Choosing a fulfilment partner for your ecommerce business: the last post you'll ever need

April 1, 2023

It was 2am on an early December night in 2014. My mother and I were at last finishing up packing the day's customer orders from our fledgling online shop.

The business was growing and seemed to be 'successful'. Why didn't it feel like that? Here we both were, bags under our eyes, up late for yet another night of picking products from the DIY shelves in my brother's old bedroom, and putting the packages together in the home office.

More frustrating than the tiredness was the knowledge that I'd had to turn off our online advertising that day. Not because the advertising wasn't working - it really was. But because we just didn't have enough stock in my parents' house, and didn't have the capacity to pack the orders.

That night in December, we realised things had to change.

When it all gets a bit much...

The Search Begins

In January, we began the search for a company that could store our expanding stock, and then pick and pack the orders we were getting on our ecommerce website on our behalf.

We weren't quite sure what the type of company we were looking for was called. 'Fulfilment' seemed to be a word that made sense - as in, 'fulfilling' your online orders: the process of taking the data from an electronic transaction on your website, and ending with the arrival of a package at the customer's doorstep.

Aided by Google, we made a shortlist of three warehousing and fulfilment companies within easy visiting distance from London. We requested quotations, and compared these with the standard service and pricing on offer from 'Amazon Fulfilment'.

We realised then that the decision of which fulfilment company to work with was a significant one, that would potentially impact our business for years to come. It didn't make sense to base this decision entirely on figures on a piece of paper. So we determined to actually visit these companies in person and try to find out a little more about them before making our decision.

This turned out to be a great idea, and our experience visiting different fulfilment companies was the key element in our eventual decision about who to partner with.

Years later, having lived out the consequences of this decision in our home market of the UK, and then having repeated the process in the US and Canada, we now have a good idea of what to look for in a fulfilment warehouse.

So what factors really matter when deciding which fulfilment company to partner with your ecommerce business?

Let's cover the main ones - and rather just list them out, I'm going to include some discussion about relative importance too.

1. Warehouse location

Specific geographic locality, beyond the country you intend to sell in... might not be as important as it first seems. Even though fulfilment companies all seem to make a big deal about it.

I'll give an overview of the main things to consider with location, and how these influenced our own decision for where to look in the UK, US and Canada when outsourcing the fulfilment for our ecommerce business. Taxes is a major consideration in itself, so I'm going to cover this separately to location, even though they're both clearly related.

i) Customer shipping times:

From the perspective of an ecommerce entrepreneur, you do care about how long it takes a package to get to your customer, for sure. But in most developed markets, standard postal services are these days able to get mail to all the major population hubs within 24-72 hours, and any established fulfilment company should have the mail companies collecting from them at least once a day.

So as long as a fulfilment warehouse isn't in somewhere really remote, the exact state or county probably doesn't matter hugely from the point of view of customer delivery times.

If your business is hugely sensitive to delivery times and is shipping large orders that are beyond standard size packages, you could make a case for being centrally located in your country of choice - the Midwest in the US, the Midlands in the UK, Manitoba province in Canada. But these locations can suffer from other disadvantages, such as being far away from sea ports.

ii) Proximity to major ports:

Depending on where your products are arriving from, you might want your fulfilment partner to be close to your manufacturer - or a major port where your manufacturer can send your products. Transporting large batches of stock overland long distances can add to your costs or delay the arrival of stock. But realistically we're talking an extra couple of days and a few extra pennies here, so unless you're having large amounts of stock shipped in on a weekly basis, this might not matter that much.

iii) Ease / pleasantness of visiting the area:

As an ecommerce entrepreneur outsourcing your pick and pack operations, by definition you won't be travelling to the fulfilment warehouse that often. But if you do plan to visit, you might factor into your decision the relative ease of travelling. Some warehouses can be really 'out of the way', not just in their distance from the local town, but even in their region's remoteness from any major airport, city or area of interest.

OK, let me give a few examples now  of how the above location considerations factored in to where my own ecommerce business started looking in the UK, US and Canada.

