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The Small Business Guide to Fulfilment Centres

by | Outsourcing

Moira Fuller | Outsourcing

If you thought fulfilment centres were only for big companies like Amazon, you’re missing a key way to grow your product business – and give you more freedom.

Hands up who *loves* packing boxes?!

Okay, some of you organised folk (like me) may get a lot of satisfaction in packing up boxes and sending them out to your customers – but if you’re a solopreneur and the CEO of your small business, it’s really not the best use of your precious time.

Fulfilment centres allow you to send your stock, packaging and print materials to a central place, who’ll then package and send your orders to your customers.

They make a huge difference to the time (and space) you get back – letting you focus on growing your business.

Thinking it still sounds like an Amazon thing?!

Bear with me! You’d be surprised. Some centres are happy to work with and support small businesses, and you may be a lot closer than you think.

Let’s dive in!

 

Prefer audio? Listen here…

Think of all the time you’ll get back from NOT packing boxes – how can you use that to grow your business instead?

Here’s the Video Transcript

Fulfilment Centres can often be seen as a little bit of a dark art, or for massive businesses.

Let me walk you through how they work, why they’re so good for small businesses, and the questions to ask if you’re looking for a fulfilment centre.

What is a Fulfilment Centre?

It’s a place where you can send all your stock and packaging materials to – then as your orders come in, they’ll package up the boxes and post them out to your customers for you.

If you recognize the daily pilgrimage to your local post office to send out a bunch of boxes, you’ll know what I’m talking about!

The key thing to consider with fulfilment centres is the cost of your time. How much time would you save if you weren’t packing up boxes and shipping them out to customers? It’s probably quite a lot – and you can do so much with that time to grow your business.

How I Started Using a Fulfilment Centre

I’ll give you a brief overview of the journey of my product-based business, Craftiosity, from when it launched to when we started using a fulfilment centre.

Craftiosity is a subscription box, so it’s probably slightly different from your business if you ship out every day (we shipped once a month), but much will be similar.

When I first launched Craftiosity, I had 22 subscribers (and loved every one of them!). We began packing boxes at the kitchen table, put the boxes into bags then made the trip to the post office.

As it grew, we got to 50, 75 subscribers, and it became more of an operation to pack all those boxes. And as I’m not a driver (and don’t have a car), we’d take the boxes to the post office in suitcases!

Then I went to a Royal Mail pickup service. In the UK, you can pay Royal Mail to come to your address and collect your mail in postal bags (currently £17.50 including VAT for a pick-up). It saves you taking everything to the post office, but you’re still packing everything to go out.

Then as we grew again, I moved to a fulfilment centre. It has been one of the most powerful things I’ve done to grow my product business, because it frees up so much time.

I have all my products sent directly to their warehouse, then send them photographs of exactly how I want things packed – they recreate what I would do, with the same care as those kitchen table days.

How Much Do Fulfilment Centres Cost?

What do you pay for? Well, there’s a few different elements, and different fulfilment centres will charge in different ways. Here’s what they might include…

BASE COST
You often pay a base cost for every order that’s posted out. It’s a cost that covers creating the box to go out in the first place.

PICK COST
Then there’ll be a pick cost per item for everything that goes into the box. It might include your box, any packaging (e.g., shred or bubble wrap), your product(s), any welcome notes or sales flyers you include – each of these would be a separate item to pick. So, if you’ve five items, it’ll be 5 x your pick cost.

POSTAGE
Fulfilment Centres can offer get much cheaper rates of postage because they’re posting so many items in bulk. It’s definitely worth shopping around, because some will charge the Royal Mail standard rate for shipping, but their pick cost and base cost will be a lot less. Then for others, their pick costs will be a lot more, but their postage is lower.

STORAGE
If you’re having items stored with your fulfilment centre (which you almost definitely will do), is there a cost per pallet of stock they hold for you on a monthly basis?

STOCK CONTROL SYSTEMS
Not everyone does this, but some fulfilment centres charge to connect into their stock control system – this allows you to check what stock they have at all times, and makes it easy for them to pick the correct items. One of the key things you’d do is to give every item a number or code, so that you can say, ‘Pick item 3’, and you both know exactly what that item is.

RECEIPT OF GOODS
Again, not all do this, but some will charge every time they receive a box or pallet for you.

ACCOUNTANT MANAGEMENT FEE
Another one that not all fulfilment centres do, but some charge to have an account manager who looks after you.

When talking to fulfilment centres, it’s worth getting a note of all the costs, then calculating what each one means to you.

These are the key things you might come across, but clarify you know everything that they charge for, so that you’re not stung with something unexpected.

Key Questions to Ask

1. Minimum number of units & frequency

If you’re posting out smaller numbers each day, check if the fulfilment centre has a minimum quantity for a specific time period, e.g., over a week or month.

2. Costs

I’ve touched on the common costs above, but go through all the different options of what they charge you, so you’re clear on everything.

3. Who they use as a courier / postal company

Check who they use, and if it’s a courier company that you’ve heard nothing but bad news about, you might want to ask them if they’d consider using someone else.

4. Any special considerations

Does your stock need to be held at a specific temperature? Are there any other aspects of keeping your stock at it’s best that you need to talk to them about? Mention this now too.

5. How will you get orders to them

Can they connect to your online shop? How will they know what each item is? What’s the cut off time each day to make that day’s post?

Use a Mystery Shopper

If you decide to try a fulfilment centre, but are a little worried about how they’ll pack things, have one or two secret shoppers.

Get a box or two posted to a sibling or friend, then ask them to take photographs as they open up the box, so you can make sure it’s posted in the way that you wanted it to be.

It’s something I did very early doors with my fulfilment centre – I did it once and they packed it beautifully, so I was comfortable trusting them.

It’s a great way to test if you’re concerned about how someone else might pack things for you.

Get started with a little research

If your product business is doing well and growing – but you’re feeling any resistance to this – I recommend doing the research. Just find out what’s possible for you and how much it costs – it might surprise you.

Of course, in terms of actual money you hand over, it will be a little bit more expensive than DIY, but just think about the value of your time.

That’s got a huge value, because you can spend that time working on those tasks that you love, that help you grow your business –  that’s what’s going to make a difference.

If the timing isn’t right for you, that’s absolutely fine – you need to be regularly packing orders for this to be worth it.

If you’re getting close though, I recommend doing this research so you know what you’re aiming for, for it to be valuable to you – I’m willing to bet it’s a lot closer than you think.

 

I hope you found this useful!

There’s a bonus PDF right here with the key questions to ask – do a bit of online research to find fulfilment centres, get in touch with them to do a little fact-finding, then compare them and work out what’s best for you.

If you’d like my support to help you put more outsourcing in place to grow your business, you find out more about working with me here.

If you’ve found this useful, there’s plenty more juicy business advice for you – with quick tips and done-for-you templates to really help your business fly.

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