Home – New Forums Tell me straight… Ecommerce order fulfillment. Viable?

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  • #979874
    MatthewKeath
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    Hi everyone,

    I used to work in warehousing, and know the headaches that business owners have with the picking / packing, and then the distribution of their products.

    With more and more sales being made online, without the need for a physical store, the idea of taking the headaches of warehousing and shipping away from the eCommerce store owner, and into the hands of a professional has struck me as something that is worth further discussion.

    1. The goods are sent and stored at the off site warehouse.
    2. The order is taken and paid from the eCommerce website. Though the magic of technology, the order is put into the supply chain system automatically.
    3. The order is picked and packed at the offsite warehouse. There is a fee for both the shipping and the packing / picking.
    4. The customer gets the order and everyone is happy.

    Obviously there is a lot more to it than that, but that is how it would work in essence.

    There are already systems doing this overseas, and there are some smaller fulfillment company already operating in Australia, but the focus on eCommerce in Australia is something new.

    Any opinions are welcome!

    #1117900
    daydreamer
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    Hi Matthew,

    Yes, exactly what is needed.

    When we checked last year, we only found 3 companies around Melbourne that were interested in doing this for small scale eCommerce businesses.

    However, they were all super expensive… about $4 up per order to pick/pack/send, plus postage, and then other fees to store the stock, take delivery of the stock etc.

    It didn’t make sense financially, as it was way cheaper to do ourselves, even though it is our biggest headache and we really want to outsource it.

    #1117901
    MatthewKeath
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    daydreamer, post: 132442 wrote:
    Hi Matthew,

    Yes, exactly what is needed.

    When we checked last year, we only found 3 companies around Melbourne that were interested in doing this for small scale eCommerce businesses.

    However, they were all super expensive… about $4 up per order to pick/pack/send, plus postage, and then other fees to store the stock, take delivery of the stock etc.

    It didn’t make sense financially, as it was way cheaper to do ourselves, even though it is our biggest headache and we really want to outsource it.Thanks for that!

    #1117902
    Divert To Mobile
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    The forum is buzzing with good ideas today.
    I like it Matthew especially since I come from a logistics background too.

    Steve

    #1117903
    EMT Australia
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    Matthew,

    As we discussed on the phone it is definately a very ill covered area in australia.
    I have heard back from the mrs re:that meeting she was in and that customer who is a big retailer in Australia is also interested in the idea.

    The main issues are how deliveries would be handled but i think if you stated metro deliveries within 24 hrs and outside metro 2-3 days i think you would be alright.

    Other considerations would be setting up a call center for enquiries on orders (ill discuss this with you later)

    It will be alot of work but i think theres a winner idea here.

    #1117904
    Nathan Hartnett
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    Hi,

    It definitely has to happen. We have a bunch of e-commerce stores, and logistics is always the biggest hassle. We love our business model, but the biggest improvement we could make is to use a (cost effective) fulfillment centre. We’ve been keeping an eye out for years for a good one, but as mentioned, they’re all too expensive.

    The current scenarios available to us at the moment are:

    1. Dropship – too many varied quality control issues, and are often limited to one supplier (no backup);

    2. Take care of it ourselves – What we currently do, which means we control the quality and have a world of suppliers to choose from – but have to have employees/contractors, as well as rent the physical warehouse;

    3. The Dream. A cost effective fulfillment centre that could take care of all of our needs. But it must specifically be able to cater to low volumes as well as being able to scale.

    Good luck! Always happy to talk about our challenges in this department.

    #1117905
    MatthewKeath
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    Allhart, post: 132465 wrote:
    Hi,

    It definitely has to happen. We have a bunch of e-commerce stores, and logistics is always the biggest hassle. We love our business model, but the biggest improvement we could make is to use a (cost effective) fulfillment centre. We’ve been keeping an eye out for years for a good one, but as mentioned, they’re all too expensive.

    The current scenarios available to us at the moment are:

    1. Dropship – too many varied quality control issues, and are often limited to one supplier (no backup);

    2. Take care of it ourselves – What we currently do, which means we control the quality and have a world of suppliers to choose from – but have to have employees/contractors, as well as rent the physical warehouse;

    3. The Dream. A cost effective fulfillment centre that could take care of all of our needs. But it must specifically be able to cater to low volumes as well as being able to scale.

    Good luck! Always happy to talk about our challenges in this department.Hi Nathan,

    Thanks for the feedback. I appreciate it.

    I will take you up on your offer to talk!

    Cheers,

    Matt

    #1117906
    relentless
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    great idea and something that I would like to use myself for my ecommerce businesses

    I know of a few existing companies that do this but didn’t check out their prices, everyone here has mentioned that are to expensive and maybe there’s a reason for this so that would be something to consider

    Also don’t forget about customer returns and refunds!

    #1117907
    MatthewKeath
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    relentless, post: 132510 wrote:
    great idea and something that I would like to use myself for my ecommerce businesses

    I know of a few existing companies that do this but didn’t check out their prices, everyone here has mentioned that are to expensive and maybe there’s a reason for this so that would be something to consider

    Also don’t forget about customer returns and refunds!Thanks for you comment!

    It seems people are reacting positively to this idea which is great.

