As small businesses grow, the task of shipping products can be a daunting affair. Those who started out making shipments from their living room will feel overwhelmed as their customer base expands and the stack of boxes grows. Many services, however, are designed to relieve the shipping burden. When doing it yourself becomes an arduous task, small business owners can explore a variety of options to stay on top of order fulfillment.
Hiring outside help
Many small businesses that grow beyond their shipping capacity will outsource the work to experts. Outside companies that perform fulfillment duties are known as third-party logistics providers (3PL). These companies will house, package and ship all orders for a small percentage of each transaction amount, such as 3.5 to 7 percent. For many businesses owners, a 3PL is the solution. But entrepreneurs should be aware that in some instances, problems emerge.
Hanna and Mark Lim, the husband-and-wife owners of Lollacup, hired a 3PL to ship their children’s dishware product. In an interview with the New York Times, they explained issues with the service. Numerous shipping errors occurred and the bills were running high. Hoping to enhance quality control and lower costs, the Lims wound up leaving the service to set up a warehouse of their own.
“We’re probably going to save about $50,000 this year doing it this way,” Ms. Lim said. “Once we went the 3PL route, it could have been easy to say, OK, that’s done. But instead, we kept questioning and evaluating. We still are.”
A 3PL may still be the logical choice for business owners with their hands full. Those who choose to handle fulfillment themselves, however, will find they must explore the menu of package carriers.
Choosing a carrier
Ideally, businesses will want a carrier that can offer affordable rates in their package size and shipping time. To figure out which carrier is most cost-effective, businesses should consider the strengths of each. The United States Postal Service (USPS) tends to have the lowest price for smaller packages while United Parcel Service (UPS) and FedEx tend to have the advantage on mid- to large-size boxes.
Jimmy Beans Wool, a seller of knitting yarn, found their carrier did the job at half the cost of competitors. Their bulky but lightweight packages were a perfect candidate for USPS first-class mail. Weighing under a pound, their products could ship anywhere in the continental U.S. in about two days, as owner Laura Zander explained to the New York Times.
Negotiating rates
Once a small business selects a carrier, there are often ways of further cutting costs. UPS and FedEx will lower rates for businesses that have high volumes of shipments or will have high volumes in the coming months. If inquired after, UPS and FedEx have been known to give businesses three months to grow their volume and charge lower rates in the meantime, Practical Ecommerce reports. Negotiating can bring big discounts.
Whatever option businesses choose, the cost of investing in a new service should not be a setback. Although getting a small business loan from a bank can be a slow and difficult process, alternative lenders make financing quick and easy. National Funding has a variety of loan services that make expansion a viable option, allowing entrepreneurs to focus on getting their products to market, and not chase after financing.
