May 29, 2009, 12:00 AM

The Big Send-Off

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5. How do you manage returns?

In addition to arranging with carriers such as UPS, Newgistics and the U.S. Postal Service to ship returns back to retailers or suppliers-or to forward returned merchandise to new customers-fulfillment providers should give retailers immediate updates on the status of returns.

At Music Parts Plus, Moreo receives electronic alerts from Quiet Logistics of when it has received returned packages so the retailer can process refunds or exchanges. “We can now calculate how much time we spent on a return, including the time to e-mail the customer instructions on how to return a product, and how long it took us to get the product back and update the Infopia system to relist it,” Moreo says.

Quiet also has developed a process by which it records items received damaged from suppliers or customers to ensure those items are not placed into regular inventory stocks.

6. Can you handle global fulfillment?

One of the biggest barriers for entering into multinational e-commerce markets is dealing with international logistics, returns, value-added taxes and managing overseas warehouses. Outsourcing fulfillment providers such as E4X Inc. and Shipwire Inc. handle all trans-border matter such as customs clearance and showing a full landed cost to a retailer’s foreign customers.

With E4X, which works with a retailer’s own fulfillment operation, retailers ship to its East Coast warehouse to have E4X handle the international shipment to 34 countries. Shipwire operates nearly 2 million square feet of warehouse space in six facilities in the U.S., Canada and the U.K. It integrates with an online retailer’s shopping cart to accept orders, then handles the warehouse management, international customs and tariffs.

7. Can you scale up to match my expected growth?

CoffeeServ Inc.’s is using the flexibility fulfillment provider Webgistix Corp. offers in warehouse space to better understand customer demand and improve inventory management for customers in the Midwest and on the West Coast, CoffeeServ CEO Ben Kirshner says.

Webgistix, which integrates its fulfillment management software into clients’ shopping cart software, has customized software that sends Coffee For Less daily e-mail reports that match orders from West Coast and Midwest customers with what is stocked in the Webgistix Las Vegas warehouse.

If those reports show significant demand for items not available in Las Vegas, the retailer will adjust inventory to allocate more stock to that facility instead of its Philadelphia warehouse, Kirshner says.

8. Can you be flexible with technology systems?

It’s fairly common for retailers to use some of their own systems, such as for maintaining financial transaction data through their own order-to-cash processing system, then forward orders to the fulfillment partner’s warehouse.

Others also have the fulfillment partner maintain inventory records in the retailer’s own warehouse management system, Tanowitz says. Either way, he adds, it’s important for retailers to check how their systems and their partner’s systems can work together.

A retailer’s warehouse management system may not be optimized for the fulfillment partner’s warehouse, requiring the partner to do extra legwork in matching incoming orders with the location of products in the warehouse, Tanowitz says. On the other hand, if a retailer relies on the partner’s warehouse management system, the retailer may find that it does not support the characters needed to describe the retailer’s products, he adds.

9. How do you manage fulfillment mistakes?

While it may be impossible to prevent all fulfillment mistakes, an outsourcing partner must have a policy of immediately addressing problems and keeping the retailer informed of both the problems and their solutions.

Quiet Logistics, for example, provides an online platform for communicating and resolving problems. “If a shipment gets damaged while in transit, Quiet has given me the ability to resolve the issue in mere seconds online, rather than a lengthy review process on my own end,” he says.

Shipwire provides immediate alerts to a client web portal, or through e-mail or phone contact, if an order goes out with the wrong items or if an order is damaged in transit, says vice president of marketing Nate Gilmore. It also insures each shipment to cover any loss during international or domestic shipment, he adds.

10. How can you help me cut fulfillment costs?

Some fulfillment providers may emphasize their ability to ship with multiple carriers, but this doesn’t necessarily result in lower costs to the retailer. Although rate shopping can search for the best deal for each shipment, companies shipping in high volumes often get the best rates by giving most of their business to a single carrier.

Retailers should also clarify how a provider charges fees for different types of shipping, Boylan adds. Fulfillment providers generally earn higher margins on next-day shipments forwarded to carriers, and as a result may charge lower per-order and per-item fulfillment fees.

Coffee For Less, which still operates its own warehouse on the East Coast, enlisted Webgistix to help it get through the 2008 holiday shopping season with better shipping service for customers on the West Coast.

Although the fees Coffee For Less pays Webgistix are about the same as the labor and warehouse management costs at the retailer’s Philadelphia facility, the shipping cost to the West Coast from Las Vegas is about 50% less than from Philadelphia, Kirshner says.

And when it comes to getting efficient fulfillment services, there’s no better time than the holiday rush.

Click Here for the Fulfillment Products & Services Guide

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