How to find the best Fulfillment Center for your business?

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✨ Post actualizado el 26/12/2023 por David Costarrosa

How to find a Fulfillment Center

Looking to take your ecommerce business to the next level?

Did you know that according to CapitalOneShopping.com, the fulfillment service for ecommerce has an annual growth of 12.6% year on year?

And that’s not all, since, as the same article also assures, this business moves more than $109 billion, with a projected $272 billion by 2030.

That’s the main reason why you, like so many other ecommerce sellers and Amazon FBAs, are looking for the most suitable place to store your products.

The choice is simple, invest in a specialized company that can store and ship your products quickly and safely, guaranteeing and taking care of your customer service.

That’s why in today’s article we will explain step by step how to find the perfect fulfillment center for your business.

Why the Right Fulfillment Center Matters

Many of us will agree that having a good agent in China is a great advantage when it comes to getting good prices on products.

At the same time, we also know that having a local supplier ready to deal with the volumes that ecommerce moves is very important.

However, that is just one part of the chain, which is often broken when the customer receives their product in poor condition, with a badly damaged box or even several days later than expected.

At this point, it is very interesting to analyze the questions asked by SprocketExpress in its article “How Fulfillment Services Impacts Customer Satisfaction”.

  • When a customer receives a product, what condition is it in?
  • What material do you use for your packaging?
  • How long does it take to arrive?
  • How is the tracking information transmitted?
  • How are returns handled?

From your analysis on the answers to these questions, it is important to know how to make the best decision when it comes to choosing the company that will carry out the entire  fulfillment process of your products until they reach your customers’ door.

Having a winning product at the best price on the market is futile if you do not have a structure that satisfies the needs and expectations of your customers.

How to Evaluate Types of Fulfillment Centers for Your Needs

As we have said before, the process of evaluating and choosing a fulfillment center is a fundamental step for the growth and success of your ecommerce business.

Therefore, in the chart below we show you the qualities of each and which is the perfect model for the stage your business is currently in.

In-house Logistics3PL or Third-party LogisticsDropshipping
What is it?Internal logistics is developed entirely by the company and without the participation of an external company that carries out the storage of the stock or the control of the shipment of the packages.Third-party logistics is carried out by an external company which is, at the same time, in charge of managing the stock and coordinating with the transport company during the entire process of sending the package to the customer.Dropshipping is a logistics and business model in which, as a seller, you do not have access to stock or logistics control, but rather a supplier or third party who holds all the stock and is also responsible for shipping each package to customers.
Advantages

  1. One of the most substantial advantages of this type of logistics is the total control over everything that happens in the logistics process.

  2. In addition, you will also have stock storage, so you can know exactly what merchandise you have without depending on someone else.

  3. This, at the same time, will allow you to offer a personalized experience when it comes to packaging, shipping times and other additional services.

  4. Consequently, you will have a higher degree of autonomy and you will depend only on the transport company that delivers the package to the customer's home.


  1. One of the most important advantages is the professionalization of logistics.

  2. These types of companies specialize in stock management and package shipping handling, so you will save a lot of time as well as additional infrastructure and logistics costs.

  3. This will allow you to be able to scale your store much faster since you will have extra time to put your energy solely into growing your business.


  1. One of the most important advantages is that the economic barrier to entry will be very low, since you will not need to make an initial investment in merchandise but will use the supplier's own stock to start selling.

  2. In general, companies that offer this type of service tend to have a broad product catalog, which can also be an important point when making the decision to invest in this type of logistics.

  3. The scalability of this business model can be higher since, as mentioned above, they are usually suppliers with a large flow of merchandise and with a high probability of being able to handle many daily orders.

Disadvantages

  1. One of the big disadvantages of this type of logistics is all the additional costs involved in carrying out such a process unilaterally.
  2. In principle, you will need not only human resources, but also packaging materials, tracking software and technology for packaging the packages.

  3. Another important point is the complexity of stock management, a sensitive area that requires expertise in order to manage stock in a coordinated manner so as not to break stock at the most important sales moment of the year.

  4. Finally, we have to consider that the growth of the company must be coordinated with logistical growth, since the most important point is to be able to meet the demands of buyers when packages start arriving late or not at all.

  5. This could mean more investments in infrastructure and specialized personnel in the area.


  1. In terms of disadvantages, the most significant is the loss of control of both the stock and the logistics process.

  2. This point is non-negotiable since this is precisely what this logistics service is all about.

  3. In addition, you will become dependent on that company and will have to adapt to its shipping policies, which often do not coincide with what you could do if you had control of your stock.

  4. For example, companies usually have a work schedule, so if you wanted to speed up the assembly of packages overnight during Q4, you would not be able to do so.

  5. Another negative aspect is the inability to customize each package or to add anything extra inside them, except for when you have a specific agreement with the logistics company in place.


