Selecting a Parcel Fulfillment Provider: Criteria You Cannot Overlook
By Krish Iyer

This article originally appeared in the March/April, 2018 issue of PARCEL.

There comes a point in nearly every growing e-commerce merchant’s journey when the topic of scalability must be explored. Scalability might take many forms for this growing business, but managing parcel shipping becomes a critical component in managing customer expectations and experience, as well as maintaining profitability. Many merchants elect to utilize a parcel fulfillment partner, which can be a great option for a growing merchant, allowing them to concentrate on business growth and customer service as core competencies. With that said, there are several considerations e-commerce merchants must consider when selecting the right parcel fulfillment partner.

How do they integrate with order sources and/or technology currently in place?
E-commerce merchants generally start to receive their e-commerce orders from a variety of platforms, such as Big, Commerce, Shopify, Magento, Volusion, Woo Commerce, and many others, with outputs to various e-commerce marketplaces such as Amazon, eBay, Etsy, and many others — in addition to their own branded website store. According to BigCommerce, 45% of all e-commerce sales are now done via e-commerce marketplaces, with an average spend of $488 on marketplaces in a year by customer. Consequently, it becomes important that the fulfillment partner be familiar with these order sources and marketplaces. Asking the question of the level of familiarity the fulfillment partner has with fulfilling orders from these platforms and outputs becomes critical in managing long-term growth and customer experience expectations.

Are they familiar with the nuances of fulfilling my particular product type?

Every product type has its own challenges in fulfilling orders; fulfilling apparel orders can be very different than fulfilling cosmetics when it comes to managing multiple stock keeping units (SKUs), packaging, temperature control, and storage needs. Finding a fulfillment partner that specializes in the fulfillment of your particular product type then generally becomes more preferable to ones who tout being “everything to everyone.” Asking the potential parcel fulfillment partner for references of similar customer types is important; if the potential partner has not fulfilled your type of product before, then asking for how they fulfill similar industry types can help manage any potential concerns or prevent future problems. For example, the fulfillment of cosmetics can oftentimes be similar in size, scope, packaging, temperature controls, and other factors to food or nutraceuticals/vitamins. Asking the potential provider for a specific plan of how they will fulfill your product is an accepted practice and something any good provider should be willing to do.

What level of visibility and tracking will they be passing back to you?
“Where is my order (WISMO)?” is a concept that has always vexed end consumers and e-commerce merchants since the dawn of e-commerce. With that in mind, it is critical that the merchant understand the exact flow of order and shipment tracking data that will be available to them to make available for the inevitable “where is my order?” questions that will arise. Equally important is understanding the resolution procedures by carrier and service type that will be used to deliver the shipments to your customer. Who is the “throat to choke” if something goes wrong with a shipment delivery? Understanding these escalation and resolution procedures then becomes critically important to avoid your customer feeling like a hot potato (and subsequently buying their product from someone else in the future).

Is their pricing scaled for your growth…. and do you understand the charges?

Fulfillment providers often have numerous charges for fulfillment including:

  • Order minimum charge
  • Order fulfillment
  • Inventory deconsolidation
  • Storage
  • Kitting
  • Shipping
  • Returns

Although many parcel fulfillment providers have varied pricing models, it is important to understand every line item, as shipping costs can often be the difference in being profitable or unprofitable.

How much say do you have in the process?

Depending on what a merchant is selling, the placement in a warehouse can be important due to temperature concerns, exposure to sunlight, proximity to other products causing an adverse reaction, and a host of other factors. Additionally, even for shipments that do not have sensitivity to environmental factors, placement in a fulfillment warehouse can be important. For example, subscription boxes often will require product SKUs to be close together to avoid the wrong item being placed in the wrong shipment. All of this is to say that asking your fulfillment provider to give you a say in how your shipments are handled and where they are located in a warehouse is a valid request.

How attuned are they to issues in the parcel shipping industry, such as dimensional weight?

PARCEL has dedicated a great deal of time to issues in the industry, especially dimensional weight and packaging for parcel shipments. It is important that your parcel fulfillment provider also be knowledgeable about these issues to ensure that they are maximizing cost efficiency on your behalf. Asking the potential basic questions around how they have handled annual rate increases, dimensional weight, and other hot industry topics ensures that you find a provider that will always be on the lookout to make your parcel fulfillment operations better.

Conclusion
In today’s competitive e-commerce landscape, parcel shipping can make or break a merchant’s chance to achieve profitability and customer satisfaction. Consequently, finding the right parcel fulfillment partner involves due diligence and collaboration. Finding common ground with potential partners on technology, visibility, cost and consistent communication then becomes the key to a successful e-Commerce merchant and parcel fulfillment provider relationship.

Krish Iyer is Director, Strategic Alliances, ShipStation. An expert in cross border e-commerce, international fulfillment, and supply chain technology, he has more than 16 years of industry experience with FedEx, Pitney Bowes, Neopost, and ShipStation.