A while back I made a post about Clickbank’s joke of allowing the selling of physical products through their system (if some of it didn’t make sense – sorry- it was late)
Nick Fehlberg was kind enough to take the time to give me a great reply and I thought it deserved to be a post on its own.
I feel a little more educated about how product fulfillment works and validated my suspicion it can be a nightmare.
Here is his post:
Nick Fehlberg 05/21/2010 at 9:01 PM
It sounds to me they want to get some brownie points for offering a sub-standard additional service. According to your summary, their refund policy completely kills any chance of this working for anyone who is selling serious volumes.
I have been down this road and let me tell you (we’re talking 2006 – 2008 here, i don’t know if there are companies now that offer the all-in-one solution you’re looking for) this aint easy and it aint cheap.
My wife and I, both very experienced online marketers, started a children’s book club much like the Scholastic/Disney thing where you get a whole bunch of stuff like a kids backpack and stickers, plus free books in the intro shipment, then two books in the series every month thereafter. So this will totally physical product.
We designed our own system to integrate with the API of the payment processor (Cybersource), because you can’t use some third party like Paypal when you’re advertising on CPA networks. After the batch capture, a cron job would build the orders for the day previous and ftp them to the fullfilment house.
Fulfillment is not cheap. They charge for every gnats ass thing they can think of and it’s also tiered in many cases. There will be a flat fee for ‘picking’ each order (from the warehouse shelf) and another fee usually for every additional item included in the package after the first one. They charge the storage fee by pallets usually.
If you don’t want the cost of the postage to appear stamped on the outside of the package, you need to use what’s called an ‘indicia’ and use ‘media mail’. An indicia is something that the fulfillment company will often be able to supply, but it might involve some haggling and time to set up. basically, your postage will be calculated and paid through their account with the USPS, and each of your mail pieces will not show that you only paid $2.30, when you actually charged the customer $9.95 for shipping. (Keep in mind that different zones cost different amounts to ship to, so you need to cover that expense.)
Additionally, some fulfillment companies will charge you to take your daily orders down to the post office. This will likely be a flat fee but it could be substantial so make sure not to overlook it. I think USPS changed their policy to cut costs and no longer do the free pickup service.
And then we have returns. Fulfillment co. will charge you per order returned, and may even charge a re-stocking fee per item. They often did a poor job of reporting returns which was not automated and required me to sit down once a week and process the returns and refunds through the virtual terminal in Cybersource’s business center.
We looked at getting fancy boxes but they just turned out to be too expensive. I was going to have a custom printed box with an image that overlapped the flaps on the top side. (Note: white boxes are never a good idea because they arrive at the customer’s house dirty and scuffed.) We opted for a plain brown carton and got some full color stickers made to slap on each one. This was much cheaper and didn’t add any cost to the packing charges.
Now, to be fair, our business had a staggering amount of inventory on the shelves and the books were quite heavy, as they were hardcover kids books plus extra stuff. As a result the storage costs were insane. We used three different fulfillment companies over the two years because they all sucked. Eventually we were using the same one that does Scholastic’s book fulfillment. Trouble was they were too big and they ran very inefficiently.
To sum it up, this whole experience was a nightmare from start to finish. Every day was a new lesson in managing the early onset of insanity. My advice is keep looking for that company that supplies the whole box and dice.
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