If you inventory products for your ecommerce site finding a good solution for shipping and storing your products can always be challenging. Most warehouse the items yourself and spend lots of time “touching” your products. So what is “touching” and how does it cost you money? The typical scenario You bring in goods from overseas and they get off a boat and are trucked to your location. You (the receiver) unload and move them into a warehouse. Generally you will spend some time inspecting your inventory and organizing it so that you can pick your items and ship in an effective manner. Sometimes if the packaging is not complete, you many find yourself repacking or re boxing items for final shipping. So here is how the “touching” is applied
- Unloading it off the truck, you have to do this
- Into the warehouse
- Organizing in the warehouse
- Possible repacking
- Final pick for shipment to the customer who ordered it
This is five times that the item is touched, moved, processed or handled. If you smart, you most likely have an employee do this work, which means you pay the employee and manage the process. Not counted here is the managing of the items coming from port and getting to your ware house that is a separate discussion. The warehouse cost is also not included in the cost at this particular point.
Fulfillment So how do you touch your items less and spend less money? Fulfillment is a different way of looking at the physical process of moving your items and touching them less Here is a break down of things you do NOT do, but still gets done by someone else.
- Items unloaded from ship, trucked to warehouse near port
- Shipping container stripped out (unloaded) and put on pallets
- Items labeled and shipped to your customers when ordered.
So how do you save money? Most of the money you save is in time. Most online business owners today get sucked into a vortex of time wasting activities, not realizing how much time they give away working “in” their businesses when they should be working “on” their businesses. Here is a sample breakdown of how the fulfillment process can save you money. Substitute your own money amounts into the examples.
- Unloading the truck and moving into warehouse. Most likely a full day’s work plus hiring or employing some help. Generally you can figure 3 people to unload the typical twenty foot container. (the reason you need help is that typical trucking vendors allow you two hours to unload, you cannot unload this all by yourself in two hours)
- You will need a forklift and pallet jack unless you have a loading bay. (most do not)
- Items will have to be stacked in some particular order according to stock numbers to keep the inventory organized. This can take a good chunk of time depending on what you are receiving. Personally we remove all the items from the truck and spread them out before we move them inside. When overseas manufacturers load your containers, they do not do it with any particular order, so things can be mixed and matched to load maximum volume into the container.
- Product may need to be reboxed or combined for final product assembly.
- Product then needs to be “picked” or selected, when the customer orders it. The shipping label, packing invoices are printed and then it somehow makes it way to UPS or Fed Ex for shipping. All of this takes time. If you hire someone or employ someone, this can be many hours of their job functions.
- So when your product ships from overseas you basically do not touch them or handle them at all when you use fulfillment. You pay a monthly fee per pallet that covers the storage and a freight charge for shipping the product out. Most fulfillment businesses ship a lot of packages and are willing to pass some of the savings on to you.
- So basically you do not handle your product at all from the time it leaves the manufacturer to the time it arrives to the customer. This in itself is much better for most business owners in the long run.
- You have to individually crunch your own numbers to see if it will work for you. You also need to take into account that your product needs to be a complete unit for the fulfillment scenario to work best. If you have to combine products or do any type of assembly, it takes away from the profit scenario and increases costs.
- Typical storage charges can be from $8 per pallet to $20 per pallet, depending on where they are stored.
Shipping costs Another factor is shipping costs. You do not want to pay full retail shipping to your fulfillment company that is just wrong. A 20% discount to new customers is not unheard of with a decent volume of shipping. If you have a fulfillment center centrally located in the country, then you can ship to either the west coast or the east cost with reasonable costs. If your center is on either cost, you have higher costs when sending to the opposite coast. For example, if your fulfillment is in California, and you ship to New York, then that is going to cost you more to send a box than it would to Arizona. Having an office centrally located is a good advantage over time. Summary Personally I have done both types of shipping discussed in this article. I may have switched to fulfillment sooner, had I known some of the details discussed here. Depending on what type of ecommerce store you run, it may be necessary to use a combination of both types. Larger operations use more than one fulfillment center to handle shipments. Usually they have one on each coast to take advantage of the shipping cost savings. Finding the right system for you involves a bit of homework and some brainstorming. This is a small price to pay for not being held hostage to all the details of shipping your product to your customer.