Shopify Fulfillment is a service that allows Shopify store owners to outsource their order fulfillment process. Shopify has a network of fulfillment centers throughout the United States and Canada, which it uses to fulfill orders on behalf of merchants.
When merchants use Shopify Fulfillment, they store their products in one of Shopify’s warehouses. When a customer places an order, Shopify picks, packs, and ships the package on behalf of the merchant. The Shopify Fulfillment Network is made to be quick and effective so that orders can be sent to customers quickly.
Using Shopify fulfillment can provide several benefits to merchants, including focusing on other aspects of their business, such as marketing and product development, rather than spending time on logistics.
The Shopify Fulfillment Network also provides real-time visibility into inventory levels and order statuses, which can help merchants make informed decisions about their business. The service also includes access to discounted shipping rates that can help save time and money.
While the Shopify Fulfillment Service can be a game-changer for many businesses, weighing the good and bad before deciding to use it is important.
Here are a few logistics pros and cons to help you make an informed decision.
Not all companies are eligible to use Shopify Fulfillment. Moreover, not all products can be run through the Shopify Fulfillment Network. There are a few minimum requirements that merchants and their products must meet before joining the network:
Assuming a business meets these basic requirements, it can use Shopify’s Fulfillment service to simplify its order fulfillment process and scale its business.
The Shopify Fulfillment Network (SFN) is a service that helps businesses with their order fulfillment needs. When you use SFN, you will be charged fees based on various factors, like transportation, picking and packaging, storage, and other special projects like bundling or inventory validation.
While some service providers can show exact fulfillment cost calculations, the fees for SFN are customized, and estimating the exact amount you will pay can be challenging. However, you can request a quote on their website, and Shopify will provide an estimate.
Fees for SFN depend on the number of stock-keeping units (SKU) you have in fulfillment centers and your monthly sales. The costs for SFN are calculated regularly and differ depending on the type of fulfillment service you need, including the following services:
There are also fees for storage, returns, and inbound receiving that don’t follow the rules, labeling with a barcode, and special projects.
Typically, fulfillment services charge by the hour or unit per pallet. There are one-time charges for receiving and shipping and recurring costs for storage. Additional fees for receiving, storage, collection, packaging, shipment, returns, and gift services are charged.
There are other options available for merchants besides using the SFN. Businesses should take the time to weigh the various options available to them.
Merchants can choose to fulfill orders in-house, which involves storing inventory, picking, packing, and shipping orders themselves. This can be a cost-effective option for small businesses with low order volumes.
But as a business grows and the number of orders increases, managing fulfillment in-house can get harder and take more time. Merchants may also need more equipment, staff, and warehouse space to maintain their growing inventory and order volume.
Another alternative to using the Shopify fulfillment network is to work with a third-party logistics companies (3PL) provider. 3PL providers specialize in order fulfillment and can handle all process aspects, including receiving inventory, storing products in their warehouse, picking, packing, shipping orders, and handling returns.
Working with a 3PL provider can be a good option for businesses that want to outsource their fulfillment operations and focus on other aspects of their business. A 3PL provider might work well for companies outside the United States and Canada. However, you must research and choose a 3PL provider that meets your business needs and requirements.
This option can be more expensive than in-house fulfillment but is a good choice for businesses with high order volumes or limited storage space.
Shopify has become a tremendous resource for small businesses that need a robust e-commerce shopping cart solution. In fact, over 600,000 merchants use Shopify totaling over $72 billion dollars in sales! Selling your product, of course, is only half of the battle – making sure it gets to your customers on-time and accurately is just as vital to long-term success. That’s why it’s important to work out your shipping logistics right from the start.
Most small businesses use a method called “outsourced fulfillment.” These warehouses can handle a variety of tasks for e-commerce organizations. From storing your product, to shipping and tracking it, they can be a useful resource instead of shipping orders yourself. But how do you know which 3PL for Shopify you can trust with your business? There are several places you can look for good reviews.
Of course, one option is to use Shopify itself for fulfillment. In June 2019, Shopify announced that it will be offering its own fulfillment network to compete with Amazon. This may be a very good option for some companies, as Shopify has a lot of data on the inventory and order histories of its customers. However, some believe that this may not be the best thing for Shopify to do in the long run. First and foremost, Shopify hasn’t recorded a profit in its main line of business, which is quite troubling for many investors. Second, launching into another altogether different business segment is very risky, especially when the business they’re jumping into is not only highly competitive but also very low margin business. With all of these factors, it may not be the best option to partner with Shopify for fulfillment. Luckily, there are a number of alternatives.
One place to search for fulfillment companies that integrate with Shopify is on the Shopify site itself. They currently have 29 different apps dedicated to helping small businesses with fulfillment. Each app is reviewed on the 5-star system and when you click on the icon, you get a brief run-down of what they’re about. These apps represent a Shopify fulfillment partner.
