With change occurring in every industry, distribution centers offer a unique opportunity for companies to expand and grow without incurring some of the costs that growth can bring. Particularly for companies located abroad and in Canada, an outsourcing facility in the United States could offer a unique and cost-saving way to enter the American market.
If you're a manufacturer outside the country interested in setting up distribution here, the first step is to check local laws to determine what barriers may exist that would prohibit you from shipping your product to the United States. Assuming you have proper clearance, consider outsourcing your warehousing and distribution operation to a U.S. company that has experience working with manufacturers, distributors, salons and the retail trade.
Such a company can allow you to maintain your autonomy yet be transparent to your end user. At the same time, it allows you to save a tremendous amount of start-up costs in establishing a U.S. operation. Distribution centers can ship directly to customers and can usually handle a pick-pack operation — shipping by the piece or by the case.
A full-service distribution center may even handle your billing requirements, shipping and receivables and much more. There is an alternative to entering the U.S. market without spending an inordinate amount of time, money and resources setting up a state-of-the-art operation.
Once you've decided that outsourcing your warehousing or distribution makes sense, you are faced with the task of finding a competent and qualified facility. Contact the U.S. Department of Trade or other industry trade organizations for sources. Be sure to take location into consideration. You want a warehouse that will meet your needs in getting your product distributed throughout the nation. If you plan to visit frequently, you should also consider location in terms of convenience for car or air travel.
What should you expect to pay? The fees can range from 6 percent to 20 percent or more depending on the services that you contract. For example, if the distribution center is responsible for shipping the product, you would pay a shipping and handling fee. If you also wanted the facility to add additional services such as handling receivables and customer service issues, then the fees would be higher. Determine how well-equipped you are to handle issues in house, and outsource those tasks that become labor intensive or too costly.
Ten years from now, the distribution business will look much different than it does today. Not long ago, there were drug wholesalers servicing independent drug stores. There were hardware distributors servicing independent hardware stores and grocery distributors handling independent grocery stores. Today, these categories are controlled by large retailers. The independent distributor consolidated, was bought or went out of business.
The options available to us today are much different. Distribution centers can use their warehouse space and sales force to assist any industry in getting their product to the market. Internet selling opens an opportunity for distributor operations to assist manufacturers/Internet sellers in shipping their product to their end consumer.
It's incumbent we realize we're in a changing business. Bigger businesses continue to consume smaller businesses, and the distribution business is consolidating all the time. Outsourcing and distribution fulfillment are the wave of the future which is here and now.