Such as easily repeatable items like toys, consumer electronics and apparel.

If your items are handmade on demand, customized items like monogramming or wedding invitations, individual (1-off) items like closeouts and antiques and or some perishables, then outsourced shipping may not be a fit. For these items, use *Shipwire Anywhere.

End Buyer

Your end-buyer makes a big difference in your order fulfillment needs. At it’s most ba-sic; do you sell to consumers (b2c) or wholesale (b2b)?

Each error can cost you

3-4 timesyour per-order pick-pack-ship costs


To learn more search on Shipwire for “Master Cartons” for an example of wholesale verse retail packaging. Also to be considered is the location of your customers (see be-low regarding the power of multiple warehouses).

Inventory Complexity

A Stock Keeping Unit (SKU) is an individual type of product. If you sell a black t-shirt in S, M & L, that is 3 SKU’s. Selling the same shirt in 1, 2 & 3 packs with all sizes is 9 SKU’s. Generally, the more SKU’s you carry the more complex (and expensive) your order ful-fillment can get. Many warehouses bin individual items in a forward pick-pack area for easy pulling of orders.

Tip: If carrying a lot of items, look to outsource shipping on high turnover items (“best sellers”) first.

Receiving Needs

Sending your product in bulk, freight or by the container to the warehouse is called “receiving”. You inform the warehouse of arriving products via an Advanced Shipping Notice (ASN) and packing list; which contains the product characteristics and number of each SKU.

Tip: All items should have appropriate SKU’s labeling to ensure accurate receiving whether done by you, the warehouse, manufacture and or shipper. Whenever possible forward all tracking information to warehouse.

Customer Support

Customers expect superb CRM (Customer Relationship Messaging) of order status, ship-ping status and tracking numbers. Customers expect the right order shipped within the time specified and to able to return items they find unsatisfactory. For international cus-tomers, understanding shipping tax and customs consequences is also required. Out-sourcing can handle all this without major investments from you.

Automation & Order Status Notifications

Automation is key to scalability and error elimination. See our *Compatible Ecommerce Carts page for a list of automated solutions with Shipwire.

Tax Considerations

For most countries, importing inventory may require your local tax ID on inbound im-ports. This is usually easy to obtain.

See our *UK Warehouse Guide for a UK Tax ID or *US Import Tax ID for the USA. Contact Shipwire for Canada Warehouse Guide.

All items should have appropriate SKU labeling to ensure accurate receiving

Learn more about taxes: shipwire.com/w/support/uk-warehouse-guide/


There are massive cost savings when you move inventory in bulk (by freight) into foreign markets like Canada and the UK

International Shipping

Reaching internal markets cost effectively is not impossible; but it can be tedious and expensive if you do it wrong.

Depending on volume and your business needs you may just want to ship orders inter-national post. If you have the volume (even 1 or 2 best sellers), there are massive cost savings when you move inventory in bulk (by freight) into foreign markets like Canada and the UK. Then ship using local ground parcel services with 1-2 day delivery times. Read on for more insight into this.

Retail Compliance

Retailers like Target®, Walmart®, Sears®, and chains like The Men’s Warehouse® re-quire suppliers to offer EDI (Electronic Data Interchange) between your order fulfill-ment solution and their supplier software. EDI/Retail Compliance gets very complex and can be expensive to integrate. It is very common for an entrepreneur to get a 40-60-page document from a retailer that wants to sell your product. Consider whether you want to absorb the cost of compliance or partner with a company that does this for you.

Send your Shipwire sales rep your EDI requirements to get a consultation.

Fast and accurate order fulfillment is a requirement to compete in today’s domestic and international ecommerce markets. Partnering with an expert like Shipwire to eliminate the headaches and control the rising costs of order fulfillment. Shipwire will provide the reliability for shipping perfection you need for your growing business.

Grow International Sales Cost-effectively Using “Local” WarehousesThe secret to reaching buyers overseas cost-effectively is to locate inventory in the local market. This is what the fortune 500 does. Now you can do this too.

Location is key to shipping price savings. Don’t settle for one good location; you need mul-tiple locations that are geographically close to major population centers and your buyers.

