So, you have an ecommerce website, now what?

So you’ve built an ecommerce website and worked out what products you are selling. You just got your first order. Now what? You have to fulfill the order and there are some options you have in the way you structure your business.

Fulfill the order yourself

Many companies start here. If your volume is small and the pick/pack process and shipping methods are relatively easy this may be a good option for you. However, there are some key disadvantages to doing it yourself. If you’re up against larger competitors you will struggle to get some of the benefits they have due to volume if you do it yourself.

Pros of Self Fulfillment

Cons of Self Fulfillment

If you have small quantities, a place to store and lots of time on your hands doing it yourself avoids any hard costs.

High overhead, need warehouse, staff and computer systems if you have volume.
You may be inexperienced and there is a learning curve.
You lose any freight advantages a fulfillment house may have due to volume.
Inventory handling costs ie: counting, shrinkage, etc. Becomes your problem.
You’ll struggle with the information systems you need to provide your clients with up to the minute order status without a significant investment in information systems. You’ll need tracking numbers and detailed information about what is in every box to avoid short ship claims.

Outsource to an ecommerce fulfillment house

Outsourcing to an ecommerce fulfillment house is a good option for many online retailers. You keep your costs and overhead down due to the scale of the fulfillment house, plus you can take advantage of many shipping benefits that a fulfillment house may have.

Pros of outsourcing ecommerce fulfillment

Cons of outsourcing ecommerce fulfillment

No overhead or fixed costs.
Freight advantages from the fulfillment house’s volume
Low costs per transaction
No investment in a warehouse required
No need to hire and train staff
You can concentrate on marketing instead of fulfilling.
Access to fulfillment house’s advanced technology for pick/pack and trace shipments.
Inventory control (counting and shrinkage) is handled by your fulfillment house.
Frees up your time.
A fulfillment house will have tracking numbers and detailed information about what is in every box to avoid short ship claims.

When your business gets very large, there is a break-even point where the transactional cost of outsourcing can be reduced by an investment in your own warehouse operation.
If you choose the wrong fulfillment house it can have negative consequences to your business and ability to provide customer service.

Drop shipping your orders

Drop shipping can be an option for some products and generally good if you have only a few manufacturers that you deal with. The idea is that you ship your order directly from your manufacturer to your customer and avoid having to do any kind of warehousing or fulfillment at all. While this sounds like the perfect solution this is often difficult to set up. Manufacturers don’t want to undertake this task unless you can prove you have enough volume to make it worth their while. Plus, as a “non-stocking distributor” you won’t get good discounts so your margins will be low. Finally, there are some real hurdles around logistics and paperwork to ensure you customer doesn’t find out you shipped it from the manufacturer.

Pros of Drop Shipping

Cons of Drop Shipping

No cost of fulfillment
Easy, take order, send it to manufacturer

Manufacturer knows all your clients, what do they need you for?
Unless shipping and customs paperwork is handled carefully, your customers will know where you got the items. What do they need you for?
Dependent upon manufacturer, less control over what’s in stock.
Lower margins

So what should you do?

If you’ve read this article and still don’t know what option is best for you, call Dare Marketing. One of our Order Fulfillment Consultants will help you decide what’s right for you. Plus, if your choice is to outsource your ecommerce fulfillment, Dare will leverage their years of experience to help you.