UK: Royal Mail's standard 24-hour postal service, covering the whole country (and required by law to treat all regions equally) and suitable for 95% of our packages, meant that delivery times to our customers were a non-issue, regardless of the warehouse's location. Our products are made in the UK, with our manufacturers located in the Midlands, so the delivery of stock to the warehouse was going to be pretty easy too. We basically had the freedom to look anywhere, so exact location ended up being a low priority consideration to us, though we did prefer warehouses within a train ride or short drive from London, simply because that's where most of our team and I work. We visited several warehouses in the Southeast.

US: USPS and the other shipping companies are able to deliver pretty quickly across the country, so again we weren't that worried about customer delivery times. What was more important was that our products would be imported from the UK, so being based on the East Coast would remove the need for us having to move our stock long distances across the continent or shipping through the Panama Canal. There are plenty of major cities and airports throughout the East Coast region, so I knew wherever we chose around there would be relatively easy to reach from the UK if needed, and I could base myself in an interesting US city, while only being five hours behind the UK office.

Canada: delivery times seem to be more of a factor in Canada, because some parts of the country are really quite remote, and the majority of the population is spread out in a long belt from the Pacific to the Atlantic. The lower population just means that it's less worthwhile for shipping companies to have as many flights and deliveries moving around the place. So it was important for us to choose somewhere fairly central, within the shortest distances from the major population hubs, while also being easily reachable from the UK or from stock coming over from the US. The Ontario region emerged as a frontrunner here, and specifically Toronto due to its international connections.

2. Taxes

All right, taxes could easily be considered part of 'location' above, but depending on which country we're dealing with, there's a lot of variation here and I wanted to cover it in its own section.

As expected, I have to give some kind of disclaimer here and say "get your own tax advice", because I don't have either the authority or expertise to give tax advice to you.

What I am willing to do though is share my experience and personal thoughts; what you do with this is up to you!

In countries with universal sales tax rates, like the UK, tax as a factor in choosing a fulfilment warehouse is basically a non-issue. No matter where you ship from or to within the country, and no matter how many sales you make, you're going to need to collet VAT of 20% (in the case of the UK) on all your sales to customers.

Note that there's also a general principle within the EU - I believe - that you collect and pay whatever the sales tax rate is within the country you're shipping from, rather than to. I know that, for our own business, whether I send a shipment to Greece or Ireland or Germany, I have to collect the 20% UK VAT rate and pay it to the UK government, even though those countries have their own separate sales tax rates (Brexit may of course change this).

Some countries have sales tax thresholds. Technically, if you're dealing with a really small fulfilment warehouse whose turnover is below £80k, or whatever the latest UK VAT threshold is, then they may or may not themselves be charging you VAT on their invoices to you for their services. But this is almost certainly something you won't come across.

Don't forget, under some sales tax arrangements (such as the UK VAT scheme), you can offset VAT you've had to pay out for goods and services (like, for example, fulfilment services) against VAT that you've collected from your customers.

Now, in countries where sales tax rates vary significantly by region and locality, like the US, sales tax rates are definitely something to factor in to your decision for a fulfilment wareouse location.

New York state, for example, has an average combined state and local sales tax rate of 8.49%. California, similar. Oregon, New Hampshire, Delaware and Montana are the four states with a 0% combined state and local sales tax rate as of the time of writing.

(Don't forget localities: many counties and cities levy their own sales tax in addition to the statewide tax, which in New York for example starts out as 4%, but the rate you pay ends up being much higher due to local rates added on top).

The exact rules on sales taxes are obviously changing all the time, and the detail is not something I want to get into on this blog.

The key thing is that if you have your products stored in a US state - even if the warehouse doesn't belong to you, as in the case of a third party logistics provider - it's likely that you'll be considered to have a 'geographic nexus' in the state for sales tax purposes, and at a minimum will need to charge the relevant sales tax rate on sales you make to customers within that state.

You may also need to charge sales tax on orders shipped outside to other states, but that may depend on certain order and revenue thresholds that vary state-by-state. It's all a bit of a minefield.

