Fulfillment company: Which provider is the right one?

Fulfillment company: Which provider is the right one?

The market of fulfillment companies in Germany is large and confusing. When choosing a reliable fulfillment company and partner, possible services must be understood at least roughly.

Fulfillment services

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Goods receipt or inbound is the starting point for all fulfillment companies. Inbound is defined as the acceptance of goods independent of the shipper. When receiving goods, it should be noted that both individual packages and pallets can be delivered. The unloading of the goods should be possible from trucks or also by container in a standardised way.

Consequently, when storing the goods, care must be taken to ensure that the appropriate storage is provided depending on the size and nature of the goods. The goods can be stored in hanging or lying storage systems as well as in packaging or on pallets. The goods must also be booked in promptly after they have been taken into stock.
Picking describes the removal of the goods from the various storage locations. After the goods have been booked out, they are subsequently combined into the various customer orders in goods issue. The orders are packed in outbound and shipped to the B2C or B2B customers. This process is also called Pick & Pack.
Customer returns or returns describe the sending back of goods by the customer in case of a customer return. The returns are checked for their condition, then repackaged and put back into storage.

Wanted: Reliable e-commerce fulfillment company. But how?

When looking for a logistics company, research on the internet is very helpful. Due to the high level of networking among companies in the German e-commerce market, it is worthwhile to additionally contact business contacts, friends or former colleagues to get recommendations from the network.

Once two or three fulfillment companies have been found, the question arises as to how to select the right fulfillment partner.

1. Similar industry specialisation

The most important and at the same time most difficult factor in the search for a fulfillment company is to find a partner at eye level. This means that on an interpersonal level as well as on a process level, both companies must have the same ideas about working together. A two-man start-up is not helped by adapting to the processes of one of the largest German corporations when the start-up itself is still in the discovery phase and has to react flexibly to market events.

Every fulfillment company has its own company-specific values and processes. Many of them specialise in certain industries or types of business, which makes it easier to work together if the right partner is chosen.

2. Comparable customers

It is easiest if the fulfillment company already works with similar businesses. This is especially true for e-commerce fashion retailers who have specific needs. For example, not only is fast shipping a basic expectation of users, shipping costs and high return rates with the complex processes behind them are a challenge for any retailer.

For e-commerce merchants, choosing a company that has experience in fulfilling e-commerce orders is crucial. On the one hand, because they know the high expectations of delivery times and returns processing of customers, as well as the differences between B2C and B2B business. And secondly, a strategic logistics partner can assist with business challenges, as the relevant industry know-how and contacts are available.

The biggest pitfall

A fulfillment company is often chosen solely on price. Since a price comparison is sometimes not possible due to non-transparent prices and service descriptions, a pure price comparison can be misleading. For this reason, wrong decisions are often made. However, since the delivery and processing of orders have a high influence on customer satisfaction, an unsuitable but cheap partner can annoy customers, which leads to higher costs in the long run.

Hamburg, Berlin or Cologne: What is the best location in Germany for your fulfillment company?

First of all, a few facts: take-up of warehouse and logistics space in Germany once again exceeded the six million m² mark in 2017. While turnover in Frankfurt am Main (673,000 m²), Berlin (453,000 m²), Düsseldorf (452,000 m²) and Cologne (250,000 m²) increased significantly, turnover in Leipzig (110,000 m²) and Hamburg (461,000 m²) decreased.

The various locations of the fulfillment companies are characterised by different industry focuses. While the manufacturing and production industry is the strongest sector in Munich and Stuttgart, Frankfurt am Main and Hamburg focus on transport and logistics services. As might be expected, fashion retail is the focus in the fashion metropolis of Berlin.

But how do I know which logistics location is the right one?

When deciding on a location, in addition to a precise partner analysis, it certainly helps to look sideways at the various competitors. Which fulfillment company at which location do the competitors work with? What is the customer feedback in the respective online shops? In addition, it is necessary to look at what transport speeds the various shipping companies offer for the different locations. For this purpose, the potential fulfillment companies must be asked precisely about service levels such as pick and pack times, return booking times or goods acceptance times.

Only by looking at all fulfillment components can a decision be made quantitatively and qualitatively for or against a location and/or fulfillment company.

Prices: What costs can I expect for a fulfillment company?

A direct price comparison of costs is not possible with most fulfillment companies. A competitive price offer is undoubtedly necessary for professional cooperation. However, transparency and working together as partners should be paramount.

When it comes to transparency, it is important to make sure that the price list is comprehensible and easy to understand. Very detailed lists of more than ten pages are usually less comprehensible than well-structured price lists with manageable items. This is because the invoices must be comprehensible even after the contract has been concluded. This can only be achieved with a manageable number of items.

It is helpful to differentiate the prices in the various fulfillment service areas such as inbound, storage costs, outbound and returns. The technical connection and, if applicable, onboarding costs for the connection to the fulfillment service provider should also be shown separately. Since these are incurred independently of the quantity-dependent components from the fulfilment service areas.

If you have any questions about MOODJA’s service times or prices, please feel free to contact us via our contact form. We will get back to you as soon as possible.

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