PLH 77 | Order Fulfillment

Logistics and order fulfillment as part of the initial process you make before launching is vital to customer satisfaction. Paul D’Souza of Source Select breaks down why it should be on the top of your list in order to offer the complete customer experience and later on reaping the benefits from it. Paul shows how he helped many clients with his expertise on handling and fulfilling this particular need, He gives some great advice and tips on how to be more efficient with your order fulfillment, from picking your market and partner to keeping your product safe. He rounds up his discussion by giving the key points when it comes to dealing with global fulfillment, reinstating how necessary the proper order fulfillment is to expand your business.

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It’s Paul D’Souza and I’m with Source Select, a logistics and fulfillment company here that’s been helping kickstarter primarily in Indiegogo, the crowdfunding product company for quite a few years. We’ve been around for twenty years. The biggest feather in our cap is that we helped Pebble watch company launch their products right from the first campaign to the second campaign, and then up to about two million units a year until they got bought by Fitbit. That’s who I am and what I like to talk to you guys about is preparing to do your order fulfillment. The preparation comes from all the way when you’re designing your campaign, if you’re going that route or if you’re going straight to eCommerce, there is still a marketing campaign. I tell people, “Contact me in advance right from the early stages because I can help you with your shipping strategy.”

Fulfillment is a critical primary business concern that impact customer satisfaction. Click To Tweet

Think about logistics, think about order fulfillment as a primary business concern which impacts the customer experience. I see that as a vendor, I show up to take care of your customers, not just move your boxes. I put the two together because that’s my offering, I go end-to-end. Trust me, you want to try to do that as much as possible, logistics and order fulfillment. I want you to focus on your marketing, on your sales and on your new product development. Leave the boxes, leave the fulfillment to me. You want that kind of partner because it impacts your customers. Fulfillment is a critical primary business concern that impacts customer satisfaction. It’s not boring. It’s not an unnecessary evil. It’s critical. It’s a space of possibility to impact your market, your customer so that they have a good experience and you have the space of possibility to go create more sales, to repeat the business. “I love working with these guys. They take care of me.” The product works great and once it didn’t work so good, but they took care of me. All the way from getting your pricing strategy, helping you not lose money, especially if you’re going to Europe, with your value-added taxes and then to returns management.

How are you managing returns? How are you retesting, qualifying and evaluating your product that has come back to save your cashflow and create your B-stock? That’s the stuff we do, that’s the stuff you need. I’m going to be very transparent here. I want you to be successful. There’s a lot I can do to help you do that and all other product companies. I’m going to speak about the things you have to think about when you start planning to launch because you’re doing so much at work, all the heavy lifting when you’re designing your product. All the marketing that you spend so much time and money in trying to get the right message, identify your personas, you do all that.

If your box doesn’t get to the old customer in a nice way, the right customer at the right time, without any damages, it’s all for nothing, you’re going to have an upset customer. That’s why this is so important, do not wait for the end. I mentor with the Founder Institute. I mentor with Plug & Play, I like to get involved in the early stage. One of our clients have this beautiful box, I’d say a chessboard by the people, the men move. I can be playing with it where I am and the other person can be playing, anyone on the planet with Wi-Fi on a phone, and the chess pieces move on the table. They’re rocking it out. They talked to us for a year from the design stage. We’ve helped improve and redesigned that packaging.

Talk to people like us because we can help you figure out the right packaging, the right dimensions. Squeeze it in a little bit. When we start picking the right shipment service, you’ll fall within a certain category. We helped a client in Australia. They were planning to ship in two boxes with one order, a base, and a stand. We helped to redesign it, with some feedback. We figured out the weight structure, the dimensions, the sizes and said, “If you bring it into one box it would still be a little bit overweight. It was a heavy machine, a heavy unit, but they went from two boxes to one box and dropped shipping costs by $30 apiece. They were up in the $70 and we brought them down to $40 to ship on average globally. Think about those concerns if you would have issues when dealing with fulfillment.

The Right Product And Market

One of my taglines is it’s not about the rate. Fulfillment is the three or four things you want to look at. Fulfillment is about making sure that your product is safe. You’ve got to get the right packaging. You’ve got to make sure you can get to your customer, so be very clear, very conservative and do your research about where you should market your product to. I always suggest the first time around the first campaign, keep it small. Go after a very niche market maybe North America. If you’re European, just Europe. You can work with me. I’ve got warehouses all over the world, in the US and Canada, in Ireland, in Hong Kong and Australia. I can cover the planet. I can ship to 180 countries.

PLH 77 | Order Fulfillment

Order Fulfillment: Working in small volumes first is not about being lazy; it’s about accuracy.