The key thing that I understood when first expanding my ecommerce business to the US was that, when starting out, it made sense to avoid setting up in states (or localities) which have both a high sales tax rate AND a high population. This is because a significant chunk of my orders would come from customers within such an area, and by triggering a state's geographic nexus rules, I'd definitely have to collect and pay a high sales tax rate on all of those orders.

The larger your ecommerce business, the more likely you are to fall within states' rules to have to collect sales tax on customer orders no matter where you're shipping them to, so at that point, factoring sales tax into your choice of fulfilment warehouse might be more of a moot point.

Again, as I said earlier, I'm not a tax expert and you should do your own research or get your own advice on this, particularly as sales tax laws have changed within the past few years and states are doing more to try and collect tax from online sellers.

How did tax factor in to our location choices for fulfilment warehouses in the UK, US and Canada?

Well as mentioned, the UK's sales tax is the same rate throughout the country anyway, so it just wasn't an issue. In Canada, there didn't seem to be a huge variety in rates between provinces either, and it was clearer we'd need to collect sales tax on all orders regardless of shipping destination.

In the US, having narrowed down the location choice to East Coast population centres for reasons already discussed, Pennsylvania's combined state/local rate of 6% (outside of Philadelphia and Pittsburgh) seemed fairly typical and reasonable. But I must admit that the state's other location attractions, it's proximity to both DC and NYC, and several major East Coast ports - the kind of things discussed earlier in this article - were more significant in the choice.

See what your own research and/or accountant says about this. Just remember that once you're based on a state, you don't want to have to move in future.

3. Company culture

I think workplace culture is arguably the most important factor to consider when choosing a third party logistics partner.

What do I mean by culture? I'm talking about things like staff morale. Turnover - how long have people been working there? Do they use child labour?! All right, you shouldn't ever find it that bad.

But how about whether the business owner works on site or not? Does the warehouse look tidy and organised, or is it a mess? Do staff seem to have a relationship and respect for the person showing you around when you visit? And, of course, is customer service prioritised?

In this case, you're the customer, and you need to know that you're going to be treated well both before and after you sign on the dotted line.

Regardless of how big or small a customer you are, when starting out with a new warehouse, you want to know that they genuinely care about you and are interested in building a relationship for the long term. If you feel well treated and respected by the warehouse, then there's a good chance that your own staff and customers will get a similar experience, and the reverse is equally true. Of course you might not expect the warehouse to be dealing direct with your customers, but your customers are very much affected by things like how quickly orders are dispatched, returns are processed and whether goods are packaged carefully enough.

How can you judge the culture and standard of customer service quickly?

There's some obvious things, like prompt responses to your emails and queries. Or like the staff/owner being enthusiastic about meeting you and about showing you around the site. If you have a phone call or site meeting, you don't want to feel rushed out of the door - they should take as much time as is needed to understand your needs and answer your questions. After all, you could be a customer of theirs for many years.

A smart and experienced fulfilment warehouse owner will be keen and interested to talk to you regardless of your current size, because they'll be wondering about your prospects for growth in future.

One of the warehouses I visited in Canada on a recent trip took me out to lunch at a local Afghan food place after our meeting, which was fun and allowed me to get to know the owners better as people. I've also been picked up from train stations before which was a nice offer as it showed a respect for my time and experience, particularly in a foreign country.

If you want to be more cynical, you could say that being treated well is just a little bit of old fasioned bribery before you're locked in to a contract with the warehouse. But I think genuine interest and enthusiasm in you is quite hard to fake. And the best fulfilment warehouses won't be making you sign long term agreements anyway.

The ideal situation is for you to be dealing with the actual owner of the business. They have the most 'skin in the game' when it comes to your custom.

It was interesting for me, while touring fulfilment warehouses in Toronto, Canada, to find that in one case the sales representative showing me around had never actually met the owner of the business. This was despite her having worked there for over a year. That fact was telling for me, as it implied a low level of interest from the top in the people and operations of this business.

How much do you think the picking staff care about their job if they're working for some nameless landlord who never bothers to show up?

