Entrepreneurs shipping large volumes especially should outsource such back-end operations as customer service, order entry, order management, fulfillment and customer returns. It's a good idea to use referrals to find a smaller fulfillment company. But keep in mind that some fulfillment houses turn away small businesses because they're more costly to service than corporations that ship large volumes of items. The variety of products being shipped also affects service and price level-for example, it's more costly and time-consuming to prepare packages that contain different combinations of items than it is single-product packages.
Before choosing a fulfillment partner, make sure you specify the services you need, your expected volumes and your business' terms, such as whether you'll pay handling on a per-piece-picked basis or on a package-shipped basis. "Not defining these terms ahead of time is the single biggest thing that makes these outsourcing arrangements fail," says Bob Hutchinson, managing director of KPMG's consumer markets supply chains solution practice in New York City.