Home > Sell On Amazon > Warehousing and Order Fulfillment (Part 2)

Warehousing and Order Fulfillment (Part 2)

If you’re fulfilling your own orders, the time it takes you to package up items for shipment can become another bottleneck to your company’s growth.  Think for a moment about the steps involved: 1) print an insert that shows the order, 2) print a shipping label, 3) pick the items out of inventory, 4) pick the right box, 5) package the items (including wrapping them in protective covering like bubble wrap), 6) seal the box up, and 7) apply the shipping label.  When you’re very practiced at this it will probably take 5 to 10 minutes per order.  That means you can process 6 to 12 orders per hour, so depending how many hours you can spend on this per day you can see how big you can get before you run out of time to physically fulfill orders.

Using a fulfillment service as I mentioned in Part 1 of this post will help with this too.  But they can be fairly expensive, and when you’re starting you probably want to conserve cash as much as possible so it can be used to expand the number of items you offer.  Most likely you’ll start out by warehousing your own inventory and fulfilling your own orders.  At some point, when your business has grown large enough, unless you already have a fairly large, established business, you’ll convert to using a fulfillment service.

The exception to a fulfillment service being expensive is when you’re using Amazon’s FBA service to fill orders for your sales on Amazon itself.  In this case, Amazon is getting more out of their service than just the fees they charge you, so they’re willing to charge you less.  Your products sold on Amazon’s website fulfilled using FBA are eligible for free shipping through their Amazon Prime program.  For a (currently) $79 annual fee, Amazon Prime provides, among other benefits, free 2-day shipping on all orders that use FBA.  So your use of their FBA service makes the Amazon Prime service more valuable to Amazon’s customers, and the benefit to you is lower fees for their FBA service.

Unfortunately, using the FBA service is fairly expensive when you use it to fill orders through channels other than the Amazon website.  But if you sell through Amazon as well as other channels, using their FBA service will allow you to keep your entire inventory in one place.

I’d be very interested in hearing your feedback on fulfillment service providers you try out, good or bad, to share with other readers.  I suspect no service provider is all good or all bad, so detailed descriptions of what the companies did well, and specific things that didn’t work out so well, would be valuable to anyone looking into these services.

I should mention that packaging supplies like boxes, bubble wrap, tape, etc. can be very expensive if you buy them in a retail store.  There are packaging supply companies that will ship packaging supplies to you in bulk at a much reduced price, and are well worth your time to look into.  I’ve used Uline (www.uline.com) for a long time and have been very happy with them.

Random Observations

For years I’ve bought my office supplies from a local mom and pop store a few blocks away.  It’s more convenient than driving to the nearest big box store, walking over there and back is a nice break, and I prefer to buy from small businesses when I can.  Seeing the proprietors every couple of weeks built up a lot of good will over the years.

A few weeks ago I was at this office supply store and paid with my new company credit card.  Until recently I just used one of my personal credit cards that I set aside for all of my business purchases.  I never thought about it, but I suppose in all the years I’ve been going to this store the topic of what I do had never come up.  Seeing my company name on the credit card when ringing up my purchase, the owner asked about my company.

I told her I’ve been an online retailer for several years and that, while it’s a lot of work, it’s doing well and I enjoy it a lot.  I’ve never seen such a change in atmosphere in such a short period of time.  I don’t think she said another two words to me before I left, but the look on her face said it all.  It’s like I was the devil in their midst.  I was not just persona non grata – I was extremely non-grata.  I’m surprised she didn’t just throw me out.

Based on her reaction to the very limited amount of information I gave her, I can only assume she feels online retailers are a threat to her store and that, even though I don’t sell the same type of product she sells, I’m still in the enemy camp.

I don’t understand this attitude.  I do understand disliking things you feel are a threat to your business.  When Walmart and other big box retailers move into an area, local stores that sell the same products are in a lot of trouble, often being forced out of business in short order.

But competing against an online retailer is not the same as competing against a Walmart store.  There’s no way a small business can become the size of Walmart in a short period of time and compete on a level playing field, but they certainly can start selling online in a short period of time.  If they truly believe selling online has an unfair advantage over brick and mortar stores, they can easily defend themselves by selling online and enjoying the same advantages themselves.  The barriers to entry are fairly low for anyone, and they’re exceptionally low for someone who’s already a retailer.

I haven’t been back to this office supply store since, I don’t think I would get a warm reception.  It’s too bad the owners have decided online retail is a bad thing, rather than selling online themselves.  I imagine having to change a business model that’s worked for many years is unsettling to a small business owner, but change is going to happen whether they adapt to it or not.  It’s better to adapt and take advantage of it than get angry and eventually go out of business.

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