joined:June 30, 2010
I operate a ecommerce shop out of my home that has grown to the point that I am getting overwhelmed with orders, and I feel that I am spending most of my time just packing and shipping products. I am also planning on taking a two week vacation overseas in the spring time and worry about customers leaving me while I am gone. I talked to a local fulfillment center and am going to go and tour their facility. I thought it would be better to go with a local company just because of the proximity and sometimes it would be easier if I receive the product, sort them, and then drop them off at their warehouse.
They said they would charge anywhere from $2-$4 per order shipped, plus a storage fee of around $100 per pallet lot size month to store my inventory. I do around 500-600 orders per month currently, but see myself expanding this once I have a fulfillment center. I would also have to provide all packing materials, boxes, bubble wrap, tape, etc and cover shipping expenses. If they have to spend a lot of time sorting my inventory then they would charge me labor for that. They said they have insurance for the value of my items, but I am not entirely sure about how well that would cover me.
Here are my concerns about potentially outsourcing my fulfillment:
1. I have around $100,000 in inventory currently. Its a very scary proposition to take $100,000 of your money and give it to someone else to hold and handle. Is there any way that I can ensure that my assets will be safe at this fulfillment house? The worst case scenarios I have been thinking about are if they go out of business or get foreclosed upon putting my inventory in potential jeopardy. I am also worried about their employees stealing.
2. My other concern is regarding the quality of service. Currently I personally pack every order and include a few samples of products along with orders, sometimes based on peoples requests. The new place said they can do that too, but I am sure that the customization that I do for the clients will be lacking once the fulfillment center takes over shipping.
3. How do you think the cost is for this? If I end up doing closer to 1000 orders a month I am looking at probably around $3000 per month plus a few extra fees for storage. I calculated that if I rent a space and hire one full time employee I will easily spend $3000 per month. I think that a full time employee will probably max out at 1200 orders per month (40 a day). And then I have to deal with all of the issues that go along with hiring an employee (employee theft, coming in late, not doing things on time). I am also currently still in the startup phase of this (only a year into it) and have to really watch my costs.
Anyone else with any experience dealing with outsourcing their shipping please let me know your thoughts. If you were considering doing it but decided to keep everything in house please also let me know why you chose to do that. It is just very scary to trust someone else with all of your inventory, but this could potentially be just what I need to avoid leasing space and dealing with employee issues down the road.