Do you use a fulfillment company?
Business is all about cutting costs that are un-necessary in order to improve the profit margin, or to reduce the prices that are needed to be charged for purchases in order to remain competitive. Reducing the profit margins is next to impossible in many industries as margins have been squeezed to razor thin, and as a result many businesses look for ways to get more productivity out of less employees in order to remain profitable and yet still be able to offer their products for sale at prices that are in line with competitors. This process gets harder every day, especially with regards to internet based businesses who have competition for their customers in other websites that are located in other countries, where they may be able to effectively pay their employees less or have an exchange rate that benefits them for sales. There is little protection for businesses in this regard, as consumers can purchase from any website that offers them the products they are seeking to buy, no matter where in the world they are located. The general leveling of prices paid by customers came in the form of shipping charges, which were higher from countries that had to ship the product further to customers than ones that were nearby. While this may have offered some relief to online merchants struggling to compete with low priced products from other countries, another method of both reducing costs and lowering prices has been developed. That method is the use of a fulfillment company.
A “fulfillment company” is a business that acts as your shipping and fulfillment department, only they are hired by you instead of being your employees. You position your inventory within their warehouses, and they use their employees to process your orders and arrange shipments to customers when orders are placed. This is done in exchange for fees for processing and warehousing, generally seen as a “per order fee” and a monthly fee for the space that is used in the warehouse. These fees are usually significantly less than the costs that would be absorbed if you attempted to rent or own your own warehouses and manage your own employees. This savings allows you to not only ease your responsibilities as far as the daily running of the business, but also saves money that can then be put towards the bottom line. In addition to this savings, the utilization of a fulfillment company that operates warehouses within the country of your customers will give you the ability to ship to your customers for the same costs that your competition does, leveling the costs of shipping that must be covered by customers. This allows you to operate in the same way that any competing business within that country does, only you can position your headquarters anywhere in the world. The use of a fulfillment company is the secret weapon of successful online businesses in today’s climate, and can keep your profits intact while allowing you to compete with the low prices offered by offshore competition.