How to pick an ecommerce logistics company?

Shipping the right product within the promised time is a crucial factor for customer satisfaction. It is also an important factor which determines repeat purchases. Generating a sale is the first half of work for an ecommerce site. The second half is the product reaching the customers hand in time. To help you out with there are many fulfillment or shipping providers who can take the product from your warehouse to the customer’s doorstep. As an ecommerce business owner you have many fulfillment companies to choose from but not all fulfillment companies are made equal. Here is list of criteria you must use to determine whether a fulfillment company is right for you.

Do they have flexible pricing? – A good fulfillment company offers a flexible pricing to help you scale your business at reduced costs. Typically there are 3 types of fees –

  • Setup fee – This is the minimum amount you need to start working with the shipping service provider.
  • Order Processing fee – A certain amount is charged for every order that is placed. Most fulfillment providers charge a lesser minimum once you give them more orders. Make sure the pricing provided by the company goes down with scale of orders.
  • Minimum fees – This is the minimum fees which is charged immaterial of the number of orders you have shipped. For instance, if the minimum fee is $500 and you have shipped only 3 orders each with a processing fee of $5 for the period of 1 month then still your fee as charged by your shipping company would be $500 and not $15. Make sure have enough orders per month which can meet the minimum fee mark of the courier company.

Test with multiple vendors – A good shipping company should deliver the right product within the desired time frame. Before you commit long term with a provider start with a pilot project and see how they handle logistics. Measure them on delivery success rate, time to delivery, accuracy and breadth of coverage area in your target market. Once you have tested multiple vendors for 3-6 months you can pick one or two long term partners when orders are really kicking in.

How does it deal with Reverse Logistics? – Reverse logistics is about shipping  a previously shipped product from the customer to your warehouse. It may so happen that a customer receives a different version of the product or has simply changed his mind. In such cases, to receive the product from customers end you will need help of a fulfillment company. Check if the fulfillment company provides reverse logistics service. If so, ask for the pricing and procedure.

Custom Packaging is allowed? – To make an impact on the customer you might want a packaging which reinforces your brand. This might be expensive for an early stage bootstrapped ecommerce business. The other option is to stick with your logistic providers stationery and standards. This is much cheaper so you will have a higher margin over each product shipped. To start with you might want to stick to standard fulfillment provider packaging but as you scale and want to establish your brand you will need a courier service provider which is happy to ship products which are custom packed.

What is their history? – Do a background check on the company. Lookup their official website, Google it for online reviews, look up for potential scams, ask other ecommerce entrepreneurs for reviews in forums.

At what scale can they deliver? – You don’t want a fulfillment company which drops the ball when you are scaling up your business. A good courier service should help you grow and should be able to process large number of orders without compromise on delivery success rate. The last thing you want when scaling your business is your fulfillment to go haywire and a long queue of customers venting out their frustration on phone or even worse vowing not to buy from you ever.

What is their coverage area or geography? – One way of losing a sale is getting an order from a location where your courier service doesn’t deliver. This is a surest way to lose a customer and the much needed cash flow. A courier service should have a wide coverage area in your target country. It should be able to deliver to major cities and towns which generate most number of orders. Every courier provider has its own strengths and weaknesses when it comes to coverage. A certain provider might we very good at delivering to north coast area while an other courier service might be good as delivering to southern states. See which geographical locations you expect to get the most orders from and pick a courier service which is strongest in that area. Sometimes you may ned to sign up with more than one vendor to get good coverage to ship your goods.

What kind of protection or insurance do they provide for your products? – Insurance gives you the much needed protection of damage, loss or theft of your product from the courier provider. Read the insurance terms provided by the courier company and see if the insurance provided is appropriate to the value of the item you provide. You should ask for a higher insurance markup for high priced items like jewelry, electronics and electric appliance.

How to they handle holiday season? – Not all days are the same when it comes to online shopping. People shop more often during the holiday season. Ecommerce sales are generally higher end of the year all the way up to February. Handling large orders is a stress test for the courier provider. With numerous orders queued up from multiple online stores and urgency over delivering gifts in time for holidays tests the delivery success rate of the fulfillment provider.

Which technology do they use? Does it sync with your current platform? – Technology is the best way of streamlining shipping. Your fulfillment partner should be well versed with technology and the tools which go in to to day to day order processing activities. Ideally they should be using a technology which notifies you on the current status of each order proactively. Apps like shipstation and aftership syncs with popular fulfillment partners like UPS, Fedex, DHL and Canada Post and notifies both you and your customer on the latest status of the order.

What other services do they provide? – It is best when your fulfillment partner provides a full range of services. When your warehousing, packing, packing material sourcing, inventory audits, order processing and returns are taken care of by your fulfillment provider you will have more mental bandwidth to focus on other aspects of your business.

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