I tell my customers, “Pick one of the big areas, one of the big markets where you’re strong. Don’t go to multiple markets at the same time. You want to test the response. See how your customers like it, get the feedback. Get those testimonials to do more marketing because once you get your first hundred customers wherever they are, and we suggest that we will work at very small volumes. I’ll work with 50 orders, with 100 orders. Get your first hundred fans, small orders.” I had a client sign up this beautiful heart monitor. They had hundreds and thousands of orders but now, they shipped out 50 here, 70 there. We tested out. Is Shopify working? Is the CSV file coming in? When you send your orders to your fulfillment center, make sure you give them the information they need.

I need my orders in a certain way, your orders in a certain way so that it’s uploaded into my computer system on the back-end here. Why? It’s not because I’m lazy. It’s about the accuracy. You want to look at the right product, the right market so it’s not complicated and you can build scalable systems. You want to shorten or reduce the amount of effort it takes to go through a campaign, get the orders or your whole eCommerce thing, download the order inflammation, and hand it off to your fulfillment center.

The fulfillment center has got to be able to process the order, ship the product out, and track the product. I’d say, “I’m not done until that product is at rest. If we send it to the wrong address or they don’t like it because the packaging got broken, they’ll want to send it back. No one’s happy. I’m not done. Manage the returns and QC a product because that’s cash and you want to save your product as much as possible, then manage inventory because there’s cashflow. A good fulfillment center will try and have as much of that automated simply because it drops error. When you drop error you drop duplicity, you drop mistakes, you reduce all that and profits go up. It as simple as that. We’re are in the profit business. That’s why my tag is By the way, that is one of my email address. When I do my mentoring work when I do my personal development work, I’m Polly the profit. It’s all about profit. That’s what we’re here to do.

The Right Partner

When you move your boxes, when you move your product, make sure you get the right partner who’s going to help you. Who’s going to help you keep your product safe? Who’s going to help you give you the information you need to grow your business, give you the communication you need so you can take care of your customers, take care of customer expectation? I picked up 900 units from China, from Shenzhen. I’m sending a truck to pick them up from Hong Kong because they’ve got batteries. We want to find a partner who can handle batteries. Globally it’s a big issue. You cannot fly a battery, a product with battery out of Shenzhen. We send trucks from Hong Kong into Shenzhen, pick them up, bring them back to Hong Kong and then we ship them on. Then we would fly them through the ocean or whatever. I was up checking my email and got glam and sync with those guys in Hong Kong. I called my customer and set expectations that we’ll be picking up the product. “It should be in the US next week, Monday and then the rest of the batch will go to Europe on Wednesday.” We can set the expectations with the customers because we’re picking the product up and we’ll keep them in the loop.

That’s what you want in a fulfillment part because it’s not about the boxes, it’s not about the rate, it’s not about dropping costs. It’s about taking care of your customer. It’s about taking care of their expectations, their satisfaction, and their experience. You tap into refer marketing. You’re tapping into reciprocity. You tap into them sharing their success. Everybody wants to talk about what a great time they had. Vanity is a great thing tap into that. Create a tribe. Create that feedback loop and we’ll help you. This is what you want in a partner, somebody who can partner with you so that you can then take all this creative genius that you’ve done, put it in a box, and then deliver that experience to your customer. I’ll give you the feedback. I’ll tell you what product is being returned, where the damage is at? What’s happening? You want a fulfillment partner who can do that. It’s all about that backend.

When you move your product, make sure you get the right partner who’s going to help you. Click To Tweet

By the way, you cannot rent a space, hire somebody with experience, a shipping manager. Get reliable warehouse staff, get all the equipment, pallet racking, pallet jacks, forklifts, all the expense. This relationship with FedEx and UPS, get them to come and pick up the product every day at the cost that we can give you. You can do it but it’ll cost you millions, hundreds of thousands of dollars. The experience is important. Like me, I am able to pick a truck, get a truck to go from Hong Kong to Shenzhen because my client cannot ship a product with a battery out on Shenzhen.

A lot of my clients don’t live in the US, they’re in the other parts of the world. I’ve got a client in Italy who had a $100,000 order with Sam’s Club. I won the project and told them to get to do the work with us because we do it entirely. What they have is just a logistics partner which is just half of the equation. That’s why I exist. I’m not the just the logistics. I do the inbound freight and then I do the pick and pack. Then, I do the sorting and then ship to your customer either B2B with EDI. These guys have a huge project with Sam’s Club and Costco doing the EDI integration. He’s bringing 225 pallets in Italy and they could not fulfill their order in the US without me, without a fulfillment partner. That’s why the end to end is better for them because we’re doing the inbound, we’re helping them prep costs in the inbound, we’re doing the warehousing and then we’re going to ship to 70 different Sam’s Club or maybe more. I’m waiting for that order, but it’s 225 pounds. They’re sitting in Italy and we’re doing all the heavy lifting for them.

