Fullfilment Centre or Small Unit & Staffing

[lavster]

Hello All, I'm looking for some advice, words of experience from you guys.
I run a small e-commerce company, shipping anywhere from 30-60 orders a day.
Currently I work full time 7-3 then pack 3-5, we have a young baby and things are getting a little bit much. I run from my house / garage and its been overflowing and limiting any expansion for a while.
I sell on Ebay, Amazon UK, US, CA, DE and a web-store.

Basically i'm wondering if anyone has experience of a fulfillment centre in the UK that can take this from me (obviously at a cost) that's not going to completely destroy my profits. I make anywhere from £1 to £4/5 depending on the item. I think if the pricing was right I could concentrate more on improving my product range and grow the business.

Alternatively we have looked for a small local warehouse (very small like 5-600 sq ft) and getting someone in to help with packing 2 to 3 hours a day but obviously this also comes with its own costs.

I dont really have a preference either way and im not too worried about loosing touch with my hands on packing etc if it gives me more time at home.

Any advice or experiences in this would be greatly appreciated.

 

[RedOnion]

I am biased

Do you have more products with the profit in the £4/£5 range than in the £1 range? I can see the profit on the items where you make £1 disappearing whether you go for a fulfilment centre or your own warehouse/staff.

Just a few things to think about if you go for your own warehouse/staff - Insurance for building/contents/staff. Paying staff holidays, as well as possibly having to cover for them when they are on holiday. Ensuring staff have enough work - otherwise you could be paying them just to be there when there is no work. Signing a long lease on a warehouse.

 

[lavster]

I agree which is why I thought fulfilment is going to be the best idea, maybe even a mix of the 2 where I pack and post my smaller items and have someone deal with the bigger profit ones. Id say my split is about 50:50 in terms of profit at the moment. I've had a few quotes for fulfilment in around the 80p per order margin and still keeping postage charges the same as what I pay now. So costs would go from £0 a month around about £950

 

[boring-friday]

I'd get the warehouse, warehouse and someone part time will be less than £950 a month. Should be able to scale it up too, unless your items are really big/awkward 20 odd items per hour is slowwww

 

[lavster]

Yeah that's true, when I look at it like that angle, the more business we do the more expensive, whilst in a small unit it would just mean more profit.

 

[RedOnion]

Make sure that any fulfilment company lets you know all their charges before you start with them (If that is the way you decide to go). Charges such as :

Charge for taking in your initial stock.
Charge for taking in any additional stock
Charge for storage
Management fees
Charge for returns

Are you planning to work at your online selling full time, or still just part time? Presumably that would have some bearing on whether or not you obtain your own warehouse? If full time, at some stage, then I can see that your own warehouse would be a good step forward.

 

[lavster]

Thanks, I definitely will consider all these things going forward. I personally wouldn't run it full time as my paye job is pretty good and very stable. My wife might run it in the future but we'll see how it all goes

 

[bharris]

Not tried myself but have you looked at storage company provides they do allow you to work in your unit so you can pack there and also have postal collections. Might save you the problems over a lease power, heating security etc. http://www.bigyellow.co.uk/business/ebay-storage/ i would think they all do a similar thing. We decided to move to a bigger house with outbuildings in the end works fantastically. Bigger home and no travelling to work.

 

[lavster]

Hi bharris, Yep I've considered this too, went over and viewed the space which I was happy with and its right next to the sorting office too. The main problem was that they shut at 5 on a Friday and I cant get in there again until Monday, this would mean masses of orders backing up.

i've got a few good ideas from here and definitely something to consider going forward.

 

[antropy]

The main problem was that they shut at 5 on a Friday

We know of a few ecommerce companies that started off in self-storage places. It's a great way to go because you often get free Internet, some have office space, many have 24 hour access and you can shrink/expand the space you pay for with your stock levels. It's a shame the storage company near you doesn't allow late access though, perhaps it's worth explaining why you'd need it?

 

[bharris]

The main problem was that they shut at 5 on a Friday and I cant get in there again until Monday,

Sounds odd to me, i would of thought that many people would want to clear out rooms in their house's and store it over a weekend. I know the one i had a quick look at (on-line only) allowed for 24hr access. .

 

[primrose]

Check out other self-storage areas nearby even if they are not so close to the sorting office. If they provide better access for friday and the weekend it would be better for you.

 

[FutureM]

Hi Lavster,

I have sent you a PM. It's just a thought as i was reading your post... your problem could be my solution vice versa.

 

[lavster]

Thanks for this, most of my items are large letters and small packets. Have you any idea on costs?

 

[FutureM]

They will get back to me with some prices.

I pay, bear in mind for very large boxes up to 30kg, £5.21 for Next Day Delivery with tracking. They would do it even cheaper through Yodel but I prefer the reliability of UKMail.

 

[bharris]

reliability of UKMail.

Really?
UkMail / Ipostparcels are terrible they have cost me a lot of money and even worse customers. They are the only Courier company i have had problems with absolutely terrible.

 

[RedOnion]

I'd agree with FutureM. I wouldn't say UKMail are 100% perfect, but I would call them reliable.

 

[apricot]

You are doing very well working 7-3 and packing 3-5 and you have a baby! Well done.

I tried Amazon DE fulfillment center to hoping that it would increase the sales.. Free delivery or having next day delivery had no impact on orders.. so I decided to continue pack on my own.. If you have a time/space issue I think fulfillment centre is a good option.

 

[Parcelhub]

Hi,


Our sister company Mail Workshop offers a range of eCommerce fulfilment services - The latest fulfilment case study may be worth a read.

Please let me know if you have any questions.


