Practical Ecommerce

Adjusting to third-party fulfillment

My last two posts — “My search for a third party fulfillment company” and “Life after in-house fulfillment” — have addressed Stupid Cancer’s massive change from in-house to third-party fulfillment. While there were many factors that prompted this change, diminishing storage space at the home office was at the top of the list.

For Stupid Cancer, selling merchandise serves a tremendous outreach goal. More people wearing our clothing means more awareness of the cause, and hopefully more cancer survivors served as a result. Even if we sell an item at cost, we’ve still benefitted from the transaction.

When you’re dealing with blank apparel goods, there is always good, better, and best pricing. When our inventory was housed in lower Manhattan, we hit a wall, literally. Our shelves were high and wide, packed with our ever-growing product line.

When we migrated to the third-party warehouse, it was a breath of fresh air being able to bump up our order quantities to the next level. By taking advantage of bulk pricing and saving $1 to $2 per item on production costs, we were able to soften the blow of the new pick-and-pack prices that we would be incurring from the fulfillment company.

Last summer, our conversion rates was 6 percent and the store was on track to double its revenue from the year prior.

An important note about our niche market and product line is that there is a finite amount of customers, and a finite amount of shirts each one is willing to purchase. What I mean by this is that we have a few dozen customers who will purchase any shirt we bring to market. These folks are deeply invested in our organization and support us however they can. We love them for it.

With each new apparel design, our regulars are the first to swoop in and make the purchase. Initial product announcements are typically through Facebook and Twitter, followed by an email blast. Sales continue as new folks visit the store.

Before the warehouse, we typically only had one or two variations of shirt per design. With the warehouse, I began testing out multiple products per release. This yielded a new wave of lessons to be learned, including what I call design fatigue.

One shirt, printed with “I AM A SURVIVOR,” I thought would perform well. In our cancer space, color is everything. For the most part, people will try to find apparel in their shade. While I didn’t order a lot of each size and color, the overall order was substantial. But the shirt did not sell as expected. Today, it is marked down from $20 each to $5.

With great storage potential comes great responsibility. One of the biggest issues that continues to present itself since warehousing our inventory offsite is lack of daily contact with it.

In the past, if a particular item were trending, I would pick up on it during the fulfillment process. Now, I rely on tools and reports from the fulfillment company to alert me to trends. Also, Inventory Planner is a tool I lean on heavily to help monitor. The app integrates with our Bigcommerce platform and helps by alerting me to both over and under stocked items. It also has predictive analysis that influences my purchase decisions.

In all, outsourcing fulfillment is an amazing milestone for Stupid Cancer that has impacted many parts of our business. We’ve discovered a lot of low hanging fruit that turns out to just be rotten apples. If you’re considering a third party fulfillment solution, consider all of the variables within your business model that could possibly be affected.

Kenny Kane

Kenny Kane

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