If you are seriously considering using the services of a fulfillment center, here’s a rundown of what you need to do to prep your stuff for the transition -in addition to part one of this series. Of course you don’t have to do everything yourself, the fulfillment center can do a lot of the work but you’ll have to pay for that service. It’s best that you get your inventory in order anyway since you should be well aware of any issues with your inventory.
1. SKU All products need to be identified by SKU (stock keeping unit), right down to size and color variations. Sure you may have a style number 10050 for an A-line skirt, but you need to have unique skus for every color and size variation. Yes, you really do. This is actually what one would call an industry best practice except most small apparel companies don’t adhere to that standard and the apparel industry actually has never officially designated any “best practices.” You never want to require a fulfillment center to open a package to see the size and you never want to have them try and differentiate hot pink, fuschia and magenta. Please read my previous posts (pt.1 & pt.2) on this topic.
2. Data Collection All products need to be in an electronic format with all the relevant information provided. Usually your fulfillment center needs a sku, an item name, size and color, and you usually have space for more product identifiers to use as needed. Again, this is something you should already have, but you will need it for your fulfillment center. A preferred format is Microsoft Excel, because nearly everyone can import this data. Of course, you may also have it stored in a software program you use (like Quickbooks for Manufacturers), but you can always export that data into a format that a fulfillment center can accept.
3. Inventory counts A FC will always count your incoming inventory but they usually need an inventory report to know what to compare the figures with and to discover any discrepancies in quantity.
The first three are the basics. Depending on your set up, you may also need to provide a fulfillment center with:
4. Packaging instructions This explains how you pack orders, whether you use any special enhancements such as tissue paper, polybags, package inserts (such as catalogs or promotional items) and so on.
5. Specialty packaging Many companies use specialty packaging such as custom printed items or packaging that a fulfillment center may not normally stock. Whether you order these items yourself or allow the fulfillment center to order them, it is usually specified in the terms and conditions of your agreement.
6. Shipping account numbers While FCs usually provide lower shipping rates than an individual DE may have, some DEs may have lower rates, through a trade association, and prefer to use their own UPS, FedEx, etc. account numbers.
7. Sample packing slip Some FCs have their own packing slip format that only allows minor adjustments, and many will customize their packing slip format to your specifications. You may also need to provide them with a black and white version of your logo (hence my previous post on logo design and why black and white logos are important). One thing I will note is when using a FC, you should always include a packing slip with the shipment and send the invoice separately in the mail. I know some FCs will invoice as well, but there are so many issues I have experienced with regard to invoicing, that I feel that it’s just a better practice to invoice your retail customers separately (one of those reasons is that many companies tend to be ignorant of cardholder security guidelines and inlcude way too much sensitive information on packing slips).
8. Extra packaging While many FCs can order whatever type of polybags you use for your merchandise, many will not have the same type and size in stock. You should always send extra packaging because some items may need to be repackaged due to wear, dirt, or other things.
9. A supply list I find it is helpful if you include a list of supplies that you normally stock. This would include things like tissue paper, box sizes, poly bag sizes, supplier packaging sizes (by this I mean the free packaging you can get from FedEx, UPS, etc.).
The difficult part of this step is just getting organized. Many DEs are not organized to this extent. I’m sure there are many things that I am leaving out (feel free to comment). Additionally, even if you’re not considering outsourcing your fulfillment, this is a good primer for organizing your set up to have hired (or volunteer) help with shipping your orders.
Selling to department stores pt.1