3rd Party Fulfilment - Is this feasible?

[MeatOaf]

I currently run an ecommerce business selling (mainly) through eBay. We turnover £50-60k a month from a range of roughly 3000 SKUs, however margins are relatively tight given the overheads of the business, namely staff and premises.

Being tied to a location and being unable to easily take a holiday/travel is very frustrating. Not only this, I am growing tired of the stresses of dealing with staff and having to turn up to my office every day to make sure everything runs smoothly when I know that I can do my other tasks remotely.

I am toying with the idea of cutting down the range of products we sell to the ones I have the least problems with, and outsourcing the fulfilment to a 3rd party company to store, pick, pack and ship out our orders. I imagine I will be able to arrange with my suppliers to send our deliveries direct to the 3rd party fulfilment warehouse which will essentially free me to run the business from anywhere that has an internet connection.

Currently I lease a 2,500 sq ft warehouse at a significant cost. I would be able to save the cost of that and of the majority of staff that I currently employ and likely just lease a very small office.

Is this genuinely a feasible idea? I know that using a 3rd party to fulfil the orders isn't going to be completely smooth and there likely be teething problems but handing that over to someone else so I am not tied to a physical location seems incredibly liberating to me. I could travel for months at a time, only having to work a couple hours each day from a laptop.

Is there anything I'm missing and any potential drawbacks? Has anyone done similar with their own business and got any experiences to share?

 

[Kiki Yu]

The ideas that you would deliver all stocks to a 3rd fulfillment center to help fulfill orders is totally right and would realease you all annoyance, and they would take care of all fulfillment issues and get back to you tracking numbers automatically on your shop if get connected your shop with their shipping system. Customers could check orders fulfillment progress just on the computer, which is what you want.

Regarding as the cost, customers could save storage cost if continuously updated your stocks, no need to pay any fees about storage(that is what we provide). Also, customers do not need to waiting for previous stocks sea shipment time, and all orders could ship by 3rd fulfillment directly to end clients within a short time such as one week.

There is one bad thing for 3rd fulfillment center--your 3000+ SKUs. That would be a bad aspect to be handled with. Our most customers could just handle with hundreds of SKUs, that is the most one. Most customers could just sell 10 SKUs.

May we know whether you could decrease your SKU numbers ?

 

[WaveJumper]

Well, the simple answer is yes but it sounds like you need to jump on google and seek out some fulfilment companies and see it the numbers stack up for you and will it make it worthwhile, only you will know your margins. The big question maybe you should ask yourself is are you cut out for retail and the associated issues; it doesn’t sound like you are enjoying it from your post.

 

[antropy]

Is this genuinely a feasible idea?

I understand your frustration but the grass often isn't greener.

Anyway, my advice would be to start outsourcing the fulfilment to a 3rd party company in parallel before you fire all your staff and get rid of the warehouse - you'll then be able to see how well it works for you.

Paul.

 

[MeatOaf]

I understand your frustration but the grass often isn't greener.

Anyway, my advice would be to start outsourcing the fulfilment to a 3rd party company in parallel before you fire all your staff and get rid of the warehouse - you'll then be able to see how well it works for you.

Paul.

That is my plan. Over the next few months I think I will trial it by sending over a number of SKUs to a 3rd party company to see how it goes. If it's successful then I will send more. Thanks for your input

 

[Danny Whitaker-Leach]

I currently run a hybrid of fulfilment and self fulfilment. Pros and cons to both.

The fulfilment isn’t as cost effective as it can seem vs self fulfilling as they all add their markup on pick n pack, storage, goods in, postage, returns. However can be super useful for us we are really seasonal with 60-70% of our annual volume in 3 winter months, the fulfilment allows us to handle more than we can in house.

Look at all avenues not just cost before you make your decision.

 

[lesliedocherty]

I currently run a hybrid of fulfilment and self fulfilment. Pros and cons to both.

The fulfilment isn’t as cost effective as it can seem vs self fulfilling as they all add their markup on pick n pack, storage, goods in, postage, returns. However can be super useful for us we are really seasonal with 60-70% of our annual volume in 3 winter months, the fulfilment allows us to handle more than we can in house.

