Business Model Insight is Key Element of Successful Fulfillment Effort

If you’re a direct merchant that outsources your fulfillment, the single most important thing that can be done to ensure back-end success is to share information with your third-party provider.

By “sharing information,” I mean providing insight into all operating principles of your business model including costs, manufacturing processes and timelines, seasonality and so on. Having this insight enables fulfillment providers to proactively offer the most effective solutions that address your particular needs.

The ideal third-party fulfillment company is one that offers a 360-degree approach to the business. The provider should be asking you questions to determine how to best help you with inbound marketing, the order process (including scripting), return processing, retail distribution and inventory management.

It is critical, too, that your fulfillment provider possess the acumen to assist you in determining a relevant P&L based on your true cost of goods. An experienced fulfillment provider has the tools that take into consideration every nuance of back-end expenses and revenues. This enables the client to determine financial viability of each program by plugging in their actual resultant cost of goods.

If your fulfillment provider knows these elements of your business at least as well as you do, it can best serve you as a true partner who can advise you every step of the way. This can often either save you – and/or make you – money on what might appear to be such mundane items as the size and look of shipping boxes.

Here’s one example of how a third-party fulfillment provider can help in unexpected ways:

Our company was hired to handle fulfillment for a hot new product, Weed Thrasher. The product was marketed as replacing the cumbersome nylon string on most of commercial weed trimmers.

Product sales grew like, well, weeds, hitting several thousand orders per week. But we noticed that return rates were higher than anticipated, and our customer service center was learning that the returns were occurring because the product didn’t retrofit to some popular brands of weed trimmers. How did we know this? A simple analysis of the “frequently asked questions,” drawn from return calls data.

Our staff actually bought the models that people most often said were not compatible and confirmed the problem. We discovered that making the Weed Thrasher compatible with these products was simply a matter of adding a few nuts and bolts, along with an addendum to the instructions on how to make the product work with particular brands of trimmers.

The result was a dramatic drop in returns and corresponding increase in customer satisfaction, just as the product was about to go to retail. Weed Thrasher was able to edit its infomercial to say that their product works with virtually all commercial weed trimmers.

If your fulfillment provider is not asking the right questions, then you should take the initiative to start the conversation. Either that or look for a new provider!

Chris Rebholz is president/co-founder of Christopher Morgan, a fulfillment, distribution and marketing company located in New Berlin, WI.