Management & Finance

The PEC Review: Shipwire Fulfillment Services

Starting an ecommerce business is no small endeavor. A would-be online entrepreneur must manage every aspect of the business, from selecting products and vendors to marketing.

What’s more, there is significant competition. As marketing and business guru Seth Godin says, “You can’t out Amazon, Amazon.” If you’re going to be successful, you need to have some competitive advantage, and that advantage is often how you market your company.

Third-party Providers Can Help

A well-known and often-cited example is Zappos, which markets itself as a service company; and it followed through by providing great customer service. Another example might be Nerdbots, which sells a unique product, robots.

To respond to the need to both manage everything and to differentiate, some business owners turn to third-party providers that can effectively take over some aspect of the business so that the business owner can focus on higher-gain areas like establishing the aforementioned competitive advantage.

Enter Shipwire, a fulfillment company that both stores your products and ships those products for you when you get an order. Effectively, Shipwire lets you focus on other areas of your growing ecommerce business, while ensuring that your orders are properly managed. Shipwire is by no means cheap, but for providing good quality and time-liberating fulfillment services, I am awarding Shipwire three and a half out of a possible five stars in this “The PEC Review.”

“The PEC Review” is my weekly column devoted to the products and services that I believe can help you improve your ecommerce business. This week, let me describe the reasons I think Shipwire could help many small business owners.

Manages What Matters Most

The best argument for using an order fulfillment service like Shipwire is not what that service can do for you, but rather what using that service allows you to do for your business—namely, allowing you to focus on marketing.

Nearly every ecommerce startup has limited resources both in terms of financial capital and available time, and often the latter is the more valuable of these two commodities. Using Shipwire lets you trade some of your financial capital for more time to devote to building customer relationships or creating an authentic competitive difference.

Storage and In-bound Shipping

Shipwire stores your products for you. If you are a reseller, you can have your vendors ship directly to one of Shipwire’s six warehouses, where your products are professionally stored in modern facilities, until orders role in.

3 and one half stars graphic

By contrast, many of the smallest online merchants start by storing products in garages or rented storage units. These units are not professionally managed or maintained, and may mean that a merchant has to do a lot of extra product handling.

Delighted Customers

Shipwire’s shipping service is known to be very fast and professional, which means that you’ll be able to provide your customers with top-notch shipping services.

What’s more, if you are an established business, you can store products at more than one Shipwire warehouse and send orders from the warehouse closest to your customer, lowering actual shipping costs and speeding up delivery times.

Easy Shopping Cart Integration

Shipwire goes out of its way to be easy to integrate with just about any shopping cart. The company offers an API for custom implementations and it has integrations with NetSuite, Volusion, and Shopify, to name three examples.

It Is Expensive

In spite of everything I have said about Shipwire, it is very expensive, and, in my opinion, best used with high margin products or prepackaged kits.

Shipwire’s basic service costs $29.95 per month, lets you store one pallet of inventory, allows just five unique product numbers, and limits you to just eights sold or returned in a given month. Plus, you’ll still pay for all of the shipping and any non-standard packaging. This means that if you sell two orders of four products each, you will have paid $29.95 plus shipping to have had Shipwire manage fulfillment for you. If that is going to work, you need to be making a lot of money per item.

To put this further into perspective, if you sell 500 orders per month, with an average of four items in each order, you might pay Shipwire more than $4,000 per month plus shipping just to store products and manage fulfillment. If your profit from those sales is less than $8 per order, you’ll be sending all of your revenue to Shipwire.

Summing Up

Shipwire is a good quality fulfillment service that lets a business owner focus on other areas of the operation while still providing good delivery services to the customer.

But because of its cost, it works best with higher-value or prepackaged items that just need to be labeled and shipped, rather than packed.

Armando Roggio

Armando Roggio

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