    #1117908
    Anonymous
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    Hi Matt,

    Quite a few years ago in the UK, I project managed the transition from in-house warehousing and distribution to a fulfilment house like the one you’re talking about for my employer – although back then they were predominantly phone based orders not e-commerce ones.

    The savings to the business were instantaneous and substantial: they were able to cut back on rent and staff from day one, and the corresponding drop in the stress levels of the business owners was also pretty dramatic.

    There were quite a few teething problems, but once those were nailed it was a great system.

    Having said that, one of the reasons that this worked for them was that they had a large number of product lines, which had quite high retail/wholesale prices, but were small in size. They didn’t need much warehousing space to house all their products. I think if you were dealing with products that were physically larger and had a relatively low purchase price, the economies of scale might become different.

    Plus they were an established business with good turnover, and the basket size of each transaction was quite high, so they were easily able to absorb the cost of the fulfilment house’s fee (and in any case this was offset by the savings in rent and staff) – but this may not be the case with some businesses.

    I’ll be very interested to learn where you go with this idea – there’s definitely demand for it in the small business sector, but as others have mentioned, so far I haven’t seen anyone in Australia who has come up with a model that is both efficient and affordable.

    Good luck with it all,
    Jayne

    #1117909
    MatthewKeath
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    FS Concierge, post: 132572 wrote:
    Hi Matt,

    Quite a few years ago in the UK, I project managed the transition from in-house warehousing and distribution to a fulfilment house like the one you’re talking about for my employer – although back then they were predominantly phone based orders not e-commerce ones.

    The savings to the business were instantaneous and substantial: they were able to cut back on rent and staff from day one, and the corresponding drop in the stress levels of the business owners was also pretty dramatic.

    There were quite a few teething problems, but once those were nailed it was a great system.

    Having said that, one of the reasons that this worked for them was that they had a large number of product lines, which had quite high retail/wholesale prices, but were small in size. They didn’t need much warehousing space to house all their products. I think if you were dealing with products that were physically larger and had a relatively low purchase price, the economies of scale might become different.

    Plus they were an established business with good turnover, and the basket size of each transaction was quite high, so they were easily able to absorb the cost of the fulfilment house’s fee (and in any case this was offset by the savings in rent and staff) – but this may not be the case with some businesses.

    I’ll be very interested to learn where you go with this idea – there’s definitely demand for it in the small business sector, but as others have mentioned, so far I haven’t seen anyone in Australia who has come up with a model that is both efficient and affordable.

    Good luck with it all,
    JayneHI Jayne,

    Thanks for your comments :)

    Cheers,

    Matt

    #1117910
    Denyse Mc
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    Yes please. Right now I’m sending emails out to sort out just this problem The US seems to have a wealth of options not available here. Please keep me posted if you get this up and running. (Even though I’m in Sydney not Melbourne.)

    #1117912
    JaxiB
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    Hi Matt

    I think it is a great idea. When I have talked to clients about selling online, I always ask them how much time/cost involved for processing the $15 order. ie get the order, package it up, get the address ready, walk it to the post office, stand in line and pay for it to be posted. If you do not have systems in place or a lot of stock being sold so you can batch the job…That $15 transaction can soon take someone 30 minutes to post out.

    If people see the value of that job being taken off their hands, to free up income generating work ( or spending more time on FS). Then surely it would be a service people would happily pay for.

    #1117913
    M1
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    There is an alternative to going it alone.

    One of the main problems is volume of trading and the fixed costs of order fulfillment. If you can team up with similar operators to increase the turnover for the same fixed costs then the cost of order fulfillment can be shared.

    We helped 3 hobby shops to join their ecommerce work together, managed it all from the one office and fulfilled from the same fulfiller. As you would expect the fixed costs were 1/3 and the individual costs were manageable within their profit margins.

    We would certainly help do this again if we had the opportunity to.

    #1117914
    LucasArthur
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    Hey Matthew,

    Well this is an interesting thread, with us FS i am sure that many sell online and from home so the ability to warehouse off site and pay per pick to have dispatched is AWESOME.. it is something i looked into not long ago and it is covered off with larger business (and some smaller with small warehouse space – there is a QLD business based in each state doing it locally as well) with a pick per order..

    Only prob is most DO NEGLECT the ebay type, ecommerce smaller fish like those selling beauty, beads, or smaller items etc etc.. even electronics… With the focus on smaller fish like MOM AND POP sellers on ebay and ecommerce they may see the $4 as significant because there margins are too low per unit to cover it and freight costs are important in the ebay’sphere too… can lead to negative feedback or unfavorable i should say through the buyer satisfaction replies…

    Sorry i have waffled a bit.. back to it..

    GREAT IDEA, many people/businesses would love this if the pricing could match the expectations of the audience it may be pitched at.. One key concern would be those FS peeps that may be concerned with the correct products being picked and packed and dealing with any returns… I only say this as i have a close colleague that stocks over 4000 SKU’s and all are minute in size which can be quite difficult to co-ordinate if you dont personally know what it is in front of you…

    Would love to hear how you travel.. awesome awesome awesome……

    Jason

    Jason Ramage | Lucas Arthur Pty Ltd | E: hello@lucasarthur.net.au   P: 61 3 8324 0344    M: 61 412 244 888
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