When to Consider Third-Party Fulfillment

Share this content:
CAMBRIDGE, MA -- Using a third party for fulfillment can benefit certain types of direct marketers, Jim Klaus of Children's Wear Digest told attendees at the New England Mail Order Association spring conference here Friday.


"Just because we've done third party [doesn't mean it's] appropriate for everybody," said Klaus, president of the Richmond, VA, cataloger. "We happen to be a very attractive client for a third-party fulfillment company. We have the volume. We do between 300,000 and 400,000 orders per year.


"We are counter-cyclical, which is key. We have a large spring business in March and April, and we have a back-to-school business in September and October. And, most importantly, we have a small Christmas business."


Another advantage of third-party fulfillment is that these companies can shift resources to meet changes in demand.


"That's something that, just as a smaller company, we would not be able to do on our own," he said.


Another plus of using a third-party fulfillment house is that they typically have more robust IT systems "than we would be able to do ourselves," Klaus said.


But this approach has negatives, including less control over a critical function.


"If we wanted to change something in terms of an operating procedure -- the way we pack, the way we gift-wrap -- we'd have to go through a negotiation process to do that," he said. "We have to figure out with the third-party fulfillment company if there [is] additional cost and additional manpower required. And then we have to come up with a pricing change."


Being tied to the financial health of another company is another negative that was mentioned, along with "being a little bit of a small fish in a big pond."


Klaus concluded by emphasizing the importance of a positive relationship.


"It sounds simple, but it's really easy to let this turn into an adversarial relationship, and you really can't do that," he said. "If it ever breaks down to the point where you say, 'I'm not going to get this back on track,' you better start looking right away for another opportunity."


close

Next Article in Marketing Strategy

Sign up to our newsletters

Company of the Week

Brightcove is the world's leading video platform. The most innovative and respected brands confidently rely on Brightcove to solve their most demanding communication challenges because of the unmatched performance and flexibility of our platform, our global scale and reliability, and our award-winning service. With thousands of customers and an industry-leading suite of cloud video products, Brightcove enables customers to drive compelling business results.

Find out more here »

Career Center

Check out hundreds of exciting professional opportunities available on DMN's Career Center.  
Explore careers in digital marketing, sales, eCommerce, marketing communications, IT, data strategies, and much more. And don't forget to update your resume so employers can contact you privately about job opportunities.

>>Click Here

Relive the 2017 Marketing Hall of Femme

Click the image above