Starting a fulfilment business

[MSheraz]

Hi

I'm looking to start a fulfilment business where I stock, pick, pack and ship customers orders. I want to do this from home (I have a office with storage shelves outside in garden) at a small scale for now so will be looking for start ups or small businesses, 1 or 2.

I would like to know what requirements do I need to fulfil before I can actually start?

Software I believe Mintsoft would be good.

Insurance for the stock, this is the one I'm trying to sort out. Simply Business couldn't help so they've passed my details to Gallagher who will call me but I'm not hopeful they would be able to help either? Anyone know a suitable insurance company for fulfilment businesses that can provide coverage for stock?

I'm registered for self-assessment so will be a sole trader.

I read on this forum about the Fulfilment House Due Diligence Scheme so I'll stick to clients in UK only.

 

[fisicx]

The main requirement is marketing.

Unless businesses know you exist and can trust you to deliver there is no business.

I’d be concerned about the garden office. What security systems do you have in place? How is stock delivered and collected? Is there access for large vehicles? Can you accept pallets?

A mate uses a fulfilment centre who has a warehouse operating 24/7 with vehicle movement all the time. There is an expectation of next day delivery so they have to operate day and night.

 

[WaveJumper]

If you rent or own your own property you will need to check that your able engage in this, most make take a dim view and depending on the scale of the operation ie deliveries and pick ups by postal services could be a problem for neighbours ...... unless of course you are going to do a run to the local post office every day.

There are links on the forum for business insurance and also our very own forum member @Frank the Insurance guy is always willing to advice

https://smartbusiness.co.uk/business-insurance/?utm_source=ukbf&utm_medium=referral&utm_content=main-nav

 

[MSheraz]

Some good points and questions . Anything that can help rack my mind and get the foundation built correct is helpful so the CCTV one is a good one.

I don't have CCTV but my neighbour offered me some a while back with free installation and I said I'll let him know when I need them. I'm assuming CCTV would boost my chances of getting stock insurance significantly?

I go to Post Office daily Mon-Fri so I'll be dropping off mail myself. This is all small scale so I don't anticipate any pallets - that can be looked at in future should the opportunity to scale up and move into a proper warehouse become available. My local Post Office accepts Evri too.

Stock is delivered by couriers and postman through front door so that is not an issue. I currently sell online myself and have been doing so since 2013, so I have a decade of experience fulfilling orders. I'm eventually moving to dropshipping profile so have more room for stock and time for packing orders.

 

[Socio South West]

Your potential customers are going to be very limited by your plans and lack of space. You will be extremely lucky to find someone small enough who is prepared to outsource this function to you. Most small businesses requiring this sort of space for stock holding will be unable to afford a subcontracted fulfilment operation.

I'm afraid I am not rating the idea of running this sort of business from home very highly on the list of good ideas: Garden sheds don't make great places to store other peoples merchandise for a number of reasons for starters.

I hope you can think bigger and get into a unit or similar, and keep your home as a home.... If it did take off as you currently inbdicate I see the potential for the business to become an invasive species as far as your home and home life is concerned.

 

[fisicx]

Fulfilment is a whole different ballgame.

The stock will be delivered on pallets. They may be a small business but still shift 100 garden gnomes a week. Or sell 50 different types of cushion that fill your office.

You won’t be going to the post office everyday. You will need courier pickups multiple times each day.

 

[japancool]

If your office can't even hold a pallet, it's a non-starter. You essentially are looking for "businesses" that can run from a home space. If they're only at that level, they may as well just do it from their own home, rather than pay you to do it. People start looking for 3PL when their businesses expand beyond their home - anything smaller, and it's more cost effective to do it themselves.

 

[Frank the Insurance guy]

There are links on the forum for business insurance and also our very own forum member @Frank the Insurance guy is always willing to advice

Thanks @WaveJumper ,

Insurance for this kind of activity is always going to be difficult if working from home.

I've arranged such cover for a client who was only shipping small value golf tees etc. Insurance was available as the stock was not theft attractive and only a few thousand pounds!

If you will be holding over £5K of stock and/or high value/risk items, its unlikely you will get cover!

I would suggest using the local self storage facility and taking up their own insurance which will cover loss or damage to the stock you hold in storage. If you cannot afford this option, then you won't be able to afford the cover for running it from your home!

 

[MSheraz]

Thanks for all your inputs, always great to see other viewpoints.

So fulfilment from garden office is a No No. That's fine.

It should be done from a warehouse no doubt but can it be done from a self storage or that too is a no no?

 

[AlanJ1]

Thanks for all your inputs, always great to see other viewpoints.

So fulfilment from garden office is a No No. That's fine.

It should be done from a warehouse no doubt but can it be done from a self storage or that too is a no no?

I don't mean this in any way against yourself but your idea really isn't good.

You offer 2 postage options, Royal Mail and Evri. - Every other logisitics company will offer everyone.
You can't hold large amounts of stock. - What if I grow, you won't be able to handle volume.
I am presuming you are a one man band, what if you are ill, take a holiday?
Costs - Your costs are going to be so much more expensive than other companies because they have the scale.

I don't think you have thought this through properly or understand where you are going to get clients from.

 

[japancool]

It should be done from a warehouse no doubt but can it be done from a self storage or that too is a no no?

It can, but if it's a public self-storage space, what are you going to do with collection?

Are you going to fill your boot up with parcels and take them down the Post Office? Will you have the correct insurance to do that? How many parcels can your boot hold? If you're not doing that, and are instead having them picked up, can the self-storage allow collection drivers in on site? What happens if your customers need more space and your unit doesn't have enough space? How much space will you actually need?

For example, I currently use about 700 sq. feet. Will you be able to get storage space to handle even two of me? If I don't think you'll be able to grow as I grow, I won't use you, since it's expensive to shift to a different 3PL provider.

Plus all the stuff above that AlanJ1 has mentioned.

How will you manage stock control? Doing it for yourself, when you know what all the stuff is, is one thing. Doing it for someone else is very different.

If RM and Evri are your only offerings, that's not great. I would expect you to be able to offer at least one premium parcel carrier (and Evri ain't it). What happens if the postmen go on strike again and I don't want to use Evri? What are your contingency plans?

What happens when a parcel delivery goes wrong?

You really need to think the whole offering through. It's not as simple as just packing up parcels and sending them out the same way you do for your own stuff.

Unless you can achieve volume, it's hard work for comparatively little reward.

 

[Frank the Insurance guy]

can it be done from a self storage or that too is a no no?

Yes it can....and make sure you take out their insurance in case anything happens to the stock.

 

[MSheraz]

Thank you all for your inputs. Very valid points and I wouldn't have known had I not asked.

It is indeed something that requires a lot of in depth thought and planning.

Perhaps in this moment in time this wouldn't be a practical venture. Am glad I got valuable insight and input so much appreciated all.