drop ship guide

How To Use A Fulfillment House

This page discusses using a fulfillment house or, in other words, an ecommerce fulfillment company. Knowing how to us a fulfillment house will enable you to increase your profit margins.



Ecommerce fulfillment companies have made it possible for people to start small businesses with very little capital. If you are unfamiliar with what Ecommerce fulfillment companies do, in brief, they manage warehouses that store products for their clients and ship products on order to customers of the client. Simply stated, they drop ship for their client companies.

When you start in business you will probably start first by using a drop shipper that uses a fulfillment warehouse.

It makes a lot of sense to do so. If you use the drop shipping model of order fulfillment, you are able to get into the business and establish yourself with very little risk as compared to what it would be were you to buy your own inventory.

And it allows you to analyze your market based not upon projections but on the facts related to how you are doing.

But as you go forward and your volumes increases, you may find it beneficial to have your own inventory.

When might that happen?

As you are sure to know by now, if you are using a drop ship wholesaler the prices that you pay for your product are necessarily higher than prices that you would get if you were to meet factory in minimums and supply your customers directly from your own inventory.

Let's discuss this by way of example. Suppose you are selling Polish pottery and using a drop ship supplier of the Polish pottery.

Now that drop ship supplier has incurred expenses in importing the product from Poland to the United States and incurs the monthly expenses of maintaining that product in a warehouse. Those costs are passed on to you.

Once your volume gets large enough you might find it profitable to order enough directly from the factory and store it in a fulfillment warehouse yourself. You will incur a monthly storage charge but you will avoid all the shipping problems and maintenance problems of your own warehouse.

And you will definitely enjoy a lower price for your product so you should be able to increase your profit margins.

When you choose a fulfillment warehouse however, you have to be very careful and you have to know what you are doing. There are some dangers if you do not fully understand how a the charges are calculated. You can get information about that at this link. Choosing A Fulfillment warehouse

A fulfillment company, if properly utilized, will actually increase your profits without you having to increase the number of sales that you make. So as soon as your business is stable and you see that there are long-term prospects for your success, it might be wise to consider using one.

By moving your products to a fulfillment warehouse and eliminating your drop ship wholesaler you are eliminating a middleman. You may have to spend a little extra money up front to get the product into the warehouse but the return on investment is likely to be quite high.

By making that move you are essentially giving yourself a pay raise.