Why Multiple Warehouses Is Better For Your Business

If you ship 25% of your orders to the U.S. West Coast, 25% to the U.S. East Coast, 25% to Canada and 25% to Europe it is likely that most of your shipments will go to major population centers where buyers are (LA, Chicago, New York, Toronto,

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An 18-wheeler filled with 10,000 stuffed animals will cost less than

$5,000to ship from NYC to LA

London, Paris, etc). If your current warehouse is in Seattle, only perhaps 20% of your shipments are optimized.

A better solution? Spread your best-selling inventory out into multiple warehouses. Put your product closer to your buyers once. Shipping orders out from the warehouse clos-est to the end-buyer results in lower parcel delivery costs, faster delivery times and true shipping cost savings.

Discover True Shipping Cost Savings

Discovering real savings of storage and shipping supply chain means using the cheap-est mode of transport for the longest distance, and leverage “economies of scale”.

The biggest expense of retail fulfillment is the product shipment from warehouse to the end-buyer. The so-called “last mile”, is typically a parcel shipment with a major carrier. So if you cut that distance down, you save real money.

See our *Shipping Calculator to plug in your business numbers.

Multiple Warehouses Reduce Costs

What is the lesson? Carrier pricing is a factor of distance. If you strategically place in-ventory in multiple locations, you can decrease delivery time and costs.

Now if you were thinking, “I would have to pay to move my inventory to my second warehouse.” Consider this. Bulk freight shipping, those 18-wheelers seen on the in-terstate, is cheap compared to the outbound piecemeal parcel shipping of FedEx or UPS. An 18-wheeler filled with 10,000 stuffed animals will cost less than $5,000 to ship from NYC to LA, that’s $0.50 a stuffed animal, in return for $3.00, $5.00, or more in savings for each stuffed animal you would ship individually – not to mention your buyers get faster delivery times.

Therefore, the rule is to strategically place inventory closer to the end-buyer, and always try to shorten the last leg of the parcel delivery by the carriers. In industry jargon, this is sometimes known as “forward warehousing”; think of it as real savings. Alexander the Great actually invented the concept; he called it a “forward supply depot.” Whatever you call it, it means real savings to you.

See our Shipping Calculator here: shipwire.com/w/support/shipping-calculator/


Warehouses Around the World

North America International Coming Soon

Reach buyers faster with reduced shipping costs www.shipwire.com/calculatesavings

United States

Chicago Los Angeles PhiladelphiaCanada

Toronto Vancouver

United Kingdom

London

China

Hong Kong

Germany

FrankfurtBrazil

Rio de Janeiro

Australia

Sydney


Pros and Cons of Outsourcing Order Fulfillment

By working with your chosen outsourced order fulfillment provider, most of these “Cons” can be over-come and likely turned into additional “Pros.”

+ Scale your order fulfillment to match your business growth.

+ Lower shipping costs.

+ Outsourced order fulfillment is usually less expensive than doing-it-yourself or running your own warehouse.

+ Automate your order handling between your shopping cart and your warehouse.

+ Get reporting and tracking of all shipments.

+ Automate claims handling. Shipwire offers 1-click claims submission.

+ Better tracking of your shipping and fulfillment costs without investing in warehouses, employees, software, vehicles, insurance, security, etc.

+ Multiple warehouses on-demand give you instant international reach and reduced shipping costs.

+ Eliminates the hassle of storage and shipping. Whether you are out getting new business or relaxing at the beach, automation means it works without you having to pack and ship every order.

+ More time to focus on sales and marketing and grow your business.

+ Automate returns handling and processing (even Internationally).

+ Allow you to enter new foreign markets with minimal investment.

+ Gives you a point-of-contact for all storage and shipping concerns.

+ Freight help-desk to assist you iron out complexities in your supply chain.

+ Outsourcing is like an expert partner helping you grow your business and be responsible for customers receiving orders correctly. It’s a “responsible neck” you can grab if you need to.

Pros: Outsourced Order Fulfillment Benefit

– Inventory is off-site and you are giving up some control. Get a free trial and test and get to know your partner. Test with your best sellers.