I don't expect a business owner to have to be working on the front line of their business every day. But I do know, from my own experience as a manager of hundreds of staff in the past, that your people respect you far more if you do two things. The first is to show up and be interested in them as real people, rather than numbers. And the second is to have some competence and understanding of their job, preferably by being seen to work on the front line at least occasionally.

That kind of attitude from the top person also filters down. Even if it's not the owner who's meeting you and showing you around, keep an eye out for whether the sales rep is on first name terms with the picking staff, and their level of knowledge about what the staff do. You could casually ask what happens at busy times like Christmas, and whether they get involved in picking and packing themselves at that time.

When staff trust and respect their bosses, they get on better with each other, and are more likely to do that little bit extra for you and your own customers when you need it.

In all three of our target markets, we found ourselves drawn to fulfilment companies who were family businesses, where the owner(s) were significantly involved in their operation. Partly because we're a family business ourselves, so we felt they could relate to us in that sense. But also because we felt that a stronger and more trusting culture was possible in an environment where staff know and respect the owners.

It's paid off for us over the years. Most recently, during the Covid-19 pandemic, our warehouses have all been able to stay open, because the staff care about what they do and are keen to come in and keep the businesses going.

Arguably, culture is related to business size, and that's what we'll cover next.

4. Size of the fulfilment company

Large, established fulfilment warehouses should have good systems in place. They'll have efficient and reliable processes for getting high numbers of packages out by a certain time every day, and should have invested in the latest technology to keep costs low.

If your stock levels grow, large warehouses will have no problem giving you the space you need. And when you're hit by sudden demand from a special offer or at Christmas, they'll have the extra staff ready to step in and keep your products moving from the shelves to the postman.

Larger operations may also have good deals with the shipping companies, savings that they might pass on to you.

If you're interested in expanding operations abroad, it's the larger businesses that might have foreign branches, or perhaps arrangements with trusted partners in other countries to share customers. When searching for our UK fulfilment partner, it was definitely a plus point when one company mentioned they had a sister warehouse over the Atlantic in New York state, because we were anticipating expanding to the US over the following 12 months.

Of course, there are downsides to the big boys.

If you're a startup or have low order numbers, there's a chance they just won't be interested in your business.

Their costs can be higher compared to smaller players, because they typically need more administrative staff and sales reps, or they have higher taxes and rates to pay.

With larger operations, you may find there's less appetite to negotiate prices, or to trust your future growth projections, because the truth is, they just don't need you as much as the smaller guys might.

Here's a strange one: my own experience has been that the larger warehouses actually have worse order management software. They tend to have invested in complicated bespoke packages over the course of many years, and find it difficult to switch. And inevitably there's an IT fee to pay for connecting their clunky software to your online store.

Smaller warehouse operations, meanwhile, can have a number of advantages.

On the technology front, relatively new fulfilment warehouses are more likely to have invested in the latest off-the-shelf software which actually works and is designed to plug in seamlessly with common ecommerce platforms like Shopify, BigCommerce and WooCommerce.

Chances are, you'll be dealing direct with the owner, who themselves is more likely to be working on site and be on first name terms with all the staff in the business (there are fewer of them of course!). This can sometimes mean a stronger culture. Or at least the ability to be more adaptive to your needs.

Smaller players are less likely to need to 'check the manual' and get permission - they have all the advantages of being a nimble startup, and can make decisions which work for your unique business rather than apply a blanket 'policy' to all their customers.

Their costs could actually be lower than the big guys, because they have a flatter organisational structure.

The risk you take with a smaller warehouse which hasn't been around that long is that they could go out of business. You can't guarantee they'll be there as long as you're trading.

And if your small fulfilment partner is not the type to pull out all the stops during busy periods when you need it, then you could get stuck with delayed orders or staff shortages.

It's clear that bigger is not necessarily better when it comes to third party fulfilment operations. But the small guys come with their risks too. What I hope is that some of the above points will have been of more interest to you than others - what matters for your own business will be different from the next guy or gal.

