EcommerceBytes-NewsFlash, Number 2393 - October 18, 2010     2 of 4

Advice for eBay and Amazon Sellers on Outsourcing Fulfillment

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Part of Amazon.com's success in the ecommerce space is its efficient distribution network, which it has opened up to third-party sellers through its Fulfillment by Amazon (FBA) service. Sellers can send some or all of their inventory to Amazon.com's warehouses, and Amazon picks, packs and ships the orders to customers as they are received.

Rival eBay does not have its own distribution network - but it is interested in offering sellers an integrated fulfillment service, according to a seller survey it conducted in August that also indicated it might provide improved search exposure to users of such a service.

Last week, AuctionBytes spoke to Nate Gilmore, Vice President of Business Development and Marketing at Shipwire, a fulfillment service that works with eBay and Amazon sellers and online merchants. In addition to sharing his opinions about marketplace fulfillment services, Gilmore also provided advice for merchants who are considering outsourcing product fulfillment.

Shipwire integrates with ecommerce platforms and currently offers certified eBay integration, allowing merchants to connect their Shipwire accounts to their eBay Selling Manager account. Shipwire systematically checks sellers' eBay accounts for closed transactions on products it is holding for its clients, processes the order, ships the product, and once the order has shipped, sends tracking information back to eBay for buyer notification.

Gilmore said it did not surprise him to learn that eBay might be considering giving greater exposure to sellers who use fulfillment services when he read about the possibility in AuctionBytes in August. "Marketplaces should value the shipping effectiveness of a seller and give their sellers tools to streamline shipping and grow cross-border sales," he said. "If a buyer benefit can be exposed, allowing the seller to participate in that seems like a natural choice as well."

"We all know Amazon has turned its shipping strength into tools to spur buyer conversion, and they have let sellers plug into those tools as well. It needs to be a win for sellers, a win for buyers and a win for eBay for success," Gilmore said.

  • Sellers need strong tools and could benefit from features that reward good shippers and help with buyer conversion;

  • Buyers reward marketplaces that can offer a consistent service, and buyers also want accurate inventory in the marketplace and accurate, transparent and reasonably priced shipping rate with on-time deliveries and tools to handle returns;

  • And buyer and seller success should translate into eBay benefit.

According to Gilmore, some products and categories are better suited for third-party fulfillment more than others.

Good categories for fulfillment:

  • toys
  • electronics
  • apparel
  • health care items/vitamins
  • commercially packaged products

Products not suited for fulfillment:

  • handmade items
  • low-margin items
  • items that have no inventory depth (unique, 1 of a kind items)
  • perishables

Shipwire recently launched Shipwire Anywhere, a free tool for online sellers that is designed to provide them with a bridge between do-it-yourself fulfillment and outsourced fulfillment. Shipwire Anywhere includes order management, inventory management, label printing and shipping software, allowing online sellers to manage their orders and inventory with one tool regardless of whether their inventory is stored at Shipwire warehouses or at their own location (or both).

How should a seller go about evaluating a fulfillment service? Gilmore said the most important part of outsourcing order fulfillment is finding a trusted partner and being upfront about business needs. He said that when vetting partners, merchants should do the following:

  • "Try before you buy." Get a free trial and do an "end-to-end test" by sending the vendor sample inventory and routing it back to yourself.
  • Seek transparent pricing. Avoid long-term agreements and hidden costs like volume commitments.
  • Invest in Growth Markets. Look for a global warehouse network with warehouses in your growth markets.
  • Connect via Software. Online sellers should require a software platform that you can easily plug into your Web store and of course eBay
  • Fit your business. Some sellers can outsourced all fulfillment, some will not. The solution should fit your business as it grows and changes.
  • Help yourself. Require great customer support because you are paying your outsourced fulfilment partner to handle problems as they arise.

The advantage of using outsourced fulfillment, according to Gilmore, is that sellers can easily handle increased sales volume without having to focus on building warehouses, and they can control costs if sales decrease. "Outsourcing fulfillment is a great way to turn a capital expenditure into a variable cost."

AuctionBytes conducted a podcast interview with Shipwire's Nate Gilmore, available on Ecommerce Industry SoundBytes.


About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.


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