Exporters can store inventory and ship locally in their target country through an order fulfillment company
Order fulfillment is the process of picking, packing and shipping orders to customers. For exporters, one of the largest hurdles in cross-border commerce is managing this order fulfillment process as it involves foreign warehousing, different currencies, foreign transportation and all the other complexities that come with international fulfillment. This is where an international order fulfillment company can come into play.
These are third parties which companies can use to outsource their supply chain management – which can be done both locally and internationally. They do this by a physical location where they store inventory, process orders, and handle the shipping logistics. While there are challenges inherent in outsourcing your international inventory distribution, the benefits of this service could be pivotal in growing cross-border sales.
Why use an order fulfillment company for international commerce? (Pros)
Outsourcing the order fulfillment process is done for multiple reasons.
- There are cost and time benefits to having your goods stored and shipped by an international fulfillment company within your target country. Inventory can be shipped in bulk to the order fulfillment company which is cheaper than multiple smaller shipments. Shipping individual orders to clients will be quicker and cheaper than if each order is exported from your home country, providing the customer with a better brand experience.
- Many international fulfillment providers can assist with customs paperwork and clearance, helping your goods move through customs more efficiently.
- Outsourcing international order logistics and management to an expert fulfillment company allows businesses to focus on growth, instead of in-house warehousing, shipping, returns and inventory management.
Many fulfillment companies have reliable and advanced inventory management systems. This ensures that orders and inventory are managed accurately and effectively. Often, they offer high quality data which provides valuable insight into the business and stock
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Things to consider (cons)
There may also be benefits to handling your own logistics. It will be more flexible, and can be cheaper if your business has not yet grown a reliable customer base in your target country.
Sending orders to a fulfillment company in bulk can negatively impact your cash flow. For this reason, businesses that are just starting out or struggling with cash flow often handle their own shipping. There is also a risk of products expiring in a foreign company. That is why it may be safer, albeit more pricey, to export products per client order.
Outsourcing the fulfillment process has potential to reduce the shipping cost per sale, but it does come with a cost. Each fulfillment company will have a different pricing structure, but there are various common fees for most fulfillment companies: setup fees, receiving fees, storage, order fulfillment charges, returns, and more. These costs can be offset against cheaper bulk shipping to the fulfillment company and cheaper local shipping in the target country only if sales volumes are high enough.
How to choose a order fulfillment company:
- Determine whether the cost is worth the service. This depends on the specific fulfillment company’s fee structure and your business’s size, cashflow and monthly sales in the target country. It is also important to note that some of the cost per month could be in a foreign currency, which fluctuates.
- A good fulfillment company will know the local laws and environment of your target country, and may be able to help clear the import. If you require specific advice, such as local product compliance laws, ask if they can assist.
- Location. You want your fulfillment warehouse to be located relatively close to your customer base. If most of your customers and businesses are ordering from one area but your storage location is on the other side of the country, then shipping will be more expensive and take longer.
- Services offered. Determine what your specific needs are, and whether the fulfillment service offers a refined solution. For example, if you require branded packaging, look for a fulfillment company that offers branded packing options instead of generic.