  1. One of the most significant disadvantages is that you have no control over anything and, moreover, you do not know in what condition the item is shipped to the customer.

  2. Another con is that it is usually a low profit margin model, since it is the supplier who takes all the investment risks.

  3. In addition, if you want to start this type of model with Chinese suppliers, you will have to face high shipping times, language barriers as well as culture and concept shock regarding customer service in general.

When to chooseThis type of logistics is often used by new companies or small entrepreneurs who are taking their first steps and learning about everything related to their business and their online store.This process is essential for companies that already have experience and a significant flow of sales and that are looking to make a quality leap to a higher level to offer their customers professionalism and speed in the shipment of packages.Dropshipping is ideal for entrepreneurs who are looking for extra income or are taking their first steps in the world of ecommerce and online stores.

How Much Does a Fulfillment Center Cost?

As we have said before, the purpose of this article is to give you all the tools and information to make the right decision, taking into account not only the services offered but also the cost structure of various fulfillment centers.

So, let’s use the information in our article “Ecommerce Fulfillment Services in Europe” to help you size up why Beeping will be the best solution for your business.

Practical example

Let’s focus on a practical situation that may be happening to you right now:

Juan has an ecommerce business and his work is starting to show its first green shoots.

Example

A hiring scenario is proposed

With the growth of sales, it is time to think about the scenario of hiring a fulfillment service to be able to invest more time in developing other products and get rid of everything involved in the preparation and shipment of packages.

For that, Juan decided to contact 4 fulfillment companies with experience in Europe.

Contact to different companies

Your first contact is with the company Fulfillment Europe. The response was not as quick as he expected, taking more than 24 hours. He liked the fact that his packages can be distributed throughout Europe and have their own software. However, he was a bit annoyed that there was no after-sales customer service and decided to continue his research.

The second option is the company Huboo. There he begins to understand that there are certain standards that will be shared by each of the companies he decides to contact: a budget adapted to his needs, his own software and even the possibility of distribution throughout Europe.

This is when he decides to open up the spectrum and focus on the differential points.

Beeping is next on the list and what he likes most is not that it is the best price on the market for packages up to 1kg, but that the company has an after-sales customer service combined with a cash-on-delivery service, which makes Juan think that all points of possible conflicts will be solved without having to handle it himself.

Finally, it is the turn of OGO Ship, which has offered Juan a tailor-made quotation, distribution throughout Europe and the possibility of using the company’s own software.

Analysis of each company

In analyzing the companies, Juan has decided to use a chart that allows him to see the strengths of each proposal.

📝 Tailor-made quotation according to company’s needs

🌍 Distribution of products to European Union countries

💻 Proprietary software

📲 Personalized response in less than 24 Hours

💶 Cash on delivery service

👩‍💻 After-sales customer service

📦 Cost of package 1 Kg - 48/72 Hrs.

3.50€

4.50€

3.59€

3.75€

Best choice: Beeping

Against this backdrop, Juan decides that Beeping will be the company that will carry out the entire process of expanding his business.

The reason for this choice is because Beeping not only offers solutions from an ecommerce point of view, but also has a warehousing service for Amazon products.

Juan is very clear that his next step is to opt for Amazon FBA (Fulfillment by Amazon), so having that point resolved is also very important for the future.

Is a Fulfillment Center Worth It?

This question is undoubtedly one of the most recurrent when considering whether or not to engage a fulfillment center.

Of course, the answer depends on the context of your business but, in keeping with the theme of the article, we’re going to help you make the decision.

🌍 When is it worthwhile?

Rapid growth

If your business is growing exponentially and you are struggling to cope with product demand and shipping, it’s time to consider a fulfillment center to scale your business to the next level.

Lack of space

Another reason is the lack of storage space. This is linked to the previous point, but it is undoubtedly another very important factor in making the decision.

Fast shipping

Beeping has an average shipping time of 24/48 hours. This is a service that will make your customer very happy and eager to continue buying your products.

🏡 When is it not worthwhile?

You are just starting out

Considering a fulfillment center if your business is very small or you are just starting out would mean an additional expense that you cannot afford today.

You sell customized products

This is another key point, since if you sell customized products it would not make sense to have a stock of them, since each one is different. In this context, it would not make sense to hire a storage space or a fulfillment center.

If you sell fragile products

If your products are fragile or very delicate and need a lot of care, the best option will be for you to be the one to carry out this process.

How can you know if the decision to engage with a fulfillment center is correct according to ROI?

You have started working with a fulfillment center and it is time to sit down in front of the computer and let the numbers confirm if the decision was the right one.

How to do it?

Let’s delve into the ROI Calculations for a moment. Assume that without the use of the fulfillment center your profit was $10,000 per month.

When you started working with the company, you had an additional expense of $3000 to your structure, but thanks to the efficiency and speed of the service, the sales volume has grown and your profit has been $16,000.

