Choosing A Fulfillment Warehouse
Fulfillment warehouses can provide a very necessary service to a companies that do not wish to maintain their own inventory.
But if you own a small company or are considering starting a small business and are considering the use of an order fulfillment warehouse, you have to be very careful that you understand the charges that you will incur when you put your products in one. Fulfillment companies definitely run their operations differently.
Fulfillment companies base their charges number of SKU's that they for you. (An SKU is a stocking control unit and it represents a particular product.) You will be charged a monthly fee per SKU. It does not matter how many products you have in the under that particular SKU. You might have one glass under that SKU and be liable for a monthly charge for that one particular glass.
If you have a high turnover rate on your products then the use of an order fulfillment warehouse makes sense. But if you're going to have a small number of products that have a low turnover rate then the charges may each you up.
We know of one customer that shipped 12 different products to a fulfillment warehouse on one pallet with the assumption that the customer would be charged the monthly fee of $45 per pallet for that one pallet. The customer failed to ask the company sales representative what the monthly charge would be for the particular pallet load of products to be shipped and stored.
As it turned out, after the customer paid all the fees to get the product delivered to the storage facility, the monthly charge he was not $45 per month for that pallet but 12 times $45 per month.
Needless to say the customer got burned and burned very badly by reason of not asking the right question.
There are many fulfillment warehouses out there. And like in any business some excellent and some not so.
And like in any business certain companies are better at some tasks and do a better job supporting certain industries than others.
So if you are going to use a fulfillment warehouse it is best to ask the right questions.
And because you are buying to be totally reliant on someone else to provide good customer service it pays you to visit them, see what they have, see what they have to offer. In that way you are more likely to be sure you know exactly what you are getting into before you turn this essential customer service function over to someone that you met on the Internet.
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