Monday, October 25, 2010

Shipping Something Next Day Air With FedEx Or UPS? READ THIS FIRST!

If you are looking for a way to save money on shipping small packages here is a tip. FedEx and UPS service many points next day guaranteed with their low cost Ground Service. So, why pay for next day air service on a package you need to be delivered tomorrow at double or triple the cost? For example, from our food fulfillment warehouse in eastern PA, FedEx will service anywhere from New York City down to Washington DC next day with their ground service. There is no need for us to EVER pay for next day air to any of those points. Similarly, FedEx Ground is just a 2 day service to Chicago and most of the Midwest. Again, as a more cost effective option compared to Second Day Air, Ground is a better choice.

Check out the FedEx site to calculate transit time from your location to where your package is going.

To illustrate, startup online ecommerce business and artisanal sausage retailer Sausage Obsession reduced their shipping costs by over 50% when they began shipping products Ground instead of Next Day Air. The handmade sausage products Sausage Obsession sells are all shipped fresh or frozen. Obviously getting the customer orders shipped from their order fulfillment service operation has to be done quickly and reliably. With the same type of packaging and amount of dry ice they were using before, Sausage Obsession is now able to service all their customers half way across the country without paying for expensive Next Day Air delivery.

Wednesday, October 6, 2010

Ecommerce Order Fulfillment Explained

What are the different service and cost components of packing and shipping with a 3rd party fulfillment operation?

If you are an online retailer thinking about partnering with a 3rd party ecommerce order fulfillment warehouse to handle your pack and ship operation you should understand the different categories of service a typical fulfillment house will provide.

Receiving and Storing Product: This includes the process of receiving your goods into their warehouse. It begins with a thorough inspection of the product as it arrives to ensure there is no damage and the exact products and quantities match what is expected based on your direction and the Bill of Lading. On an ongoing basis it is important for the provider to maintain and report accurate inventory numbers. Storage requirements depend on the product but can include the facility maintaining a temperature controlled environment, custom racking, or on-shelf storage. Receiving and Storage rates are generally billed as either a per pallet cost, or a per package cost depending on the product.

Order Pick Charges: An integral part of the fulfillment process is how orders get transmitted from you to the facility. This can happen as part of an integration with your shopping cart software, EDI, flat file, or even a fax. As the orders are received, they are assembled or “picked”. Order Pick charges are generally based on a flat per order fee that includes the first item, and then a small additional charge for each additional item in the order. So, as an example, if your typical order is for three items, you could expect to pay $4.50 per order plus an additional $.50 for each additional item, making the total $5.50 to have the order packed.

Administrative Support: Fulfillment providers will often charge a monthly service fee for things like reporting or fielding customer calls. These charges can varying by a large extent and depend on the requirements you put in place.

Packing Materials: This would include the cost of the carton the order is shipped in, any dunnage (packing material to protect the product in the box), as well as the labor to assemble the box. These costs may or may not be included in the Order Charges detailed above. Remember, the majority of costs for a fulfillment operation are labor, so each small action (assembling a box, printing a label, placing an item in a box, etc.) each take time. It may feel like you are being “nickeled and dimed” but it is really about charging for the exact time spent for your specific needs. Fulfillment is not a one size fits all service in any sense.

Shipping Costs: The handling costs associated preparing an order to be shipped (printing the shipping label, palletizing boxes, etc.) are generally covered by the Order Charges. But obviously one big remaining cost is for shipping (FedEx, UPS, USPS, etc. assuming you are shipping boxes, not pallets at a time). If you have one, it is often best to use your company’s own account number and most fulfillment providers will allow you to do that. They may, however have a better contract with one of those carriers and be able to pass on some of that savings.

More info on Ecommerce Order Fulfillment and Frozen Food Fulfillment.

Selling a Food Product Online? Things to consider with your fulfillment operation

What are the special considerations for an online retailer selling food products online?

The whole order fulfillment process is made up of many steps, but there are two factors that apply to dealing with food products. First, the location you choose to store and pack your shipments needs to be food grade, which means it meets certain standards for cleanliness and pest control. The facility is periodically inspected to make sure those standards are upheld. Second, you need to consider if there are there any requirements related to the temperature in the facility that need to be considered while the products are stored and also when they are shipped.

From a storage and handling perspective, non-frozen or “dry” food products can be handled similar to any non-food product. The main exception is of course that the requirements for maintaining a food grade facility need to be adhered to. Food products, whether dry or not will likely have expiration or best used by dates so it is important to manage the inventory to make sure product is still fresh and usable. The FIFO (first in first out) method of managing inventory generally makes the most sense for food products. Frozen products obviously need more care and temperature control during storage. Keeping frozen food frozen is clearly important, but more subtle requirements such as controlling humidity and ambient temperature are also important.

From a shipping perspective, the needs are very similar. Dry food products can ship similar to most any item, although some non-frozen products may need to avoid being frozen at the risk of damaging the product or its packaging. Shipping frozen products is an additional, but manageable challenge. There are many options for stock, or custom packaging to be used when shipping frozen food (or any cold item for that matter). Kits that contain a styro-foam “cooler” and tight fitting carton are likely the best option and can be designed for most applications. Items packed in the box, along with dry ice can be kept safely frozen for 24 to 48 hours during shipping under normal conditions (think hot summer and cold winter). Needless to say, some level of expedited delivery, preferably overnight needs to be used to make sure product gets delivered on time. However, keep in mind, UPS and FedEx offer Ground service that provides next day delivery to locations within a pretty good size radius. There’s no need to pay for expedited delivery when ground will suffice –the cost savings could be >50%.