We’re passing customs. We’re going through all that with them. We’re doing all the import, export documentation. With the tariffs, there are a lot of issues going on with getting your products in and out, but you want to tie together, keep the handoff, whichever, whatever infrastructure, whoever your partners are make sure that the handoffs are tight, your product is safe. It’s not damaged. You want to be able to set the right expectation with your customers. That’s part of fulfillment.

A lot of headaches happen after the campaign is complete, after you’ve done a phenomenal job with marketing, after you’ve created an amazing product, and then fulfillment. “How do we get the boxes out? What’s the damage? What’s this? What’s that?” We helped a client reduce shipping costs alone by 40% because the product they were bringing in was too bulky and we helped them redesign. We’ve done that over and over again. Once the product is marketed successfully, and you hit different volumes because you come in, you do the onesies and twosies, you shipped all your backers. You’ve got 900 products, a thousand products, or 300 products out and guess what? Your marketing is kicking in and you suddenly got an Amazon order. Now, what do you do? We know how to ship to Amazon, fulfillment to Amazon seller central, vendor central are very different.

You’re doing with LTLs, you’re doing less than truckloads, and you’re dealing with palletizing. There’s a whole bunch of fulfillment type strategies and processes that you have to know to address their order shipping guidelines. They’ll tell you what a palette should look like. I have another client with Costco. Costco said, “You have to use a certain type of pallet, not any other pallet,” because they don’t want their pallets breaking. We sell pallets for $10, $12, $15 a pallet. The Costco certified pallets of $40, $50, $60 based on volumes. Uline is selling a pallet at that level for $61 retail. We do that for you. Your fulfillment partner, your fulfillment capabilities need to scale with your business. That’s key.

Selling To Europe

Besides selling internationally, selling into Europe, tremendously different to selling in the US. Here’s one thing you will have to remember if you’re going into Europe. Every country in addition to potential customs duties, you have to provide and pay a value-added tax. What we do is based on your orders, you’re back from your backlist orders or from your crowdfunding campaigns, we identify by line item and we group your European Union orders based on the country because every country got a different tax and you have to pay that upfront. As a product enters Europe, you’re going to pay the tax if it’s going to any EU country. If it’s going to a non-EU country. We can still ship it out of our warehouse, but we have a bonded warehouse in Europe.

When we’re shipping to Africa, we put all the products and send all the product in EU because it’s cheaper. You’re not paying the value-added tax of all product that goes into my warehouse in EU, but you’re only going to pay the value of the tax on the product that is going to go back out to your customers that are in EU countries. We calculate that for you and you pay that before your product gets released. Literally, it’s better when it’s still on the water or in the air, so when it hits the dock, it’s ready to come out. The estimate has been calculated and you have to build that into your business model. You’ve got to build the value of the tax into your revenue model. We help you with that, your fulfillment partner should. If you pay extra, it gets neutralized, it gets consolidated in 45 days.

Doing business in Europe is different. It costs money. It’s the cost of doing business. I will take that any day of the week where we’re trying to sell it to Peru, Brazil or the Latin countries or in India where you have no idea about the complexity, the fluctuation, and the variability of where the taxes and the duties are very high, 70% tax, 200% tax. By the time your customer gets the product, they’re frustrated. They’ve got to pay for the product two or three times before they get into their hand. You need to know that upfront to decide if you want to do business in those countries and put your customers through that experience.

We’ve had a client in Europe when dealing with value-added taxes thought that they would minimize the customer experience based on the country and add one value, one retail price that included value-added tax. It was a nightmare, we did it for them. They lost money because they had to ship two or three times. You have to decide, is that model good for you? Some people do that. It’s because what it does is it jacks up the retail price and not everybody realizes the duties, the shipping and the value-added tax is all built in. Why is my partner looking so bloated? All in there you might lose out on the emotional state. You might lose out on the other marketing related dynamics that kick in when you deal with a pricing strategy.

PLH 77 | Order Fulfillment

Order Fulfillment: You plan for success. I want you to think about your business as one day becoming a global company.

