Operational guide for scaling fulfillment services for a startup

Phase II: >10 Units Shipped Per Week Add the extensive FAQ to your website and continue to add answers to common questions as received. Find local fulfillment companies in the yellow pages under “fulfillment services” or “mailing services.” If you cannot find one there or at www.mfsanet.org, call local printers and ask them for recommendations. Narrow the field to those (often the smallest) who will agree not to charge you setup fees and monthly minimums. If this isn’t possible, ask for at least 50% off both and then request that the setup fee be applied as an advance against shipping or their other fees. Limit the candidates further to those who can respond to order status e-mail (ideal) or phone calls from customers. The e-mail from your “customer service” folder will be provided as copy-and-paste responses, especially those related to order status and refund requests.4 To lower or eliminate miscellaneous fees, explain that you are a start-up and that your budget is small. Tell them you need the cash for advertising that will drive more shipments. If needed, mention the competitive companies that you are considering and pit them against one another, using lower pricing or concessions from one to get larger discounts and bonuses from the others. Before making your final selection, ask for at least three client references and use the following to elicit the negatives: “I understand they’re good, but everyone has weaknesses. If you had to point out where you’ve had some issues and what they’re not the best at, what would you say? Can you please describe an incident or a disagreement? I expect these with all companies, so it’s no big deal, and it’s confidential, of course.” Ask for “net-30 terms’—payment for services 30 days after they’re rendered—after one month of prompt payment for their services. It is easier to negotiate all of the above points with smaller operations that need the business. Have your contract manufacturer ship product directly to the fulfillment house once you have decided on one and put the fulfillment house’s e-mail (you can use an e-mail address at your domain and forward it) or phone number on the online “thank you” page for order status questions. Phase III: >20 Units Shipped Per Week Now you will have the cash flow to afford the setup fees and the monthly minimums that bigger, more sophisticated outsourcers will ask for. Call the end-to-end fulfillment houses that handle it all—from order status to returns and refunds. Interview them about costs and ask them for referrals to call centers and credit card processors they’ve collaborated with for file transfers and problem solving. Don’t assemble an architecture of strangers—there will be programming costs and mistakes, both of which are expensive. Set up an account with the credit card processor first, for which you will need your own merchant account. This is critical, as the fulfillment house can only handle refunds and declined cards for transactions they process themselves through an outsourced credit card processor. Optionally, set up an account with one of the call centers your new fulfillment center recommends. These will often have toll-free numbers you can use instead of purchasing your own. Look at the percentage split of online to phone orders during testing and consider carefully if the extra revenue from the latter is worth the hassle. It often isn’t. Those who call to order will generally order online if given no other option. Before signing on with a call center, get several 800 numbers they answer for current clients and make test calls, asking difficult product-related questions and gauging sales abilities. Call each number at least three times (morning, afternoon, and evening) and note the make-or-break factor: wait time. The phone should be answered within three to four rings, and if you are put on hold, the shorter the wait the better. More than 15 seconds will result in too many abandoned calls and waste advertising dollars. HOUSE_OVERSIGHT_013927