Cheap Fulfillment Hidden Costs that Damage Your E-Commerce Profits
One of the major reasons why businesses fail is because they can’t keep control of their costs.
To avoid failing many businesses look for ways to cut the outflow of money by either doing a lot of the work themselves or by hiring a cheap service provider.
While this can limit the outgoings of the company it can also negatively affect the business’ customer service performance.
In the ecommerce world this could be a vital error. Customers are more likely to swap suppliers when they’ve received bad customer service. Therefore, retaining customers is essential.
Why Is Measuring Customer Churn So Important?
Customer churn is a vital aspect of running your business that you must keep under control:
When customers leave your business it doesn’t just mean that they aren’t going to buy from you again. It also signifies that some members of your target audience might discourage others from buying from you.
When word of mouth or referrals are such an important stream of customer acquisition, this can be a serious issue that can threaten your business’ success.
At the same time, it costs significantly more to sell to an unknown individual than to an existing customer. Therefore, your profit margins are likely to be squeezed. Customers who experience good service not only stay with an organization, but are also likely to increase the frequency and volume of their orders.
Not Just Your Customers
The other aspect of hiring a cheaper fulfillment company to help you with your e-commerce business is that your products might not be safe. Items might be broken or stolen at the warehouse or during shipping; this can irritate your customers and increase costs.
When you add up all the potential problems that can plague you when choosing a fulfillment company based on price alone, it is easy to see that a cheaper fulfillment service might actually be costing you more in the end.
Choosing The Right Order Fulfillment Supplier
So instead of looking at just the price of the fulfillment service, you need to look at other aspects.
It is important to remember that a fulfillment company’s price isn’t necessarily representative of the quality of their service. So why not use these markers to determine whether a fulfillment company is suitable for you or not.
1. Lines Of Communication
Your order fulfillment company is going to be your partner:
Therefore, you need to be able to communicate with them on a regular basis.
Imagine you have a customer who changes their order; you need to be able to relate this to your e-fulfillment supplier so they can stop the order going out and ensure the change is made.
Without clear communication lines this isn’t going to happen.
This also about who you are going to speak to. You are going to get a better service when you only deal with one person. When it is just a team, messages could become lost and this could damage the delivery service.
2. Past Customers
Speak to their previous or current customers and ask the following questions:
- Are they happy with the service they’ve received?
- Are their customers happy with the fulfillment service?
This is very important because it is indicative of the service you will receive.
Ask them for a list of customers your can speak to and look online. You’ll probably find lots of reviews on social media and other sites about the professionalism of the fulfillment company.
3. Go To Their Warehouse
Another thing to do is to go to their premises and see what their operations look like:
- Is their warehouse tidy?
- Are the products properly labeled?
- Are staff looking professional?
These are all good indications of the service they will provide you.
When you are in Hong Kong, you can arrange a Floship warehouse tour and come to visit our world headquarters. We are happy to show you around, just make sure to make an appointment ahead of time.
Be mindful about your visit. They will know that you are coming so may put on a show, but there is only so much that they can prepare.
Look at all the tiniest details – like are the labels accurate?
Conclusion: Due Diligence with Your Order Fulfillment Provider will Save you Money
How do you choose your fulfillment service? Have you made a choice you’ve regretted?
Choosing the right fulfillment supplier is an important decision.
While you might be tempted to choose the one with the best price, they might end up costing you the most. Instead, look at their professionalism and the quality of their service, and then make your decision.
When you are ready to find out how Floship can help you increase the quality of your international fulfillment and take the headaches and complexity out of the process, click here and get in touch for a free evaluation and find out whether we are a good fit for your current business model.