In my own experience, I've found that smaller operations can be surprisingly resilient. During the Covid-19 pandemic, I heard of several big name ecommerce businesses that had to cease operations, because of being unable to implement physical distancing rules, having too many staff off sick, or being classed as 'non essential' by the government's rules.

Meanwhile, all of our (small and nimble) fulfilment partners stayed open throughout. Their lower staff levels made physical distancing much easier. As smaller businesses, governments were less interested in shutting them down. And being family businesses, the owners were able to take several steps to keep their businesses open when staff were off sick, such as quickly adjusting operational hours or bringing in their own teenage children to help out (I'm sure it wasn't child labour!).

5. Pricing

Pricing is the obvious factor to consider when choosing a fulfilment partner. But be careful, and think long term.

This is not about finding a misprice. All fulfilment companies have certain core costs that they need to cover, so there's a limit to how low they can go. Ultimately the pricing model needs to work for both you and the fulfilment warehouse, and there's nothing in law saying they need to give you the same price from one year to the next once you've already signed up with them.

There are a huge number of things you can be charged for when it comes to a fulfilment contract, so you need to make sure you understand what all these elements are.

i) Pick/pack fee: All warehouses will have some kind of picking and packing fee per order; this is the basis of their service and how the fulfilment company makes its money. Some will add on top of that a fee per unique SKU included in the package, and/or per product. Watch out for this as if it's variable, it can get quite high with larger orders. Expect the pick/pack fee to be higher if you have large, valuable products and few orders. Conversely, you obviously want it as low as possible if you're a high volume seller.

ii) Returns: Orders sent back to the warehouse by customers (returns) may be charged the same way as orders going out, or may have their own pricing structure. Decide how important this aspect of the pricing is to you based on the number of returns you actually have - it may not be that high. No point quibbling over something that only applies to a tiny percentage of orders.

iii) Storage: This can be a big one depending on your business. There'll be a storage fee for your products, based on number of pallets and shelf space taken up.

If you have flexible suppliers who can top-up your stock 'just in time', you can minimise the storage you need and simply adapt to customer demand by sending in top-up shipments as necessary which then get sold quickly. But it's likely that you'll want to have a decent level of stock to deal with unexpected surges. And if your suppliers can't quickly top up your stock, for example they're based abroad with long shipping times, then you'll want to have your stock ready with a decent margin of safety in advance of when it's sold.

Storage can really add up, particularly if you're a seasonal seller with stock sitting around for most of the year waiting for the busy months. Fulfilment warehouses tend to keep storage fees fairly high because they want to discourage you from just using their site to dump products which aren't selling. They rely on a fast turnover of products to earn their pick and pack fees, discussed earlier.

Storage charges are of course influenced by the amount of rent a fulfilment company is having to pay to occupy their warehouse. So your best chance of keeping this low is to be working with a fulfilment company in a low rent part of the country.

Sometimes, fulfilment warehouses might have 'overflow' space, for example hard-to-access parts of the warehouse, where they can keep products which they won't need to access for several months, and charge you a lower fee for this than they would if they kept your goods in a prime area. Or they might know of another warehouse which can temporarily store your products cheaply.

I've also heard of ecommerce companies renting their own separate storage-only room or warehouse which they fill with products, just in case there's a problem with their suppliers and a delay to stock arriving just before a crucial selling season. They'll then top-up the fulfilment warehouse with stock 'just-in-time' from their own cheaper storage space. This sounds like more of a hassle to me though, so unless the fulfilment warehouse's storage charges are really high, you're probably better off just keeping the extra stock with them.

iv) Receiving: There'll be fees for receiving goods to the warehouse, either on a per pallet or per box basis, or simply a per hour fee for the staff work in unloading and unpacking.

v) Packaging: Assuming you want the fulfilment warehouse to provide mailing bags and packaging, you'll have to pay for that, and may even be charged for things like tape and shipping labels. We buy our own external packaging and send it direct to the warehouses.

vi) Shipping: Obviously this is a huge one - the warehouse will be passing on the shipping costs it incurs for shipping your orders. A good question to ask here is what margin the fulfilment company is making on shipping? Typically, fulfilment companies get big discounts from the shipping companies, because they're high volume sellers. They then take a cut of this. It's not unethical, just a part of their business model, but for the sake of transparency you should ask them what that cut is, for you to compare with others. 10-15% seems to be typical, but some fulfilment companies claim to pass on the exact shipping cost without taking a share. It's likely they'll be charging you more elsewhere if that's the case.

