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CHOOSING A FULFILLMENT PARTNER
 16 Questions You Absolutely Must Ask to Choose the Right Fulfillment Company
1. Where are you located? (In proximity to my customers)
Due to today's Internet technology and real-time reporting, proximity of your fulfillment house to your customers is more important than the proximity of your fulfillment house to your location. For example, if all of your customers are in the Northeastern United States, then hiring a fulfillment company in California is not a good idea.
As a point of reference, 70% of the US population is located in the Southeast, Northeast and
Midwest with California housing approximately another 16%. If your order distribution is spread
evenly throughout the country then New York, Pennsylvania or Ohio are good choices to
minimize shipping costs.
If most of your customers are in the East then New York, New Jersey, Pennsylvania or
Maryland are good choices.
Finally, if most of your customers are in the West then Nevada, California, or Utah are good choices.
2. How big is your warehouse?
You want a company that has a warehouse big enough to accommodate your needs but not so
big that you get lost in the shuffle. Make sure you are able to get the attention and service that
you require from your fulfillment company.
Flexibility is key. Virtually every company is concerned with whether or not the fulfillment
company they choose is able to handle the sudden huge influx of orders that will ensue as their
business grows. In addition, be sure to ask what happens if business slows down.
Fulfillment companies want you to succeed. Your relationship with a fulfillment company is a rare
business circumstance in which your goals and their goals are completely aligned.
You need to probe the fulfillment company to determine their views toward accommodating your
growth plans. This is more important than worrying about the actual space they have available to
meet your sales projections.
Some fulfillment companies are aggressive and look forward to helping customers meet their
expanding needs. These companies have already thought about and made plans to address the
needs of a customer's growing business.
However, some fulfillment companies are content to add your business but are not prepared to
address the challenges and excitement of growth.
Choose a fulfillment house that easily accommodates growth and contraction of your business.
3. What insurance coverage will I have?
The fulfillment company you choose should have full coverage to replace your inventory in case
of fire, water damage, criminal theft, natural disaster or accidental damage. Ask them what
coverage they have and what happens if your inventory is damaged.
It is not uncommon to ask for a hard copy or email copy of the policy once you have made your
choice. The right fulfillment company will not have a problem providing this to you.
4. How long have you been in business?
Longevity shows that management is committed to the company and can properly run their
business. Most businesses fail within the first 5 years. It is a much safer bet if the business is 5+
years old.
5. Do you have minimum and maximum volumes you handle?
Some companies have a minimum order amount. If you do not hit that minimum order amount
then you may be charged with additional fees or they may not even want your business.
As far as maximum volume goes, in most cases, it is up to you to decide if the fulfillment
company can handle it.
6. Which shipping companies do you use?
Many fulfillment companies have multiple choices, but some only do business with one or two
companies. It is always best to ask.
The fulfillment company should provide you with at least three different shipping options. If they
are seasoned in the industry, then they realize that a labor strike could occur at any time with any
company.
Typical choices for parcel shipments are UPS, FedEx, DHL and USPS.
7. Is there a long term commitment?
Some companies try to lock you in to long term contracts. Long term can be suitable, but on
occasion you will get locked in only to find the service is terrible. If a fulfillment company requires
a long term commitment, be sure that there is a way out of the contract.
Better yet, find fulfillment companies that are committed to service and have short term
renewable agreements or no commitment at all. If they are good at what they do and are
committed to customer service, then they won't require a long term commitment.
8. Do you have a service guarantee? (In case there is a mistake)
Some companies in the industry provide guaranteed services. Similar to FedEx guaranteed
overnight delivery; fulfillment companies can guarantee accuracy of the order or shipment time.
Keep in mind that does not mean they ship all orders correctly. It means they hold themselves
accountable for their mistakes.
The best companies in the industry provide a 100% accuracy packaging guarantee and a 100%
shipment guarantee within one business day or the order is free.
