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  • December 3, 2021

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As more and more people prefer to shop online, ecommerce stores continue to increase to meet consumers' demand. Owners of e-commerce stores need to get products to their customers in a timely and efficient manner. And many are able to achieve this through fulfillment companies. 

A fulfillment company handles inventory, processes orders, and ships products for other businesses. This allows e-commerce stores and other businesses to focus on other parts of their businesses as the fulfillment company handles inventory and shipping. Also, many business owners don't have enough space to store products and take advantage of the warehouses of fulfillment companies. 

The proliferation of the e-commerce business combined with the increasing number of online buyers means demand for fulfillment services will only increase. A research by reported on Business Wire expects the fulfillment services market size to reach a whopping USD 168.72 billion by 2028. That translates to a CAGR (Compound Annual Growth Rate) of 10% from 2021.

It's an exciting time to join the fulfillment industry with the future of the industry so bright. But as with any other business, you need to plan properly before diving into the fulfillment business. This is important to ensure the business runs smoothly, clients are satisfied, and achieve the ultimate goal of the business - to make profit. Below are five tips for starting your own fulfillment business: 

  • Create a budget

One of the first things you need to do when starting a fulfillment business is to decide how big or small to start and then create a budget accordingly. The number and sizes of warehouses as well as the type of technology to be used will determine the budget. You should also consider equipment leasing services versus buying equipment in full to save on startup costs. 

The services to be rendered will determine the number of staff, equipment, and facility required. Shipping services, for example, will require trucks. In-depth research is important here to get the correct quotes on the assets the business needs to invest in. Then, the required amount should be set aside.

  • Streamline with software

Efficient operating processes are key in the smooth running of a fulfillment business. This is to prevent miscommunication and avoid repetitive orders. The truth is that a fulfillment business is a high-tech business and it's important to have adequate technological capability to run the business. For one, there must be communication technology to prevent botching customers' orders. 

The right software will also help with internal organization and help staff involved in processing/packaging orders and those involved in shipping coordinating correctly. There is no cutting corners in a fulfillment business and the owner must ensure the right operational equipment and software is available. 

  • Establish a pricing system

Establishing a pricing system may be a bit tricky for new fulfillment businesses. Ideally, the pricing system should be reasonable and competitive and if your services are to be more expensive than others, you should be able to justify. When establishing a pricing system, all the services completed will have to be considered. Pricing options include warehouse fee, order receipt fee, reporting fee, customer service, new product set up fee, customer service, and so on.

  • Marketing is key

Marketing is crucial to any business and the fulfillment industry is no different. The owners of fulfilment industries must come up with a marketing plan to reach potential clients. The increasing number of e-commerce stores means there are always people looking for a reliable fulfilment company. And this means a strong marketing campaign is needed to reach potential clients. If there's a new service the business is offering, then such service should also be effectively marketed. 

  • Understand and set up KPIs

KPIs means Key Performance Indicators and these are metrics that can be used to evaluate the performance of a business. Fulfillment business owners need to come up with their own KPIs to evaluate how the business is doing. There are several metrics that can be included in the order lead and return rate. The order lead time is the time from when orders are received to when they are shipped. And it's important to have a reasonable order lead time to keep clients happy.

The return has to do with the amount of products that are returned due to damages or other problems caused during shipping. A high return rate will have a negative impact on the business and measures should be taken (such as proper packaging) to correct it before you start having problems with clients.