Another thing to bear in mind with shipping is whether the fulfilment company requires a deposit of some kind, payment in advance for shipping costs that will be incurred during that month. This could move up and down each month depending on your sales the previous month. If you have very high sales one month but expect orders to drop sharply the following month (for example, December vs January, if you sell a popular Christmas holiday item), you don't want your January shipping deposit to reflect the December shipping costs, and should try to agree a reduction.

vii) Software/technology: Typically you'll be expected to pay some kind of connection fee to the warehouse's inventory management software package, for them to connect to your website and be able to receive orders. This could be quite hefty depending on the ease of connection, but with the best modern warehouse software packages, connecting to Shopify, BigCommerce and other ecommerce platforms should be as easy as installing an app.

Beware of the need to create bespoke connections to your website using brand new software code and developers - this is a sign that the warehouse's software package is not well adapted to the modern world of ecommerce platforms. Of course, if you're operating your own bespoke website, then you should expect to have to pay a bit more and may need your own web developer to do some work.

Also watch out for ongoing monthly software fees here. Do you really need the ability to log in to the warehouse's software to check stock levels, if your own website is already connected and telling you this information in real-time? Some warehouses brag about their software's ability to tell you what SKUs are selling quickly or which are laggards, but a good ecommerce platform should give you this information already, and if you're not going to use their extra data, you don't want to have to pay for it.

When my business first started selling in the US, our initial fulfilment partner started charging us IT fees for the time they had to spend fixing their own software's mistakes in stock counting and failing to download orders. You don't want to be in this position.

viii) Set up fees: you may be charged a flat fee for setting up your account. This could be instead of, or in addition to, the software connection fee. Sometimes this fee is designed to discourage small, unserious sellers who want to waste the time of fulfilment companies by opening an account with them but then only sending over small amounts of stock which they don't have any serious intention to sell. If you can show the fulfilment company that you're a serious or existing operation, you obviously have scope to negotiate this fee.

ix) Other miscellaneous fees: The catch-all 'other' category is something to watch out for. Typically your quotation should have an hourly rate listed for staff time in doing additional requests on your behalf. This could be anything from replying to your customer service emails, making changes to orders, or dealing with your customers randomly showing up at the warehouse.

Different fulfilment companies will consider different elements of their service as being included in the other fees listed above. For example, if a customer makes an order but subsequently wants an item added to their order, and your customer service staff have to email or call the warehouse to arrange this, is this additional item included in the initial pick/pack fee, or does the labour involved in changing the order go down on some hourly rate?

You want as much of the basic service as possible to be included in the basic pick/pack fees mentioned earlier, rather than in some hourly rate with the clock being turned on and off.

If you want promotional material inserted into each package to customers, make sure this is included in the pick/pack fee or has its own nominal charge rather than being charged for the extra time of the labour involved.

Make sure you ask these questions rather than get hit with an inflated 'other' category later on. If you do get charged for miscellaneous tasks, the fulfilment company should be able to provide you a full breakdown with an explanation of each task involved.

When we first entered the US market, our initial fulfilment partners would send through invoices with way more than ten line items. Even the pick/pack fee had four elements to it! I really resented paying an hourly rate for 'account management' time, things that I considered to be part of the basic fulfilment service. Every month, $200-$500 seemed to get added to our invoice for 'management time', which included being billed for the time I had to contact them about errors in their own software.

There's only one reason to make your invoices deliberately complicated, and that's to justify billing you high amounts that are difficult to reconcile with the level of service you're actually receiving.

My current approach to pricing is now to prefer simplicity. I want to minimise baseline monthly fees, and pay more as my business grows with the fulfilment company, and I'll tell fulfilment companies this up front before they quote.

