Avoid frustration from your customers waiting to receive their orders. Here’s why you should outsource your shipping.
NOVEMBER 08, 2011
Today clients rave about Andrew Simmons’s customer service, but not long ago disgruntled buyers plagued him.
“Five years ago, my customers hated me—some even threatened to hunt me down,” said the entrepreneur, whose Seattle-based holding company, Six Shooting Stars, carries a variety of software for the arts-and-crafts business, including a best-selling beading program. While buyers weren’t upset about the quality of his products, they became incensed about not receiving them.
“In addition to the U.S., I ship overseas, and 50 percent of my packages were vanishing,” said Simmons, who even opened his own warehouse to combat the shipping problem, which he ran from 2004 to 2007. “Unfortunately, managing the shipping facility ended up causing more problems than it was worth, and the overhead was high,” he said. “The happiest day of my life was when I shut the warehouse down and started outsourcing my shipping.”
Off-site warehousing
Fortunately for small business owners like Simmons, warehouse giants like eBay and Amazon have moved into order fulfillment, which means that entrepreneurs can focus on building their brands while their products are stored and shipped elsewhere.
With order fulfillment, automation that includes seamless ordering and shipping is the reward that frees entrepreneurs up to run their businesses, said Nate Gilmore, vice president of marketing and business development for Shipwire, an order-fulfillment company for small business owners, including eBay merchants. Services like Shipwire will warehouse products in various geographic areas and are connected to shopping carts, fulfilling orders as they come in.
“For small businesses, the benefits of order fulfillment are many,” Gilmore said. “Business owners reach customers more quickly and build a global platform for growth. They’re able to invest money previously spent on warehousing, on inventory and product development.”
Making room for creativity
Small business owners who switch to off-site order fulfillment find their productivity also skyrockets once they’re not bogged down by mailing responsibilities. “Having the ordering and shipping running on autopilot frees me up to tap into my creativity to develop and market new products,” said Simmons.
Better customer service
For Dan Provost and his partner, Tom Gerhardt, a switch to order fulfillment allowed them to fill orders much more quickly than they thought possible. The duo runs a small design company, called Studio Neat, and co-created the Glif—an iPhone accessory for mounting the Apple device at a range of angles. Glif debuted as an offer on the online funding platformKickstarter in October, 2010.
“The response on Kickstarter to the Glif blew us away,” said Provost, who is based in New York. “We expected to sell 500 and were prepared to mail them, but we got initial pre-orders for 5,000.” Part of their promotion involved mailing out a prototype to certain people who had pledged donations on Kickstarter, so they had to send out 500 of those.
“Stuffing bubble mailers on the weekend and taking bags of mail to the post office was a tedious time-suck, and we soon realized that we’d reached critical mass as to what we could do ourselves in terms of shipping,” said Provost. After checking out various fulfillment services, they decided on Shipwire, but the holidays had arrived.
“By the time the Glifs were rolling off the assembling line and getting packaged, it was the second week in December, and we had 7,000 orders to fulfill immediately,” said Provost. “Fortunately, Shipwire shipped all of the orders within 24 hours, making us look really good.”
Reduced stress
When Daniel Galhardo started Tenkara USA in April 2009, he knew that a key part of marketing this reel-less Japanese method of fly-fishing required shooting videos on location. He also found himself shipping more orders than he anticipated. For a four-day filming and exploration trip to the Sierra Nevada, he packed up an assortment of products for mailing and hit the road.
“I couldn’t disappoint my customers, so the plan was to check orders regularly and mail them at the nearest post office,” said Galhardo, who is based in San Francisco. “I was stressed about shipping the whole trip. Once I had to drive 30 miles out of my way just to find cell-phone reception and Wi-Fi. I started using an order-fulfillment service as soon as I returned home.
“Since then I’ve been able to go on more filming trips without worrying, including a recent two-month expedition to a remote Japanese village to learn more about tenkara. On that trip, I managed everything remotely, tuning out of the shipping side of things for days at a time.”
Testing the waters
Not all products lend themselves to order fulfillment. You must have sufficient inventory that can be stored off-site and a large enough profit margin for it to make financial sense.
Entrepreneurs who are uncertain if order fulfillment is right for them should try the concept with small quantities of product and have the fulfillment company mail merchandise to them so they can inspect the packaging. (Some fulfillment companies offer free trials.)
Once many entrepreneurs experience the seamlessness of having orders filled remotely, it becomes easier to grow; happy customers are repeat customers, and repeat customers spread the word. (Get more tips on shipping.)
Julie Bawden-Davis has been a journalist since 1985. She’s written for Entrepreneur, Better Homes & Gardens and Family Circle.
