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What is a Fulfillment Service? (Part 2 of 2)

If you haven’t already read Part 1 of What is a Fulfillment Service?, you can do so here.

Now that you better understand some of the services a fulfillment company might offer, let’s talk about the advantages of using a fulfillment company.

Space.

For newer companies that might not have adequate storage facilities or available funds to build or rent them, working with a fulfillment service makes good sense. They generally have thousands of square feet of space at their disposal, as well as the staff and utilities to get orders filled.

Cost Savings.

Since the new company only has to pay for the cost of the space they are actually using, they can save money on their facility rental costs and keep their expenses down. The fulfillment company may charge by pallet fee or charge a certain amount per item. Either way, it is less expensive than to rent an entire warehouse.

Less Downtime.

Most notably, these companies have policies and procedures in place to get the smaller company up and running and get orders filled with little downtime. The new client can start generating revenue right away once they get help with order fulfillment from the fulfillment service.

Better Shipping Prices, Options.

Companies that choose to work with a fulfillment company will also benefit from lower costs on their shipping materials. Since the fulfillment company will be able to purchase these items at bulk rates, the client companies will be able to take advantage of better pricing. The cost savings may be as much as 50 percent as compared to the cost of buying them at retail prices.

The fulfillment company may even include the packaging fee in the cost of shipping or the cost per order. Client companies know how much they will be spending on their shipping per month, which makes it easier to track this cost when they are determining how much to charge their own customers.

April 25, 2014
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