Thanks,

Simon

 

[juderino]

Hi,

I was pretty much in your position last year. I was spending so much time packing orders that I was neglecting the other stuff like maintaining stock levels etc.

I didn't fancy the hassle of hiring space and taking an employee so I opted for order fulfilment.

The place I use charges for goods in, storage, pick fee, packaging and postage. They can handle returns but I do that myself. If you're making £1-2 on an order you will definitely be losing money but if you can concentrate on the more profitable orders then it might be worthwhile.

The main benefit for me was that it freed me up to do all the other stuff that I haven't been able to keep on top of. As a result of that my sales greatly increased, mainly because I was ensuring I had plenty of stock availability. The place I use almost always gets the orders out the same day with a 1pm cut off so it's better for the customers. Another benefit is that their bulk postage rates were better than the account rates I was getting from Royal Mail and I also now have access to other couriers which works out cheaper than RM Special Delivery.

There are a few annoyances which arise from giving control over to someone else but overall it's been a good move for me.

Feel free to PM me if you want more info about the company I use.

 

[Paul Kelly ICHYB]

Know your figures before you make any decision.

A fag packet calculation is that you are selling, on average 45 items a day at £2.50 profit, which is £3375. You need to look at whether taking a unit and employing someone (you can trust) will work out better than fulfillment.

For the fulfillment company to prepare an accurate cost forecast, you need to break unit sales down (unit pricing is irrelevant, unless very high value).

My gut feel is that setting your own system up, whilst dealing in lower profit kit, will be cheaper - staff £1000 gross, storage £1000, admin/insurance etc another £1-200.


BTW, off subject, but get a call to action on your front page e.g. register for free updates/receive a discount on first purchase etc i.e. collect emails

 

[Tech4Homes]

Three weeks ago I was in exactly the same position!

I'd almost agreed to put my stock into fulfilment...

In the end I got a 600 sq ft. unit and a new staff member who deals with phones, orders and adding new products to the website Mon-Fri 11-4pm.

It's a Basepoint unit in a business centre so I have 24/7 access but no lengthy lease. This will do us until I can afford to buy a bigger unit. I'm reluctant to rent a bigger unit if I can help it.

It's only been one full week but it's so much easier having someone answering that phone, packing orders etc and 50 new items have been added to the website. I'd never have got that done by myself.

There's a bit of sacrifice to be made if you're only covering your own costs, but the idea is to push forward, expand, do more, sell more, make more....

 

[Sparetoolparts]

I don't want to hijack this thread, but im in the same boat, I work 9-5 home at 6pm kids to bed at 8:30pm answer emails/fix website until 10:30-11:00 then bed, I get 10-15 sales a day with average profit of £6, however I don't hold stock, I simply order in from the wholesaler when I make a sale, I get my parts on friday evening and I pick and pack until 12-1am on sat, then off the post office with Drop and Go account Sales are continually rising and my father is retiring from work after Christmas, so I'm planning on giving him a shot of picking and packing and increasing my postage days to twice a week, sure I will need to pay him a few hundred a month but hopefully it will free up my time allowing me to concentrate on the bigger issues, Have you spoke to a business Adviser yet? I have just signed up to Go For IT program here in Northern Ireland so should be getting expert advice soon FOC!

 

[phil4v19]

its no an easy decision. I originally did a comprehensive breakdown of my scenerio and projected costs when looking at about 13 companies.

companies I have assessed so far
Seko Synergy, bwmailing (southhampton), cloud fullfilment, CML, ogden fullfillment, etail (wetherby), James & james (cambridge), Spark response (gateshead), ATL, paton brown
ukfullfilment, parcelship, 3P logistic

I have actually used 2 companies over the last 2 years both with similar pricing

Etail LTD, Dewsbury
Pros - Friendly hard working staff. Quick response to email and phone. Fairly reliable at processing orders on time with reasonable accuracy. 2pm cut off time. Returns handled quickly.
Intergration for some multi channel system eg linnworks. Good range of postal services inc cheap tracking service to selected international destinations. Allowed integration of my own courier account. Performed reasonably well over the busy Christmas period..
Cons - storage costs were higher than quoted as they dont use dynamic storage and seemed to be charging for empty shelves. Some picking errors as they dont use a bar coded system

Parcelship in Nottingham -
Pros - very impressed for the first 4 months and worked hard at ironing out any minor problems. They have their own in house multichannel system. Smart stock feature predicts estimated out of stock dates. Dynamic real time storage. Bar code system. No restocking charges. cheap rate for returned items

Cons - No multichannel integrations eg linnworks as promised. Really appeared to struggle in a lot of areas (invoicing, delays, picking accuracy, communication, technical feed problems, slow to book in stock, returns system) during the 3 months prior to Christmas resulting in bad customer feedback and post Christmas admin headache trying to resolving the problems they created. Significant amount of delayed and lost mail due to problems with the RM Sheffield hub. Communication not always clear and sometimes slow to respond.

I'm still looking for a better realible solution- any suggestions please ?

 

[waj]

Use fulfilment centre only if you have scope give away some of your profit to pick n pack and storage charges. Be also aware of any management fees and extra charges like container unloading or return handling etc. If you work on a small profit margin then fulfilment centre may not be a cost effective option.

 

[JJWinst]

Just an idea but if you're selling on Amazon would it not be ideal to use FBA and also send excess stock to deal with your eBay/Web sales? You can manually process orders to be fulfilled elsewhere. You'd need to spend a bit of time manually putting the order's through Amazon when received but it would free up your space and a bit of time spent packing etc..

 

[joshgeake]

I know this was originally posted a while ago but I've got experience of both scenarios and I currently run mine out of a small warehouse with staff. Feel free to PM me if you want to chat.