It is relatively easy, these days, to start selling products online. There are many off-the-shelf tools that small product companies can use to quickly build an online shop.
What isn’t so easy is packaging products, choosing the right shipping carrier, and keeping customers happy with quality, on-time fulfilment.
Here are some big considerations for startups and small brands to keep in mind when planning their ecommerce fulfillment strategy.
Consider Outsourcing Right Away
Many small businesses intend to handle order fulfillment and shipping on their own. They may not realize how much time it takes to pick, pack, and ship orders. While it is often manageable for a while, it’s probably not sustainable.
If you think you won’t have the time or resources to fulfill your products accurately and on-time, seek out a fulfillment provider who has experience with startups.
Third-party logistics is the act of outsourcing distribution, warehousing, and fulfillment services to a business. Many ecommerce companies hire third-party logistics providers (called a 3PL) to ensure their products are accurately stored, inventoried, packaged, labeled, and sent to the correct carrier. The most important factor when outsourcing is finding the right third-party logistics partner for your brand’s needs.
While it may appear cheaper to fulfill products in-house, it the cost of outsourcing usually far outweighs the time and headaches of managing fulfillment yourself.
The biggest benefits for startups and small businesses to outsource fulfillment to a 3PL include:
- Grow your customer base. An experienced 3PL will have relationships to help get your brand into new sales channels, whether that’s retail, online marketplaces, or international markets.
- Best practices are at your fingertips. Working with experts means you get the best quality and industry knowledge. If you’re wondering how to switch carriers, chances are your 3PL will help walk you through that process.
- Differentiation in the market. Have you ever ordered a product for a friend and been able to send a custom message with it? That’s a value-added service. From procurement to assembly work, re-flashing software, and using special eco-friendly packing materials, working with a 3PL who offers value-added services will create new ways to differentiate your brand and keep you competitive in the market.
Figure Out What Your Customer Wants
Fulfillment is the last stop before your goods get to your fans. Your fulfillment practices should be informed by what will resonate the most with your customers.
A beauty brand will likely add much more flair, and less instructions to their packaging than a medical device. A nutritional supplement will need far less security in their packaging than a high-value camera. Choose the branding, packing materials, and shipping service that meets your customer’s needs.
While you’re trying to grow your customer base, put thought and planning into your fulfillment process. Give your customers a great unboxing experience. If you choose to outsource fulfillment to a 3PL, you’ll have experts helping you put your fulfillment ideas into practice.
There are also the ebbs and flows of seasonality to consider. Most ecommerce brands have a very busy and hectic holiday season. If you do fulfillment in-house, during peak season you’ll likely spend all of your time fulfilling orders and answering customer support requests—that leaves no time for team building, customer support, marketing, fundraising, and more.
Automate Communication When You Can
Customer support is a huge part of fulfillment. While digitally native brands may be great at social media and online branding it’s not the only type of customer communication. Small brands often scramble to create customer support documentation like FAQs, product guides, and return support—all of these are an integral part of your overall fulfillment.
It can be very time consuming to keep up and resolve customer issues quickly. A big part of customer satisfaction is having support tools ready for the customer before they need it.
To create time saving strategies, small brands should automate customer communication whenever they can. Here are some examples:
- Create a simple return process. Make it abundantly clear where returns need to be dropped off and how they need to be labeled.
- Send SMS texts to alert your customer that their order has been confirmed, fulfilled and then shipped, to help increase anticipation.
- Send an email to notify that their package arrives, include a short video tutorial on how to start using the new product.
Check out our guide to the best shipping options for small businesses.
Don't Be Afraid to Use Value-Added Services
Yes, value-added services cost more, which is a big consideration for startups with a short financial runway. But think about the customer satisfaction, brand recognition, and added revenue you can get with a few simple fulfillment projects. Here are a few examples:
- Subscription service: What better way to lock in future revenue than to ask customers to pay for a monthly subscription to your product. Not all 3PLs can handle the order flow and inventory management that is required with a subscription service model. Think about it, you need to make sure you always have subscriber orders go out first (they already paid!) and then real-time orders second. A 3PL with a robust warehouse management system is necessary to make this happen.
- Special kitting: There are so many things kitting can do for small brands. A big one is increase average order value by bundling products together. It’s a great way to combine similar items that your customer may not have ordered otherwise. Make it seem like a deal by offering bundled items for a limited time, or a discounted rate. By offering bundles, this means your fulfillment provider will need to create a new SKU for the bundle in their order management systems so that you can keep accurate inventory counts of all the items that will need to be bundled.
Think About How You Plan to Scale
It may seem like a tall order to figure out your future plans before you’ve gotten very far off the ground, but in terms of your fulfillment strategy, knowing where you want to go will help you now.
- Storage capacity. Your inventory growth strategy is a big consideration. If you plan to release new products quickly, or even start offering new flavors, colors, or sizes of your current products. This means you’ll have need to add more SKUs, which means more space, and more complex inventory management.
- Service regions. Where do you think most of your customer interest will come from, geographically speaking? Knowing where you’ll need to ship your products will give you a better idea of where you should fulfill your products. The closer you fulfill to your product’s destination, the more you’ll save on shipping costs.
- New Sales Channels. Maybe you have specific retail stores in mind, or online marketplaces, or even hotels. Whatever your scaling strategy is, it’s important to have a road map to get you there. Knowing what sales channels, you want next will help inform the type of fulfillment set-up when you’re just starting out.
Common Misconceptions About Startups Outsourcing to a 3PL
It’s a common misconception that small companies always handle their own fulfillment in-house, and midsize companies always outsource. There are many nuanced services that a 3PL can provide to companies of all sizes.
- Startup volume is too small. Not true! There are many 3PLs who work with small companies. In fact, quality fulfillment and industry connections can help open doors to new sales channels like Amazon, retail stores, or international markets.
- 3PLs don’t work with startup platforms. Nope! Some 3PLs have built-in plug-ins that connect with specific platforms, like with Shopify for example. It’s a platform that attracts many small brands because it’s easy and simple to set up. This integration helps eliminate inventory errors by allowing a seller to seamlessly connect their Shopify page to a 3PL’s inventory system. No matter the type of online shop you have, if you work with an experienced 3PL, they will have the built-in capabilities to connect with your ordering system.
- I’ll lose control of my company. Definitely not! A 3PL supports your company’s fulfillment needs. While they may make suggestions (more economical packaging, or cost-effective carrier service) they should be producing fulfillment practices that you want done for your brand. Ultimately a 3PL should become an extension of your brand and your operations team.
The best advice when choosing a 3PL: be sure to ask around for referrals from companies similar in size to yours.
If you’re looking for a 3PL with fulfillment centers in cities across the US, we own and operate facilities in the Bay Area, Los Angeles, Kentucky and the East Coast. Use DCL’s national footprint of warehouses to distribute your inventory across the country to reduce transit times and save on shipping costs. If you need fulfillment or shipping support and want to partner with DCL Logistics, we’d love to hear from you.