Ecommerce can seem like magic from the customer’s perspective. When they want something, they just need to press a button and — poof! — it arrives at their doorstep a couple days later.
Of course, ecommerce isn’t magic. There’s a lot going on behind the scenes when a product is being moved from Point A to Point B.
Before the customer even places their order, your inventory must be highly organized so products can be retrieved quickly. You may also need to maintain special facilities at your storage locations, such as refrigeration for food or medicine.
When the order comes in, the product will need to be packaged. Extra time and effort will be required for products that are particularly fragile, large or oddly shaped. Finally, a carrier will need to be chosen for shipping the product, and it can take quite a bit of research to figure out how to get the best rate.
Overall, it’s a complicated process — especially now that Amazon has set two-day delivery as the industry standard. If you can’t offer fast delivery, you’ll lose business to competitors that can. And if there are ever any hiccups in your process that result in delayed deliveries, your reputation is going to take a hit.
Indeed, if you’re not able to keep up with order fulfillment, you may not stay in business for long.
Third-Party Fulfillment vs. Self-Fulfillment
Often, when stores are just starting out they don’t need to deal with much volume. If you’re only selling a few products per month, it’s easy enough to keep products in your garage and carve out time for packaging and shipping as needed.
But fulfilling orders can quickly become a full-time job when sales start to pick up. Furthermore, it will eventually require investing in storage space as well as additional equipment and workers.
This is why many online stores decide to use an order fulfillment company instead of fulfilling orders themselves.
Order fulfillment companies help businesses store, process and ship their products. They offer you affordable access to inventory management infrastructure that would cost a fortune to set up on your own. And they can usually handle returns for you, too.
Another benefit? An order fulfillment company will usually lower your shipping costs. Order fulfillment companies ship a large number of packages on behalf of their clients, which allows them to negotiate lower rates from shipping carriers.
How to Choose an Order Fulfillment Company
There are many factors to consider when selecting an order fulfillment company for your store. First off:
- How many warehouses does the company have?
- How large are they?
- Where are they located?
Larger order fulfillment companies sometimes require their customers to meet a minimum order threshold, so they may not be an option for smaller stores. Length of contract is another concern. Ideally, you’ll be able to avoid getting locked into a long-term contract. A month-to-month plan gives you the flexibility to quickly switch to a new solution should your circumstances change. But don’t rule out long-term plans by default, as they can still be flexible if there are minimal penalties for leaving the arrangement.
Also, what is the order fulfillment company’s policy for damaged items and shipping mistakes? You’ll want them to be responsible for as much of this as possible. Some companies have “shrinkage” or “breakage” built into their contracts. This works like an insurance deductible — you’re responsible for losses up to a certain amount, and then the order fulfillment company will start paying for losses after that amount has been reached.
Finally, cross-reference the services that would be valuable to your business against the services provided by the order fulfillment company. Do you want to add your own logo or other branding elements to your packages? You may also be interested in “kitting,” which involves combining products with multiple stock keeping units (SKUs) together into one package with a single SKU. Not every order fulfillment company provides these services.
The Top 8 Order Fulfillment Companies
The following order fulfillment companies stand out as the absolute best options for online stores:
ShipBob is by ecommerce entrepreneurs, for ecommerce entrepreneurs.
The company launched in 2013 after the founders started their own online photo printing business and discovered they weren’t satisfied with any of their shipping options. This led them to create ShipBob, a program that automates ecommerce fulfillment. Since then, they’ve invested in hundreds of thousands of square feet of warehouse space as well.
The ShipBob fulfillment network consists of four warehouses located in the Chicago, Philadelphia, Los Angeles and Dallas/Fort Worth areas. These facilities are all fully owned and operated by ShipBob, and there are dedicated customer service reps at each site to help troubleshoot any issues that may pop up.
ShipBob’s most notable service is its 2-Day Express Shipping Program, which allows you to meet the expectations set by Amazon. Other benefits of using ShipBob include:
- Its proprietary software is free for all ShipBob customers, and it integrates with major ecommerce platforms such as Shopify and BigCommerce. This dashboard makes it easy to keep track of your inventory, orders and shipments.
- International shipping is available to over 220 countries.
- B2B and wholesale services (pallet preparation, freight quotes, etc.) are available.
- You can use custom branding for your boxes.
- ShipBob can perform kitting if needed.
- No minimum order volume is required.
2. Fulfillment by Amazon
When you’re trying to meet the two-day shipping standard set by Amazon, your best bet may be to go with the ecommerce leader itself.
Fulfillment by Amazon (FBA) gives you access to Amazon’s massive network of 170 fulfillment centers, which amounts to over 150 million square feet of warehouse space and 250,000 full-time employees.
Using FBA also makes your products Prime-eligible. This means Amazon Prime members can order them with free two-day shipping. When you consider how extra costs such as shipping are the most frequent cause of abandoned carts along with the fact that an absurd 82% of American households have an Amazon Prime subscription, it’s easy to see how FBA can significantly increase your sales.
