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I figure this type of situation will scale better especially for the holidays and I can concentrate on advertising, marketing, and sales instead of being shipping clerk.
[edited by: sun818 at 8:38 pm (utc) on Sep. 1, 2004]
> You have to get your product to the shipment house (shipping costs)
The costs for shipping products to the fulfillment house and storage would add up quickly. I make less per piece, but it is my intention is to market the site and increase volume. If I pick a fulfillment house in the middle of the United States, I could save money in some situations. It would cost less to ship from midwest to East Coast versus of coast to coast.
Thanks for the input so far. Any other ideas?
You might then be able to "move" your business to this shipping center and pay a lot less taxes than you would in San Francisco. Additionally if you found someone in a lightly populated state like Wyoming, you would have far fewer customers that would have to pay taxes on their orders. I know that whenever I shop online I try to shop out of state to avoid sales tax.
Since we are a major client for our distributer(manufactuer), they were more than happy to drop ship for a small fee, rather than seeing us take our buisness to the competition.
I'm actually trying to offload some my work, so I can start working in including about five pending drop shippers that I want to include on our web store.
> service levels
I actually would like to get back to same day shipping but because of the success I can't fill the orders quickly enough. So, by using a fulfillment house I'm hoping they can ship same day. Since you've mentioned, that will be a question I'll have to ask. I wouldn't want a service to ship 3 days the order is submitted came in...
We have take a page from DELL, 'Lie about the delivery time and deliver the shipment early'. All our shipments from dell has arrived 2 to 3 days before they are due.
Customers are happy when they think they are getting the package early, when in fact, you are just padding your fullfillment times.
Sure you may lose a few rush orders, but from my experince, people with rush orders are a big pain in the rear, and I can do without there business.
Since real estate is high in your area, how about renting a self-storage space and doing packaging there?
I've thought about it - its a lot of wasted time going back and forth between printing invoices, packing boxes, and bringing the packages back for placing shipping labels. Space is not as much of an issue right now as time is.
If I did go the self-storage space, a colleague recommended I use pre-paid FedEx shipping labels. This would remove the requirement to bring the packages back to the house for label printing. Honestly, I have not looked into it much.
The issue is how to best use my time and not be shipping clerk the rest of my life. ;)
Have you talked to them about letting someone come into the house in the afternoons to help with shipping? Maybe if you hired a high school kid for 3-4 hours they wouldn't be as threatened because you're giving some kid real-world experience.
I struggled with the concept. I talked to many fulfillment centers all over the country. Some were cheaper than the one I have now.
In the end I searched for a local company that is a 20 minute drive from my house, they have extensive expertise fulfilling the types of items I sell. This is a bigger issue than one might think because if you ship lightweight delicate items, you don't want a fulfillment center with dust, forklifts and big burly guys.
Now here were the issues:
I am homebased and legally prohibited from having employees in my home. beside that, I wouldn't want to. it's my home.
The cost of geting office space would have to be factored into the equation. I also have to look at the fact that shipping is not a full time job for someone dedicated to the task so it would be hard to find someone who wants that type of work.
Also, to legitimately employ someone in my state (like you, Sun818, I'm in northern california) would be extremely expensive in terms of taxes and workers comp and other responsibilities. I'm not doing it under the table because the last thing I need is to get caught or sued and I can't do it, ethically speaking.
So I bit the bullet and went to a fulfillment center.
People always raise questions, but here is the one thing I had to come to terms with:
inventory and shipping is not rocket science. Really. I would ask all sorts of questions about whether or not they could do it right, could they do this, could they do that. Other people aren't lemmings and having a fulfillment center is not much different than having to train somebody to work for you. EXCEPT the people at the fulfillment center do this all day every day for years.
Issues are resolved quickly. The "learning curve" is much lower than having to train someone because they are just adapting to "my way" of doing things that they already do.
All in all, it was the best decision I have made because my time is not well spent packing and shipping. I can grow my business and not have to worry about the staff to fill orders. I won't have as much stress during the holiday season. I don't have to deal with the complications of hiring people.
It's just like I have a shipping staff that's in another location. We are in touch constantly, we solve any issues quickly. There has been no delay in turnaround time (often, they are faster than me because this is ALL they do), and even though I am a small account for them, they sincerely wanted my business. Insurance, damage, theft and any other issues are automatically covered by a professional fulfillment center. My incoming inventory now goes directly to them. They open at 7AM I send the orders the previous night, they're out before 10. I send the rest of the orders the next morning to go out by 3, I send a last batch of orders that are for FedEx by 1 so they can go out that day.
I send over my own packing slips so they can be all pretty and graphically pleasing just like I would print them here. We have made it as seamless as possible.
I'm posting this for you because I had a hard time finding good information on making that jump. Because most info out there does not focus on the small business, they focus on the big guys. It took me 2 months to get the guts to make a move, but I finally did it and I have not looked back.
And I get the benefits of having shipments delivered to a business, they have a loading dock (which you can run into needing), have regular and steady multiple carrier pick ups and so on.
So, when you look at this, you have to understand that shipping is not rocket science and it's not as difficult for someone else to be as competent at it as you. As a business owner with limited resources (mainly time) you figure out what your strengths are and outsource the rest.
Sun818, you have plenty of very good fulfillment centers in your neck of the woods. I know. because if they had been closer, I might have used one. I would definitely suggest going with a place close that you can visit, meet the people, tour, interact with, be in the same time zone (so important).
Hope this helps.