The Key Things To Dealing With Global Fulfillment

The key things you want to look at, or maybe the top five points of areas you want to focus on when you’re dealing with global fulfillment. I want you to think about your business that one day it’s going to be a global company. It’s going to be super successful. You plan for success. One, you want to be able to understand the pricing around the finances, around your fulfillment, all the requirements. When you work with me, I’ll give you a unit price. What does it cost to bring this one product from your factory to the warehouse the pick and pack, warehousing fees, everything in and out the door to your customers? I do inbound, pick and pack fees, packaging material, outbound fees, duties and taxes, and then I divide it by the total volume to move. One product costs you so much. You have to know your numbers.

The second thing is you’ve got to know your demographics. Where are you going to sell phase one, phase two, phase three? Which is the right market to go into phase one, phase two, phase three? You want to look at what’s the complexity to do business in Europe, what’s the complexity and what’s the cost associated with doing business in the US, Australia. You might have some market in Australia. What I’ve seen is that it’s not a very big market and it’s very costly to move a product. I can help you go directly from Shenzhen to Australia. Still shipping, they don’t do effort. Everything is struck in Australia. You’ve got to know your demographics, your markets and figure out when do I want to scale my business into different markets.

The third thing is packaging. Do you have the right packaging? Is this packaging sufficient enough to keep my product safe? Is it aesthetic enough to get people to want it and grab it off the shelf? Is it compact enough and light enough to drop my shipping costs down? You want to think about all these aspects of getting the right box for your product so you can get the product to your customer. It impacts the bottom line and I can help you with that. The fourth thing is communication. You want to be able to bring automation and communication to your entire value chain from your factory to your logistics partner, to your fulfillment partner, to your customer and your customer service team. That entire value chain ecosystem has got to be tight. That’s why companies come to me because I remove one of the partners and I go, “It’s just me, the company and the customer service.”

I and their customer service team, we’re the only two people and everybody is on my team. I’m coordinating with the rest or all of the ecosystem. That’s the tightest. You outsource to one company who moves all your products. I would definitely recommend that model. You can see there are other people that do that, but I’m one of the few people that do that. I do the inbound. We can save people tons of money. It’s all about the relationships, it’s all about the volumes. Are you getting the right volumes and space? You can negotiate it if it’s just one person and you got to go to who’s got one container, even if you do have a container. I’m bringing in multiple containers a week. You want to have those partners. The fifth thing is about the back office. It’s not just about the rate. All my clients, maybe ten out of ten we’re doing something. They’re going to test the product.

It’s all about relationships. It’s all about volumes. Click To Tweet

One of our clients that got a luxurious product suddenly realized that packaging had the wrong phone number. It’s called kitting, testing, rework. You’ve got to be able to develop the resources to do that because it’s much cheaper to get the product done to get the kitting, the testing and the rework done here or in any of the destination countries, better moving the entire load back to China, to the manufacturer or Indonesia or wherever. We are picking a product from all over the world, back to the manufacturer to get a little bit of rework done. That’s important. Everybody has problems with it.

We had a customer that one component they started noticing an error and there was a batch run with a supplier to their manufacturer that produced something bad and these little units were popping and breaking. We had to open twenty pallets worth of products, take off their Mastercard and open up the product, open up this one unit, and test it. They were so bad that we put them aside and we got to ship them all back to China. All these products are now waiting because it was incomplete. They had to scramble. You need somebody to do all that for you. I have another client who’s done an order with Costco. Costco does everything differently. We’ve got to repackage that product for Costco.

Another client has a huge project with Target. Target wants their product in different ways. It’s got to be palletized a different way. We’ve got to remove them out of cartoons and only have inner cartons because they don’t want to open up two boxes. You’ve got to read all thousands of products. We literally moved 135 products to them. Each one we opened up, we take it out of the cart and only keep the inner carton, put it back on the pallet. Those are the five areas that I have you focus on. Think about that through the “development” of your business and think about that early. I offer that as a service.

I can help people with a literally logistics and order fulfillment strategy, consulting session. We can spend some time on the phone, we can talk through it, but talk about these issues with your people, with your leaders, with your business partners, with your manufacturing consultants, with your marketing people because all of them worked with us the feedback we give them with your marketing people, with the colors or the pallets with your manufacturing partner. We’re working with all these other people, consultants, you work with these service providers because the team has got to come together to make sure your product is packaged right, you’re sending it right and the fulfillment has done right because it’s the last mile.

We are the delivery people. What we do last is the first thing your customers experience. That’s why it’s so important. I wish you only the best. I had fun time with you. I’m very passionate about what I do at Source Select. The website is Go check us out. There’s a video on my Get a Quote link on my website. Go check out the video even if you don’t want to quote, you don’t need to. It explains this who value chain. It’s very important. It’s an important part of your business and I’m here to help. Take care.

Tune in to Paul’s next Office Hours. Connect with and find out more about Paul in our Experts Directory.

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