Feature: Tom Krueger on the Nuts and Bolts of Fulfillment
When should one look for a fulfillment company?
Much sooner than you think. Evaluating the right fulfillment company takes time and developing a RFP (request for proposal) is the best way to have fulfillment companies compete and outline their services and prices in a concise format.
Look for a company with proven ability to handle similar products and services. You should evaluate the skill sets of the departments (administration, warehouse and distribution, order processing and customer support centers) to handle the complexity and projected peak order volumes. Can they manage customer service, installment billing, continuity, financial reporting? Check references and look for a service in which the individuals who will manage your operations have proven the ability to be a resourceful partner.
Once you select a vendor you should estimate for a simple program between four to 10 weeks to go through all the pre-flight set-up activities. The more time the better. You can have a shotgun wedding with a provider but that normally leads to unexpected problems down the road. If you have a complex product that needs special packaging or will be testing installments or continuity you'll be glad you have the time to insure the systems are tested without being under the pressure of live orders.
There are pricing and service level contracts to be negotiated and a laundry list of set-up parameters from warehouse set-up, customer service manuals, training, ordering of supplies and shipping and handling instructions to insure your business and your consumers are serviced by your standards. A good fulfillment company will provide all the support services to help engineer your program to be cost-effective and customer-centric.
What are the most critical time elements in getting the fulfillment systems operational?
Of course, getting the product stocked in the warehouse and ready to ship is the most important, but for start-up companies it can be the merchant account. It seems like an afterthought with most organizations but what we find as the most time critical element for a start-up in DTRV is ensuring the client has a merchant account for Visa and MasterCard transactions and it's integrated with the fulfillment systems. Amex and Discover merchant accounts can be obtained directly and normally very quickly and are combined and processed through your merchant account provider.
In most cases the process for obtaining the merchant account initially is long and drawn out so companies can be left in a position where your first orders arrive but you can't authorize or settle the credit cards.
Some fulfillment companies may supply merchant account services and that can be expedient but it also favors the fulfillment company because they get to handle your money and pay you later (after service fees and some holdback for the possibility of returns). I would suggest getting your own merchant account that integrates with your fulfillment company's systems and getting started early.
What legal issues do I Need to be aware of?
There are product liability, tax, merchant and banking and Federal Trade Commission issues to be concerned about. It's best to follow the golden rule. Treat your customers as you would have them treat you -- as long as you're one of the good guys. If you follow all the FTC rules and regulations and keep communication concise and true from the beginning of the sales process to the end, you will have smooth programs with minimal customer service.
The Direct Marketing Association is a good resource to help you understand potential legal problems before they occur. Fulfillment companies can be held co-liable so you should expect a good service bureau to be wary of possible problems and ensure your business services the consumers correctly and according to the law.
Tom Krueger is Vice President of National Fulfillment Services, a full-service fulfillment company, which has handled DRTV, catalog, continuity and subscription services for over 40 years. He can be reached at email@example.com