They also provide additional guaranteed services, such as inventory accuracy. This is a good way
to compare companies because if they are not prepared to offer you a money back guarantee this
could indicate questionable reliability.
9. How do you handle mistakes?
Even the best fulfillment companies occasionally make mistakes. It is how the mistakes are
handled that counts.
The accuracy rate should be at least 99.5%. An error rate on packaging should be less than
(0.5%). That means there should be less than 5 mistakes per 1,000 packages. When the
fulfillment company makes a mistake they should be willing to pay to correct it as well as refund
your money in the original order.
10. Can I access my account information in real-time over the Web?
Advanced fulfillment companies should be able to provide you with your entire inventory and
order information in real-time over the Web. They should also be guiding you during the
integration process with your website and providing you with access to dozens of real-time
reports in any format you like.
If they don't have what you need then simply search elsewhere, there are good quality companies
providing great technology for a very low price.
11. Can you integrate with our Web site or existing systems?
Whether you need a stand-alone system or an integrated system, fulfillment companies with
advanced technology will easily be able to provide you with what you are looking for with
minimum effort on your part.
These IT systems should allow you to access your information over the web and allow those who
require access to get the information they need in real-time.
12. Do you have daily backup? (Is my information secure)
Your fulfillment company has a record of all your shipment and customer data. This is your
information and is very valuable. The fulfillment company you choose should have daily server
backups.
In case your own server crashes, this also serves as a store of information.
13. Who will be handling my account and do I have a dedicated account manager?
You will need to know if there is a dedicated person who will be assigned to your account. This is
a designated individual who you can call and has authority to act on your requests.
If a call center or an account team is assigned to your account, then be prepared to wait longer
for a response to your request.
Furthermore, ask the company who your dedicated account manager will be and ask to speak to
them directly in advance of making your decision.
14. How much do your services cost and what do I get?
This can be a complicated question since there is no standard billing practice in the fulfillment
industry. However, every company should take note of your needs and then provide you with a
comprehensive proposal that includes detailed pricing.
There are basically two types of charges. These are monthly recurring charges and fulfillment
charges. Monthly recurring charges occur regardless if you ship a package or not. The basic monthly
charges you should be paying include; warehouse space, account management and software
charges. Monthly recurring charges may fluctuate depending on certain variables such as how
many pallets you are storing. These charges will be incurred each month regardless of order
volume. Fulfillment charges occur only when you ship a package. This includes pick and pack charges
and materials associated with each order. They are directly correlated with order volume.
Basic fulfillment charges include; shipping, materials and pick and pack charges.
Generally you should be able to verify all charges without relying on your fulfillment company for
an explanation. If the company has an hourly charge for activities such as receiving or assembly,
be cautious, since it is almost impossible to verify the time and it is a practice that lends itself to
over-billing.
15. Can you provide three or more references?
Can the fulfillment company provide you with references of satisfied customers? This is a vital
step when you are in the process of choosing a fulfillment company. If they are an accomplished
company, they should be able to provide you with the names of at least two or three customers
who, when you contact them, will simply rave about their service.
If a company cannot easily supply two to three references then pass immediately.
16. How often do I pay you for your services?
Ask how often the company plans to invoice you. Some companies make you pay weekly for
shipping charges and some require you to pay in advance. Still others invoice you for all charges
on a monthly basis.
Additional Questions to Ask
- Do I get software upgrades for free?
- Do you provide low inventory warnings?
- How do you process my order information?
- How will I access inventory and order information?
- Once I make a decision how long will it take to get setup and start shipping?
- Can you provide me with an implementation timeline?
- How do I make payment?
- Do you offer credit or accept credit cards?
- How do I get a refund for late shipments?
- Do you have a low inventory warning system?
- What is the turnaround time when shipping orders?
- What type of packaging materials do you use?
- Is the system customizable to meet my specific needs?
- Do you have in-house programmers to assist me?
- What is your system uptime?
- What happens if I pay late?
Distributed by Webgistix Corporation with permission of the author.
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