5 Approaches to Order Fulfillment
By June Campbell
Fulfillment is simple at a brick and mortar store. The customer pays for the merchandise and carries it away. However, fulfillment is more complicated for a mail order business or a business that is selling via the Internet.
Fulfillment includes taking the order, packing, shipping and processing the financial transaction. It could also include customer service, technical support, inventory management, and processing refunds, returns and warranty claims.
Fulfillment is a vital but costly aspect of operating a business. Your situation determines which approach works best for you.
1. Drop Shipping
Drop shipping is an arrangement in which a wholesaler or manufacturer agrees to fulfil orders from items in their warehouse. You make the sale, conduct the financial transaction, and send relevant data to the company to process. Since the company ships the merchandise, you do not have to arrange warehousing or inventory management.
Many businesses will not agree to drop shipping, as they find it more profitable to process large orders instead of individual orders. However, there are exceptions. Find a company that produces merchandise that you would like to sell then contact them and see if they will negotiate.
Alternatively, look for a company that promotes drop shipping. Run a Net search or a Yahoo search for "drop shipping." Before signing a drop shipping agreement, ask for references from satisfied merchants.
2. Set Up Your Own Mail Room
Micro businesses might set up a "mailroom" in the basement. It's cost effective, but labor intensive.
You will need a means of processing payment (i.e. credit card capabilities) and a means of keeping track of inventory, orders, refunds, etc. Yahoo's Small Business category lists numerous companies selling software for small business management.
Larger small businesses might opt to set up a mailroom in the workplace and assign employees to handle order fulfillment. This allows the most control over fulfillment as everything is done on site. You can ensure that knowledgeable people handle customer service, that packaging is appropriate, and that refunds, warranties and are processed in a timely manner.
3. Integrated Fulfillment for the Web
Businesses that are adding online sales to their regular operations require software that integrates with the existing system, manages inventory, facilitates customer service and generally handles all aspects of fulfillment.
If you're too large for the basement mailroom and too small to outsource, you might consider using one of the companies that are catering to small business. Check out Yantra, Manugistics and EXE Technologies.
4. Fulfilling Digital Products
Businesses selling only digital products (computer documents, software, music, video, etc.) have the easiest time with fulfillment. You will need a web site, shopping cart software to take the order, and a means of processing payment. The most automated businesses use technology that serves automatic download information to the customer upon processing a transaction.
Online businesses might opt to purchase web storage, shopping carts, encryption for secure ordering, and a credit card processing service individually. Alternatively, they might look for a "one stop shop" that handles the entire thing for a fee. The former is likely to be lower cost but labor intensive; the latter could be more costly but simpler to set up and manage.
To find ecommerce providers, run a Net search for "ecommerce billing fulfillment service".
5. Out-Source to a Fulfillment Firm
If your sales justify it, you could outsource the entire process to a fulfillment company. This may or may not be more expensive than doing your own fulfillment. Calculate the cost of on-site fulfillment and compare the price.
Out-sourcing reduces your control over fulfillment, as well as the amount of contact you have with your customers. If customer contact is very important to your operations, or if you need to explain your product to customers before making a sale, outsourcing might not be your best choice.
Before signing a contract, consider these issues:
1. Will the company package your merchandise appropriately? Can they handle your perishable products quickly? You want to avoid returns of damaged goods.
2. Does the firm process orders quickly enough to accommodate your turn-around time?
3. Is the company strategically located? Shipping costs and transit times will be reduced if your fulfillment company is located close to the majority of shipping addresses. For example, 74% of the U.S. population lives close to or in UPS zone five. A company situated in that region might be a good choice for businesses that sell primarily to the US public.
4. Are sales reps assigned to your orders and are you permitted to train them?
5. Can the firm provide references from customers running similar operations to yours?
As the comedian said, "Delivery is everything."
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About the Author
June Campbell's work has been published internationally in both print and electronic publications. Visit her web site for guides to writing business proposals, joint venture contracts and more.
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What Everyone Should Know About How To Buy Wholesale
By: Melanie Burns
Finding a supplier for the product you want to sell, at a price that you can profit from, can be a big task. The best suppliers for your online sales or auctions do not advertise their services and often cannot be found online.
Those that you can find online tend to be middle-men. It is often difficult to get a good enough price to make any real profit online.
Let me tell you about my simple 2 step system to find an untapped source for wholesale suppliers. This is so simple that it's often overlooked as a source for product. This system involves thinking outside the box and not letting policy stop you. (continued below)
The First Step to find a supplier is to find someone that already sells or has access to what you want to sell. This could be a website, an eBay seller, a manufacturer, a wholesale outlet, or a regular store in your city. This is the easy step. You know what you are looking for and you can search on the internet, not for a wholesale source, but for anyone already selling what you want to sell.
Another valuable source for a local supplier is your local phone book. The yellow pages are the best way to find local sources. This should be the first place you look. Doing business locally with someone that you can meet face to face is a big plus for your business.
Another potential source for your product is to find a distributor who would be willing to private label a product for you. You could get a very high quality product for a much lower price than if it had the name brand label.
The Second and Key Step is to convince the source you found to become your supplier.
Manufacturers and wholesale sources often have minimum orders that might be beyond your reach if you are just starting out. Online retailers, eBay merchants, and retail stores may be your best bet. Try to find a small store who is looking to expand.
But remember, you are dealing with a human being and they can be convinced to do business with you. Just be sure to sweeten the deal for them. One way is to offer the person you are dealing with at your new found source, a percentage of your profits from the products he supplies you.
Be sure to project it out for him. If he can see the benefit of working with you even though it causes extra work for him, you can be successful in making a deal.
You could offer him 20% of the profit from sales of his products. For example you could show him that you project to make at least $100 profit from each product, and you expect to sell 40 of them per month. The $4000 a month means an extra $800 per month in his pocket. You still make a nice $3200 profit for the month in this example.
On top of that, he will be ordering more products from his supplier and may be eligible for a higher price break from them. This way, his reward for the effort to work with you, is making money on both sides.
There are many benefits you can offer your potential supplier, but no matter how you look at it, the main thing it comes down to is MONEY. What's in it for your potential supplier to do business with you? If can you show him that, you have a better chance of making a deal with him and starting your online sales.
NOTE: When looking for suppliers around your city, don't go trying to impress the big stores with your $800 or even $3,000 extra income per month proposal. Try going to the little stores that are looking to expand their business, they are the ones that are usually more open to new opportunities.
The big stores are making hundreds of thousands of dollars per month in profits, so an extra couple of thousand would probably not impress them the least bit.
So now you see that by thinking outside the box, you open the door to many possibilities and increase your ability to make money online with your products.
About the Author:
Copyright © Melanie Burns
This article is free for reproduction but must be reproducted in its entirety including live links and this copyright statement. Subscribe to the iBusiness How2 Newsletter to receive hot tips, how to's, internet business tools, and relevant product reviews by sending an email to: newsletter@internet-business-how-to.com
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