I want to know that all elements of what I consider to be the basic level of service - including picking items from the shelves, packing them and including any inserts and labelling, and standard customer service adjustments to orders before they've been shipped out - are included in a flat-rate picking fee.

I don't mind if this fee is a bit higher than it otherwise would be, but what I want to avoid is having ten additional line items on my invoice each month that make it impossible for me to predict what the bill will be each month while our order numbers fluctuate.

In months where my business is doing better, I'm happy to be charged more, but I want to know that then in quieter months, our invoices will drop and not make our model completely unviable. In practice, this means that I prefer to pay more for a flat pick/pack fee, rather than have high ongoing monthly costs for things like software, account management and storage.

Eventually, we changed fulfilment partner in the US, and now our invoices are simple and clear. We get charged each month for the following:

  1. A pick/pack fee per order, which drops if our order numbers cross a certain threshold (this incentives us to make a certain minimum number of orders each month). This fee includes one promotional insert and the packing slip;
  2. A shipping reimbursement, depending on the shipping costs incurred by the fulfilment company for that month, and reduced by the deposit paid the previous month;
  3. A shipping prepaid deposit for the following month, which varies in size depending on the number of orders anticipated;
  4. A storage charge, which is predictable depending on the amount of stock we have in the warehouse, and the number of picking bins our SKUs require;
  5. A flat receiving fee for each shipment of products that's arrived in the warehouse that month.

The only other item on our US invoices is small credits received, for example for any errors made by the warehouse.

Clear and simple, the way I like it.

A final point on pricing: everything is negotiable. Particularly if you're dealing directly with the business owner. Just make sure you think 'win-win' here. In a multi-year relationship, there really is no point in trying to screw over your fulfilment partners and have them lose enthusiasm for your business and your customers.


OK we've covered a lot in this article. Here's a quick recap of what's important when choosing a fulfilment warehouse to store and ship your orders to customers:

  1. Location: it matters, but for reasons which are specific to your business. Do you ship disproportionately to specific areas of the country? Then look for somewhere close by. Importing from abroad? Then be close to a sea port. Want to visit the area a lot for business? Then make sure it's a pleasant part of the country to visit.
  2. Taxes: you obviously want to keep these as low as the law allows, but low-tax areas may have other disadvantages such as being really remote or having poor local infrastructure. Taxes might not even be a consideration if rates are fairly uniform across the country. Just make sure you've looked up the rates and are aware of what you'll be paying beforehand, so there's no surprises.
  3. Culture: a big impact on the quality of service you'll receive from your fulfilment partner. You want to work with businesses which value their staff, and value your custom. Family businesses where the owners get stuck in with front line operations can be good for this.
  4. Size: this will partly depend on the size of your own business, but don't discount the small guys. They can offer do things quicker and cheaper than larger operations.
  5. Pricing: understand all the elements, and ask lots of questions beforehand to prospective companies. Every fulfilment company should offer you a bespoke quotation, adapted to your business and anticipated level of orders and stock. If you prefer a particular pricing structure, make this clear, as many fulfilment companies can be very adaptable. Negotiate pricing - within reason. This has to work for both of you and you want it to be a long term partnership.

You'll obviously have picked up in this article that some considerations are going to be more important to your particular type of business than others, so don't give all of these elements equal weighting.

If I was forced to pick one thing that was most important, I'd choose culture. A fulfilment company with a good attitude, with staff who are happy to come to work, and which is keen to work with a business like yours, is absolutely crucial for the success of your ecommerce business operation over the long term.

A company like this is more likely to want to work with you and see your interests as being aligned. They should be interested in supporting your growth, and that will benefit them directly too. They'll go the extra mile for your customers, will make fewer mistakes with orders, and will be willing to adapt quickly when your order volumes change.

The overarching goal is for your business to be a success, and for you to still be trading in several years' time. You want to be working with a fulfilment partner with whom you see a long term relationship. While the option of switching companies is always possible, and is something that should keep your fulfilment partner on their toes, the hassle and cost to you is significant.

This is a decision you want to get right first time.

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