Example equation

In this case it would be worth it, as you would be earning an additional €3,000 per month, which is a 100% return on investment.

How Do I Choose a Fulfillment Center Location?

The choice of a fulfillment center should not be based solely on price.

As we have seen in the case study, Beeping is an excellent option because it meets a series of conditions that will make everything run smoothly from your client’s perspective.

Location factors are pivotal in this decision-making process. 

However, the question of location, as well as shipping routes, should not be overlooked.

While in the United States, for example, this point has a greater influence given the geographical distance between different cities, in Europe the China factor comes into play.

China is one of the most influential countries in the economic arc of ecommerce since this is where the majority of the products sold online come from.

Evaluating shipping routes from China to your final destination is crucial.

That is why it may be tempting to think of a business model based on a fulfillment center in China.

However, although in theory the cost is lower, the great distance between cities in China is a point that slows down the process much more than usual.

If you want your company to meet the standards expected by customers these days, then your search should be 100% focused on a fulfillment center located in Europe.

What Makes a Good Fulfillment Center?

Although this answer depends a lot on the current situation of your business, it is true that there are some key aspects that you should take into account before engaging a fulfillment center.

👀 Criteria to consider

Technology and Software

When we talk about technology, we talk about technological solutions that improve the operation of the service, including everything from proprietary software to a barcode system. In addition, it is essential to have integration with the most popular platforms in order to adjust and improve work times.

Capacity

It is essential that the fulfillment center has sufficient capacity to handle the time when your business grows and needs to be scaled.

Customer service

As we have explained before, this is one of the fundamental points since a great part of your success will depend on it.

Experience

Experience is a key factor in this business. A fulfillment center that has been in operation for years is not only a result of its responsibility and seriousness, but also that it has already won several battles.

Flexibility

Whether the fulfillment center is open to adapt to your differing scenarios is a point that you will undoubtedly have to place on the scale when making a decision.

Cost

Of course, the cost factor can also tip the balance to one side or the other although, as we have said before, you must evaluate a “whole” and not a single factor.

🔎 How to evaluate these criteria

Visit the site

If you have the chance to visit in person, you will have a much more realistic view of how the fulfillment center works.

Ask for references

 Nowadays it is very easy to get reviews about how a company works. Just put their name in Google and the reviews will be right there in front of you.

Try the service

If possible, try the service for 1 or 2 months to evaluate their work. At Beeping, we do not have a minimum contract duration.

Evaluate the service

Buy a product and evaluate the company’s performance yourself.

Key Questions to Ask Potential Providers and Red Flags to Watch Out For

Here is a list of questions you should ask a fulfillment company in order to address the most important issues and avoid any possible unpleasantness.

1- How many orders do you handle daily in your order fulfillment process?

2- Do you have the capacity to cope with high-demand periods such as holidays or Q4?

3- What platforms can I integrate your service with?

4- Do you offer real-time package tracking?

5- What is the average shipping time for each package?

6- Are there any additional costs for storage?

7- Do you have a minimum contract period and can I terminate the contract early?

8- If you send the wrong product, who bears the cost of the error?

9- Beyond storage and shipping costs, are there any other additional costs?

10- How do you handle returns and what are their costs?

In addition to these questions, we will leave below a downloadable file with a checklist so you can check if the company meets all the requirements to be the solution for your business.

Free download:

Check if the logistics operator you have on file meets all the requirements with this free checklist.

Conclusion

While it is true that there are many options, finding the right fulfillment center that fits your business is not an easy task.

In principle, you should evaluate if this is the right time to face such an expense. For that it is essential that you analyze the current situation of your business and its future projection.

At the same time, within the evaluation process is the choice of the fulfillment company that will carry out the shipment of your package.

At Beeping we have personnel trained specifically for this action with the objective of providing a service according to the current standards in terms of delivery times, cost and efficiency.

Use our list of questions so that you don’t miss anything when contacting each company and remember that a fulfillment center is not an expense but an investment to improve the quality of service of your business.

If you take this step-by-step guide forward, you will be able to free up your time considerably to target other areas or new products in order to increase your own profit and that of your ecommerce business.

FAQ

What are the contract terms usually like with fulfillment centers?

In the case of Beeping, there is no minimum contract duration regarding the use of our service. However, we have clients who have been using our services for more than 3 years.

At the same time, clear guidelines are established regarding the type of product that can be stored, as well as the terms of service and the cost of the service.

How do fulfillment centers handle returns?

At Beeping we have a simple reverse logistics process with the objective of streamlining one of the most tedious processes within the ecommerce supply chain.

Once the return process has been initiated, the package will arrive at our warehouse and will be checked by an expert to ensure that the product and its original packaging are all in order.

Once this is done, the customer will be notified and the product will be put back into storage.

Contenidos 📋
The difference is in the people. Choose our logistics service.

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