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Editor’s Note: This is a guest post from Neil Matthews, find out more about Neil at the bottom of this post. On another note, thanks so much to those of you who’ve applied to join The A Team! We’ll be sifting through the applications and getting back to you in the next few weeks. Now, back to Neil’s article…
If your physical product business is stopping your dreams of a nomadic lifestyle, then a fulfillment service may be the answer to your problem. Most people would not consider a retail business which sells physical products as the ideal business model for a location independent lifestyle, but using a fulfillment service means that you can sell your physical goods and still enjoy a nomadic lifestyle without the stress and hassle of storing, shipping and managing the products.
How do I manage & deliver stock?
A fulfillment service is a warehousing service which effectively enables you to outsource the stocking and delivery of your orders from your retail business.
The fulfillment service takes receipt of your goods from you/your supplier, places them into your warehousing space and can also dispatch your goods to your customers whenever a sale is made.
In exchange for this service you will pay a recurring fee for space in the warehouse and a small fee for each product dispatched to cover its shipping and handling.
Is this the same as drop shipping?
Drop shipping is slightly different. With a drop shipping arrangement you send orders (on behalf of your customers) directly to the supplier who then sends out the stock for you, rather than you maintaining your own stock of the supplier’s products either in your own storage facility or that of your fulfillment service provider.
Many suppliers do not offer drop shipping so a fulfillment service gives you the benefit of handling goods as well as controlling your own supply of stock.
How are orders handled?
The first stage of the process is to send your stock to the fulfillment service – you either do this directly yourself or organise this with the supplier of the stock.
Once received, the fulfillment service will book your goods into a warehousing area and using unique stock keeping units, record your stock in their system. Once that process is complete you can then start sending in your orders…
Whenever a sale is made from your online store, you send that order along with your customer’s details to the fulfillment service. The goods are checked out of your warehousing area, packaged and sent out using the shipping service you select. Most fulfillment services offer multiple shipping options.
If you want an even more hands-off approach, many modern shopping cart programs typically offer integration with shipping services, so yet another layer of administration is removed. The order is taken, payment processed and then an integration module will request that the goods are shipped, all without you lifting a single finger.
These services also handle returns – if there is a problem with the order and the items are returned by the customer, the goods are sent back into the warehouse and checked back into your stock.
Some fulfillment services offer multiple warehousing locations, so if you offer your products to locations around the world, you can take advantage of local shipping options by storing goods in multiple locations.
Which companies offer these services?
Two of the services I have worked with and integrated into WordPress websites are:
- Fulfillment By Amazon
- Shipwire
These services are priced on one of the following models:
- Monthly cost of space used, this is usually on a cubic feet basis
- Charge per fulfillment (goods received into stock or sent out)
For example, Shipwire has a starter package of $29.95 for 16 cubic feet (the size of a standard palette) with 8 fulfillments, with an additional cost of $2.70 for each additional fulfillment. See full pricing details for Shipwire here and for Amazon here.
Is this a scalable business?
In a typical retail business which sells physical goods, there are usually scaling issues – there are only so many packages you can wrap and get out of the door in one day and only so much storage space you can afford to rent or buy. As your business grows, you quickly get into the thorny area of staffing your distribution set-up and finding adequate warehousing space.
This is not the case with a fulfillment service – here you get access to fully-equipped and fully-staffed warehouses to ensure your goods are shipped, no matter how large your operations grow.
It’s an excellent solution for a nomadic, location independent professional who wants to sell physical goods without the hassle of handling the products yourself. Have any of you tried it or are you considering it? How have you found it?
Neil Matthews supplies WordPress technical support services and how to tips over at his blog WP Dude