Amazon charges the following fulfillment fees for standard-sized packages (this includes picking and packing your orders, shipping and handling, customer service and product returns):
- Small (longest side 15 inches or less, shortest side 0.75 inch or less, median side 12 inches or less): $2.41 for 10 ounces or less, $2.48 for 10 to 16 ounces
- Large (longest side 18 inches or less, shortest side 8 inches or less, median side 14 inches or less): $3.19 for 10 ounces or less, $3.28 for 10 to 16 ounces, $4.76 for 1 to 2 pounds, $5.26 for over 2 pounds with an additional charge of $0.38 per pound after the first 3 pounds
There’s an extra fee of $0.40 per item for clothing and $0.11 per item that contains lithium batteries.
As for inventory storage, Amazon charges $0.69 per cubic foot for standard-sized packages in January through September, and $2.40 per cubic foot in October through December.
3. Rakuten Super Logistics
Like FBA, Rakuten Super Logistics is a spin-off service that allows you to piggyback off an ecommerce platform’s existing infrastructure. Rakuten is the most popular ecommerce site in Japan and has 15 fulfillment centers in the U.S.
Rakuten Super Logistics launched in 2001. Its extensive experience in this industry allows the company to provide high-quality service; Rakuten Super Logistics guarantees 100% order accuracy and 100% order turnaround by next business day. And with its infrastructure, the company can provide two-day ground shipping to 98% of the U.S.
Note that Rakuten Super Logistics does have an order volume minimum of 250 orders per month, so smaller stores may not be able to use this service.
Founded in 2014, ShipMonk has warehouses in Los Angeles, California; Pittston, Pennsylvania; and Fort Lauderdale, Florida. The company also invested heavily in warehouse automation technology, achieving 99.9% picking accuracy.
ShipMonk’s pricing is remarkably transparent. Its rates for standard ecommerce fulfillment are as follows:
- 0 to 500 orders per month: $2.50 for the first item in an order, $0.50 for each additional item
- 501 to 1,000 orders per month: $2.25 for the first item in an order, $0.50 for each additional item
- 1,001 to 2,500 orders per month: $2.00 for the first item in an order, $0.40 for each additional item
- 2,501 to 5,000 orders per month: $1.80 for the first item in an order, $0.35 for each additional item
- 5,001 to 10,000 orders per month: $1.50 for the first item in an order, $0.30 for each additional item
- Over 10,000 orders per month: Custom pricing, contact ShipMonk for a quote
5. Red Stag Fulfillment
Every order fulfillment company will tell you it’s committed to reliable service, but Red Stag Fulfillment really walks the talk.
If the company doesn’t unload your shipment within 48 hours of it arriving at its facility, Red Stag Fulfillment will pay you $50 for the inconvenience. If an order isn’t shipped according to your service level (Next Business Day, 3 p.m. cut-off or 5 p.m. cut-off), you don’t need to pay for that shipment and you’ll get $50. And if the company ships the wrong item or wrong number of items, it will fix the mistake, not charge you for the shipment and pay you $50. Also, Red Stag Fulfillment guarantees no shrinkage and takes full responsibility for any damage that happens in its warehouse.
Red Stag Fulfillment is able to reach 99.9% of Americans within three days and 97% of Americans within one to two days. This is an ideal solution for smaller stores as well, because there are no long-term contracts and no order minimums.
Fulfillify has warehouses in Rochester, New York; Harrisburg, Pennsylvania; Oklahoma City, Oklahoma; and Reno, Nevada. The company is able to reach 98.6% of the U.S. population with one-to-two-day ground shipping.
One major benefit of using Fulfillify is the software — its dashboard provides you with detailed reports for inventory, material receipts, orders, reorders and shipment tracking.
Fulfillify’s pick-and-pack rates start at $1.99 per order with an additional charge of $0.50 per item. The company also offers product storage for a monthly fee of $12.50 per pallet and product receiving for a monthly fee of $12.00 per pallet.
7. eFulfillment Service
eFulfillment Service is one of the top options for online stores just starting out. There are no order minimums or long-term contracts, and its pricing for fulfillment and storage is especially competitive.
One thing that sets eFulfillment Service apart from some other entries on this list is it provides cross-docking, which is when orders are received at the warehouse and then immediately shipped out without being stored. This is a useful service for crowdfunded ventures that need to get a newly developed product shipped to their backers as fast as possible.
8. FedEx Fulfillment
Experience counts for a lot in ecommerce. When 90% accuracy isn’t nearly enough to maintain a good reputation, you need an order fulfillment company that really knows what it’s doing.
While FedEx Fulfillment was launched relatively recently in 2017, it’s the product of a company founded back in 1971. With its unparalleled institutional knowledge and expansive infrastructure (600 facilities in the U.S. and Canada), you can be confident that FedEx Fulfillment will provide you with fast and reliable service.
Service costs vary, and you'll need to fill out an online form to request pricing information.
It Takes a Village
You don’t need to hire staff or build out your in-house capabilities for every task that must be completed by your online store. In fact, that’s often not going to be the right solution for your bottom line.
There are many third-party resources available to help you save money and still get excellent results. Best of luck finding the right mix for you and your store!
Adam Ritchie is a writer based in Silver Spring, Maryland. He writes about ecommerce trends and best practices for Shogun. His previous clients include Groupon, Clutch and New Theory.