Dropshipping · Fulfillment

Know of a fulfillment house/center providing package consolidation services?

Sawyer Mueller Technology Consultant at Accenture

September 2nd, 2015

1. Know of a fulfillment house/center providing services like package consolidation (ie from multiple suppliers)?  For typical dropshipping, it seems customer orders with goods from multiple suppliers necessitates multiple packages.  Seems logical (and neat) for someone to intercept disparate packages in order to provide consistent packaging and improved customer experience.  

2. Routing to a middleman seems worthwhile for customer experience but excessive.  So is "private label shipping" with suppliers the better play?  I suppose it's feasible to arrange consistent packaging and more with each supplier.  Anyone have experience with this? 


September 2nd, 2015

This is a service that almost all 3pl (third party logistics) businesses provide and, in many cases, it's their raison d'etre. Very competitive space. Call a few local to you -- they tend to cluster near big urban centers and hear the big ups/FedEx/ups hubs -- looking for quotes and you'll get a sense of the business quickly. Many are offshoots of regional haulage companies. Couple of "tech" vendors in that space too who come with their own robotics and software solutions (as well as warehousing, pick-pack and logistics). To your second question, the large scale distis will offer some level of package customization but if you're looking for a branded experience (esp with consolidation) you'll have to do it in house or pay for a competent 3pl.

Brooks Isoldi Developer at Traversed

September 3rd, 2015

I assume by "private label shipping", you're referring to having the supplier package the order with your branding, so it appears to be coming from you?  This kind of white glove service (if they will go for it- remember, you're asking them to remove their branding and replace with yours), with the suppliers appears to be the best option from the cost and customer service "experience" perspectives, however with the larger distributors (think Grainger), that's excessively difficult for several reasons:

1) Probably most important, it's simply not what they do.  Their business model surrounds volume being moved in and out of their warehouses and as quickly as possible, to the point where if they have multiple PO's from the same customer, shipping to the same destination, from the same facility on the same day, those PO's may well be picked, packed and shipped separately.  They may (if lucky) get put on the same UPS waybill, however the notion of consolidating into the same packaging is a pipe dream for them.  More often that not, a single SKU on a single PO will get it's own box.  Mistakes get made (often).  While their error rate may be quite low compared to their total volumes, from an individual customer perspective, it can feel quite high.  Trying to tie a private label service into that is asking for disaster. 

2) Their is a good chance a single PO will be fulfilled by multiple facilities, thus reducing the benefit of this kind of private label shipping...your customer will still get multiple boxes.

3) Most procurement agencies will have multiple sources to purchase from and trying to sync them all up with the same service, same quality, etc. is incredibly difficult.

Finally, it may seem to be more cost effective, however I think you will find that between the disparate costs from each of the different suppliers and the time spent setting up and managing such a process with each of them, the costs associated for doing this for ALL purchases will greatly outweigh the predictable and manageable costs of hiring a 3PL.

Just about any 3PL that legitimately does retail inventory management services (i.e. receive, inventory, warehouse, pick, pack and ship) can provide private label / branding services, it's just a matter of their costs and quality and you will find a pretty wide spectrum of quality, however not nearly as wide of a spectrum in cost.

When looking for such 3PL's, just a couple things to be on the lookout for:

- Staffing levels and how frequently / infrequently they have to staff up and down.  It seems counter intuitive, but I would trust a facility that frequently needs to staff up and down than one that doesn't.  It's not easy to staff up and down and one that has the process (and people) down-pat is going to be able to handle surges much better than one doesn't.

- Diversity in currently offered (and managed) services.  There is a wide-range of potential services in the Warehouse/3PL spectrum (from receiving/inventory to custom kitting to custom branding).  A company that offers a wide variety of these services needs to be evaluated closely to determine how extensive their experience is in managing those services (companies will say they can do it, but can they really?), whereas a company that doesn't offer any more than a couple of them are just not going to be able to be flexible with you.  Additionally, just because a COMPANY says they can provide such services, doesn't mean that every one of their facilities has experience in providing them.  Don't trust a company that uses past performance from one facility to justify providing such services in another...You will want to see past performance AT the facility you're considering using and that will all depend on your business model.

- Seemingly small line item costs...they WILL come up and bite you.  Evaluate the pricing very carefully for each line item's impact on not only the per unit margins, but total order margins as well as bottom line (monthly / yearly) margins.  Many of these companies will break out a cost for literally everything they do (practically every key pressed supporting your operations), which puts the onus on you to build your cost models effectively and be crystal clear with them as to what you want and don't want.

I hope that helps.  I spent 10 years in logistics and managed such a 3PL facility for a time, so I have some experience with it.  I'm happy to discuss this further if you wish.