Not every app will be appropriate for every industry. That’s why it’s critical you do your homework prior to taking the leap with any individual option.
Another great spot to look for information on 3PL fulfillment companies for Shopify is the shopify discussion forums. There are pages and pages on fulfillment. This is a powerful way to search for the best companies because you’ll get opinions and ideas from other “fellow” Shopify merchants, which could potentially be worth its weight in gold.
If you can’t find what you are looking for, you can always start your own thread and check it periodically for comments – but be careful. Sometimes professional fulfillment companies will create or answer posts, so you have to be a discerning judge of the comments. In order to view the forum, you have to create an account and log in.
Shopify also recommends three major fulfillment companies on your shipping settings page: Amazon, Rakuten Super Logistics and Shipwire. These are three of the largest fulfillment companies out there today, but they may not be the best fit for your company even though they’re recommended by Shopify. First and foremost, while all three of these companies offer multiple locations for a wide network of shipping options, they also prefer working with larger customers that ship higher volumes of orders (generally over 1,000 orders per month). Amazon is more lenient and doesn’t have the strict minimums of the three, however Amazon’s pricing structure is higher than most fulfillment providers. Be careful of the other two recommended solutions, as Shipwire garnered a 2.6 out of 5 stars and Rakuten earned a 3.7 (on only 6 total reviews though).
Thankfully, Shopify allows you to work with the fulfillment provider of your choice. As long as the warehouse you are using can process orders by email, Shopify will allow you to use anybody. However, if your business is more technologically savvy, you can also develop a custom app through an expert Shopify API developer.
The majority of people will go to Google first when looking for a business. Although it’s a powerful search engine, there might be a few reasons why your best fit is not on page one. Here are a few explanations on why you must be careful looking for fulfillment companies through Google:
If you intend to use a search engine, just know what you’re looking for. The more specific your search, the easier it will be to find a good match.
If you’re a busy bee and you just don’t have time to search, it may be best to hire a consultant. A guided service can save you the time and headache of a search. Especially if you have custom needs. There are over 20,000 options for a fulfillment business in the United States alone.
If you are actively vetting companies, using a professional in the industry may bring more insight to the table. For larger volume shippers, there are a number of different fulfillment consultants that specialize in helping create a formal RFP and then short-listing top matches. This type of service isn’t cheap, and usually costs either a large sum of money or you’ll pay a percentage of your fulfillment fees for any recommendation.
For those not able to afford hefty consulting fees, WarehousingAndFulfillment.com is a matchmaking service that has a massive database of thoroughly screened fulfillment companies for every industry – and can help you choose a 3PL provider for Shopify. You may want to try your own search first to understand what you want and then ask the pro. You’ll know your strategy best based on your business model.
Finally, there are some general warning signs when choosing a fulfillment company that every small business can look out for. These are the most important things to look for when vetting Shopify third party logistics providers. Don’t get caught in these traps:
If you’re a start-up or small business, you probably intend to grow. Don’t get caught in a long-term fulfillment contact. Many logistics companies will now offer flexible pricing based on your growth (or decline). They will adapt to your needs and adjust accordingly. Therefore, it’s never wise to lock into warehouse long-term fixed fees. Look for a company that will give you month-to-month or more flexibility.
Insist the fulfillment company spell out exactly what you are getting. You don’t want to be surprised with hidden costs in a peak season. Make sure the scope of the agreement and the exact charges for every service are accounted for in the contract. Also, clarify points like the minimum and maximum volumes they will accept and any guarantees you get as their customer.
In a world of fake reviews, any business can look good on paper. You should request references and any verifiable data that supports their claims of capacity. You should also ask if they have other customers they serve in your industry.
It’s important that you look for a fulfillment company that has prior experience with your industry. Every fulfillment company functions a little differently, so it’s critical you ask the right questions. Many of these companies actually specialize in particular industries. Specialization is one of the first things you should have on your list.
It can save E-commerce companies a considerable amount of time and money when their orders go straight to the e-commerce fulfillment center through a direct integration. Specifically, you will need a Shopify 3PL fulfillment integration. Many sellers need to compile their sales and then send a report to the fulfillment center. It’s an extra step and can lead to longer shipping times. When the fulfillment center receives your order so quickly, they can usually handle the packing and shipping on the same day.
One of the most common pitfalls a small business can face is choosing a fulfillment center just by price. Although budget is important, a business can lose money if they choose a company that isn’t the right fit. Long shipping times lead to unhappy customers. It’s important to get competitive fulfillment prices from logistics companies. Sometimes low prices mean low quality.
The best you can do to avoid any mistakes is your due diligence. Take the time to look into the business. Don’t be afraid to call and interview them. You don’t want to have to change companies after four months so it’s worth being patient in your research. And remember, you can always ask for help! There are many valuable and informed consultants that can lead you in the right direction.
You can never be too careful, but when done right, outsourcing can save you money on warehousing costs, taxes, and labor. And who knows, perhaps a little more peace of mind too!
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