– Cost. When comparing a quote for outsourced order fulfillment to doing-it-yourself make sure you compare apples-to-apples. Don’t tell yourself you don’t have employee-staffing costs if you pack and ship your own orders. Assign a reasonable hourly cost for your own labor.

– You must be conscious of your receiving and packaging. Outsourcing means that you are relying on a third-party that needs clear communication from you regarding your inventory details. You will need to clearly communicate your needs and get agreement from the warehouse.

Cons: Outsourced Order Fulfillment Hurdles and How to Overcome Them


Choosing an Outsourced Order Fulfillment ProviderBy now you probably have a pretty good idea of what is important to understand when speaking with potential warehouse vendor. That said; here are some things to consider and questions to ask.

General Business & Warehouse

How long have they been in business?

Do you get along with their customer support and account team?

Is the warehouse also a retailer? Be cautious: if they are, they could be competitive to you and you’ll be feeding a competitor all your sales and customer data. Not a smart idea.

Where are their warehouses located? Shipwire warehouses are in the U.S. Canada and Europe, *complete list of Shipwire warehouses.

Are your products a good fit for the facility?

Tool & Automation

Is the online tool set user friendly? *How it works & Free Trial.

If not outsource all your shipping; does the provider have software to use for free to manage your shipping? See *Shipewire Anywhere for options.

Do they provide reporting and transparency for your orders as they are received?

Do they offer online insurance claims and customer support tickets with ability to track them?

Do they have the means and team to continue to build their platform to provide you with more advanced tools? Or did they buy a bad piece of software that even they are frustrated with?

Does your website developer have a complete toolkit if they need it? This is called an API (*Application Programming Interface)

Do they offer 1 click setup and compatibility to *common e-commerce software? You don’t want the expense of developers integrating your store to the warehouses.

What type of automation do they offer for your storefront?

Find detailed information:

shipwire.com/how-it-works/store-your-product/

shipwire.com/how-it-works/

shipwire.com/anywhere

shipwire.com/developers

shipwire.com/connect

shipwire.com/w/support/config-ure-and-store-products-overview/

shipwire.com/pricing

shipwire.com/w/support/sending-products-to-shipwire/


Features and Supplies

What type of *packaging does the service offer?

How are *returns processed?

*How fast will your products go from receiving to being available for shipping?

How does the warehouse software handle back-orders and out-of-stock inventory?

Does the provider’s packaging reinforce your brand or do they put their own brand all over the packaging?

What are the parcel carriers and freight options available in the warehouse?

Do they offer wholesale and pick-n-pack services?

How does the warehouse handle mistakes or lost packages? Is it your dime or theirs?

Do they offer inventory insurance within the warehouse?

Can they accomplish consumer shipments, business-to-business and retail compliance?

International Considerations

Will the order fulfillment provider ship internationally?

Does the provider have a network of domestic and international warehouses that you can leverage to expand your business?

What international carriers will be available for your use?

Do you get access to knowledgeable teams overseas?

Pricing And Contracts

Can they provide quotes quickly and guarantee them? For a comparison, please see Shipwire’s *order fulfillment pricing calculator.

Look for hidden costs. Many third-party logistics company contracts can have hidden fees – Charges for Receiving, non-palletized receiving, forklift usage, automated order submission fees, packaging/repackaging fees, pick-pack minimums, minimum storage costs, extra charges to change their packaging, etc.

Look for minimum contract commitments hidden in the contract.

With Shipwire, we stand behind our online pricing quotes; they never have contract commitments and no minimums.

Order fulfillment pricing calculator: shipwire.com/pricing


Getting Started Overall, does the provider make you comfortable enough to trust with your inventory and your order fulfillment? Please see our *“Set It and Forget It” list for more reasons why Shipwire is the best order fulfillment provider for your business.

Features and Supplies

Do they offer a *free trial of any warehouse in their network?

Can you outsource a portion of your inventory, use one warehouse in their network only and/or stop and start during the year if your going to just use the warehouse seasonally or when your own warehouses is overwhelmed?

Store Sell Ship Delight

Try our free trial: shipwire.com/trial Set It and Forget It: shipwire.com/help/c/how-it-works/storing-goods/

Guide to Outsourcing Fulfillment

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