Biz Miss

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Finding Someone Who Fulfills Your Needs (Part 2) April 7, 2008

Filed under: customer service,Starting Up — bizmiss @ 11:04 am

Choosing a fulfillment house was no small feat. First I asked my uncle, who’s been in the wholesale business a long time. He suggested GFS in Dallas, TX, which he uses because they have reasonable rates, good service and are centrally located (nationally) right near a major airport hub. Most of my orders are local, however, so a Bay Area warehouse seemed like a better choice. The shorter the distance my products need to travel, the less it would cost my customers and the better it would be for the environment. Plus, I really wanted to be able to pick up a carload of Sweet Meats for local deliveries and design fairs. Of course, a warehouse in the Bay Area is going to be more expensive than a warehouse in Dallas, but I figured the money I save by not shipping or driving my cargo out there would even things out somewhat.

Next I called my logistics guy over at Schenker. Sometimes they can warehouse things themselves, but they’re very often full and this month is no exception. They know a lot of people at a lot of warehouses, though, so I gave him my parameters and my budget and he said he’d see what he could find. In the end he couldn’t really find anything I could afford (he works mostly with warehouses that store perishable or expensive items like electronics), so I was on my own.

A brief tangent: Eleanor at The Present Group pointed me toward Noonaco, but they are so new they don’t have a warehouse yet and couldn’t store an entire container’s worth of merchandise. Oh yeah–I had since found out that my “less-than-container-load” was only shy by two boxes, so I ordered a whopping 24 more meats and filled it up. LCLs are charged per cubic meter to ship, but FCLs are just a flat fee,because they never need to be opened or sorted before they reach their final destination. If I hadn’t ordered two more boxes, it would have doubled the cost of my ocean freight.

Having exhausted all of the human resources I could find, I turned to the Internet. I started just by googling the term “fulfillment house” to try to get a general idea of terms and prices before I narrowed my search to within an hour of my house. I used a combination of Google, ThomasNet and directories like the Yellow Pages and came up with a short list:

After calling each of these places, it became apparent that it was going to be extremely difficult to comparison shop. Every company has their own complicated fee structure and no two are alike. For example, the one-time cost of unloading my truck into the warehouse might be calculated based on number of pallets, cubic footage of the cargo, or man-hours. Similarly, the cost to fill an order might be a flat fee per order, based on the number of boxes, or based on the number of individual items being sent. Combine this with possible minimums and the fact that some warehouse’s prices change the longer your stuff sits in storage, and my head was about ready to explode.

So I made a spreadsheet. Assuming I sold half my merchandise retail and the other half wholesale, and it took me six months to sell out completely (really big “ifs,” but they seemed to represent reasonable averages), I totaled what it would cost me to store and ship the entire container. Then, assuming the average wholesale order is 12 pieces and the average retail order is one piece, I totaled what it would cost my customers in shipping.

Using this very imprecise system, I was immediately able to knock out IPS and PRISM as unaffordable. I then called the other three companies back and asked about things like minimums and insurance coverage in the warehouse (very important!). The guy at GoodSource was sort of hard to reach and he quoted me a lot of numbers that seemed too good to be true. I just got a bad feeling in my gut about reliability, and I’ve learned to always listen to my gut when it says “no,” so I eliminated them, too.

That left R&L and PRIDE Industries, who are comparably priced. R&L scored big points for location and being a small, Bay Area business, and PRIDE won for customer service and the fact that they’re a non-profit that employs people with disabilities. In the end, I chose PRIDE for a lot of little reasons, like their really simple pricing structure and the fact that I could always reach my customer rep when I needed something, rather than waiting for a callback. At the very worst, if something goes wrong, I have a well-researched runner-up to turn to for my next shipment.

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2 Responses to “Finding Someone Who Fulfills Your Needs (Part 2)”

  1. karrie Says:

    this is so fascinating! i love hearing how you are working through problems that I have never imagined!

    and I love love love thinking of an entire shipping container filled with sweetmeats.

  2. Dan Says:

    Great writeup, it’s definitely encouraging to read through other ppl’s business journeys. FYI, your link to thomasnet is broken, it should be pointing to http://www.thomasnet.com/


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