November 13, 2020

Worldwide Shipping? Easier said than done.

by Kai Langohr

Have you ever seen an ad in which someone tries to convince you to quit your 9-5 job and build an online business instead? If your algorithm is anything like mine, chances are pretty high that you have. Well, these self-proclaimed gurus “guarantee” outrageous success while, at the same time, working much less than everybody else. They make it sound easy and tend to hide some crucial hurdles that come along with an e-commerce business model. 

One of these, for instance, is getting the product into the hands of the customers, also known as 'worldwide shipping'. In today's world we are used to same-day delivery offered by huge corporations (check our blog post on Amazon here) that it's hard for us to fully comprehend how complex the entire process can be. 

For a parcel to make it around the world, a lot has to happen. The journey begins with a customer ordering a product from the online shop. Once the payment is processed, the order needs to be picked, packed, commissioned and finally be fetched by the carrier, before it will be passed on between individual shipping hubs a dozen times, until it eventually arrives on your doorstep. 

Truth is, however, the majority of this journey is fully out of our control. Once the parcel is handed over to the carrier, they themselves are responsible for a successful delivery. As a startup, all you can do is engage in thoughtful due diligence before entering a contract with one carrier or another. One thing is certain though, mistakes will happen and you'll regret choosing a shipping company that lacks reliable customer support. 

But next to the actual delivery process, there’s an even greater challenge, which is the fulfillment itself. In business, this is a classic make or buy decision. Shall one insource or outsource the process? What are the advantages and disadvantages? And last but not least, which choice is more cost-efficient?  

These ‘gurus’ try to sell you the idea that outsourcing this process will be heaven on earth. You just tell your manufacturer to ship your items to their warehouse straight away or even worse: Your manufacturer ships out the product directly to the customers (welcome to the drop-shipping business). They will then take care of storing, packaging and cushioning whenever demanded. That way, you’ll never need to see your products again. “You’re good to go” they say, “time to enjoy your pina colada on the beach while someone else does all the mundane work for you”. 

Sounds good, doesn’t it? Well, we have quite some experiences with fulfillment companies; as we tried out several ones. And to be honest, they are everything but stress-free.

It always starts the same way. You reach out to a fulfillment center and get forwarded to the smoothest of salespersons. They make their services sound even more appealing than the gurus do. Your contacting person is friendly, the pricing seems fair and the overall impression is good. Once you signed, however, disaster is on the march! 

Unfortunately, we’ve experienced that the support of a salesperson is far different from the later provided operational support. It was a common experience to not have access to any support manager at all. E-mails and phone calls remained unanswered on end. And all of this despite paying an expensive monthly support fee.

On top of that, our fulfillment partners regularly made frustrating mistakes such as billing us wrong services and messing up our inventory tracking. Long story short: the service was everything but what we were promised, and the overall handling was generally far from stress-free. At least this was the experience we’ve made with several fulfillment partners we cooperated with. There must be better ones out there, maybe we just never found them. Either way, we concluded that we needed to gain more control over the fulfillment process – insourcing was the only solution for us. 

“People who are really serious about e-commerce make their own logistics" - Daniel Gebler (CTO at Picnic)

For a startup like ours, that values constant communication with their customers, it’s invaluable that we are now able to personalize our parcels. We like to surprise our loyal recurring customers and collabs by putting some extra goodies and a handwritten note in there. Thereby, we can bond with our community members on a much more personal level. It has gone so far that some customers even wrote a postcard back thanking us for the experience. If that’s not cool, I don’t know what is. 

Interestingly, we were even able to make the entire fulfillment process more cost-efficient than it was before. We reached out to numerous carriers and got an individual quote regarding our personal shipping situation. Depending on how many parcels one ships per year, one can easily get a discounted price. Ultimately, we received an offer where the shipping prices were even lower than the ones we paid to the fulfillment companies before, as they apparently made a profit margin on what was claimed to be an on-and-off item. 

Furthermore, the insourcing process induced a whole new chapter in the history of AERVIDEO. For the first time ever, the company moved from co-working spaces into its own office including a small warehouse. It was a leap of faith to do so but it totally paid off. We now have the space to store and actually fulfill the parcels ourselves. By thoroughly setting up all the processes, we will be able to offer the service to other small startups as well. Thus, we are able to create another revenue stream and not make the same mistakes that the fulfillment companies made.

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