Look at all avenues not just cost before you make your decision.

That's a smart way of handling the seasonal fluctuations

 

[lesliedocherty]

Being tied to a location and being unable to easily take a holiday/travel is very frustrating. Not only this, I am growing tired of the stresses of dealing with staff and having to turn up to my office every day to make sure everything runs smoothly when I know that I can do my other tasks remotely.

The job is the easy bit, everything else makes it harder and at times not much fun, I know a few who have gone down your route they done the 80/20 thing and cut their SKU list way back, they do not make as much as they did and yes it does cost more than you are quoted, BUT the hassle is infinitely less.
They can now concentrate on growing a business, rather than being in the trenches every day dealing with sickness, performance dramas.

 

[MeatOaf]

The job is the easy bit, everything else makes it harder and at times not much fun, I know a few who have gone down your route they done the 80/20 thing and cut their SKU list way back, they do not make as much as they did and yes it does cost more than you are quoted, BUT the hassle is infinitely less.
They can now concentrate on growing a business, rather than being in the trenches every day dealing with sickness, performance dramas.

Glad to hear that others have done this successfully - the 80/20 rule is exactly what I had in mind.

I think it's something I will trial over the next few months. The volume of SKUs we have could probably lead to a bit of difficulty so will need to consider how many we want to cut it down to. 20% of our current range is still over 500 SKUs. I am considering Huboo as their software seems very good, although I am unsure if they will be able to handle that sort of volume of different SKUs

 

[Mr D]

We've done both fulfilment and self fulfilment at the same time.
The fulfilment service was doing the work of several staff and could in the busiest times be a large chunk of total sales dealt with.
For overall a low cost.

Can be far better than the headache of staffing and warehouse space.

Take time to plan and implement it, your warehouse will need to be paid for until end of contract or next break clause time.
Very handy to take time away and someone still makes you money.

 

[anonuk]

We sell a lot on Amazon and until recently majority of our stock was in Amazon’s Fulfilment Centres. We even began fulfilling eBay and website orders from Amazon too. Other than the storage costs, Amazon only charge a ‘delivery’ fee which isn’t much more than Royal Mail for similar sized parcels.

We have recently been looking at alternative 3rd party fulfilment centres and they charge around £1.25 per unit sold on top of the delivery cost. The one we looked at in particular would also be charging £84 per week in storage costs for, I think it was about 6-8 pallets of stock.

If we decided to send some of each sku we sell we could easily be paying £1200 a month in storage fees.

We decided in the end that it wasn’t a worthwhile proposition for us. We need our staff and warehouse to manufacture our products anyway so the only thing we would save is the stress/extra hours that we have to put in over the peak season, but costs would actually increase for us.

 

[Lawson@CBF]

Hi all, from a fulfilment centre/3PL perspective, seasonal goods are hard to plan for. We need space to store your goods, most clients do not have a handle on their forecasting. We have to manage the labour element for your potential orders.

The storage elements should be looked at as our problem, however. We bill volumetrically for the stock held as we will need to have units in pick bays as well as a bulk usually on pallets stored elsewhere in the warehouse for replenishment or larger orders.

I have seen a growing trend in 3PLs looking to charge like Amazon with a percentage of transaction value but this is only viable with a critical mass or I guess if your products are of a certain value.

Pre-planning for Q4, can you kit build or prebuild some of your items in bulk to eliminate any unnecessary pick charges? A lot of our clients are now getting us to pre-pack for a set fee which will increase profitability and speed to pick during the festive chaos.

Agreed that 3PLs are not right for everyone. But I know I'm trying to make sure we have modular, scalable processes to suit fast-moving items. Make sure your sales integrations are bombproof and your SKUs/barcodes need to be on point to save headaches all round

 

[SendfromChina]

Most of our VIP customers, like you, have thousands of SKUs. They are usually more concerned about whether the supplier can store each SKU in an orderly manner to ensure the accuracy of the inventory; at the same time, when the order arrives, whether it can be packed and shipped out within the same day.