In 2019 Joe Spisak’s ecommerce company had used three fulfillment companies in just 18 months. Frustrated, he began fulfilling in-house, which led to offering fulfillment services to other brands. And that led to Fulfill.com, a marketplace connecting merchants to providers.
Spisak and I recently spoke. He addressed his own fulfillment frustrations as a seller and the difficulties of identifying suitable vendors. The entire audio of our conversation is embedded below. The transcript is edited for clarity and length.
Eric Bandholz: Give us your pitch.
Joe Spisak: I own a company called Fulfill.com. We are a marketplace connecting ecommerce brands with third-party fulfillment companies. We’ve built our own matchmaking software and mapped out 3PLs worldwide. We identify the best fulfillment options for a brand and connect it with those 3PLs.
I’ve been in ecommerce for about 10 years. I’ve started a couple of ecommerce brands and used that success to launch my own fulfillment company, ShipDaddy. I sold that two years ago to start Fulfill.com.
We’re much needed in the industry. Shopify reported in 2022 that every year 38% of brands change 3PLs. That is ridiculously high, especially because once you’re locked in with a 3PL, the cost to switch to a new one is exorbitant. It’s a pain to go through that process. There’s no easy way to compare options. Most brands don’t have a logistics expert, and reaching out to 10 or more 3PLs and comparing is a lengthy process.
Our 3PL directory contains roughly 600 worldwide locations, with quantitative data such as pricing, communication methods, and warehouse management systems.
We offer this as a free service for brands looking for 3PLs. We make our money from two types of 3PL referral fees. First, the introductory fee is tiered based on the size of the opportunity. For example, a brand with 1,000 to 5,000 orders per month would have a higher fee than a startup. Second, we get 2% of the fulfillment charges (pick-and-pack and storage) for typically 36 months.
Bandholz: How do you stay current with each 3PL’s rates?
Spisak: Not all pricing is comparable in the 3PL world. We ask all providers to submit a quote that is all-encompassing. Typically 3PLs have pricing tiers depending on order volume. We store each 3PL’s pricing and other details and then manually connect those providers with brands.
We hope to eventually tie directly into all 3PLs’ warehouse management systems to automatically receive data such as available storage capacity, number of customers, industry-vertical expertise, and overall throughput. Then we can calculate in real-time the error rates, carrier charges, and pricing.
After connecting brands with 3PLs, we follow up with the parties to monitor the experience. We have roughly 300 ecommerce brands approaching us every month. We’ve tested lots of 3PLs.
Bandholz: Are brands mostly changing 3PLs or migrating from in-house fulfillment?
Spisak: It’s both. Some need specialized services, such as hazardous materials expertise, cold storage, big and bulky, or multi-site international help. We’ve placed companies doing over $1 billion in annual revenue. We can also help the little guys just starting and looking for a fulfillment home. Typically, 3PLs have minimum order quantities. But we have 3PL options for everybody.
There’s an increasing number of boutique fulfillment centers. Many venture-capital-backed 3PLs are excellent marketers with giant ad budgets. But they may not have the operational expertise of a boutique provider. A merchant requiring orders shipped within 24 hours should find a 3PL that writes that need into the contract with penalties for non-performance. Most VC-backed 3PLs won’t offer that assurance.
Bandholz: Why should brands outsource fulfillment? Why not do it themselves?
Spisak: I have an interesting story about my own fulfillment center. My wife and I started in ecommerce by selling a couple of tabletop board games. We did pretty well, around 2,000 orders per month. We went through three 3PLs in 18 months. It wasn’t a good experience.
I ended up bootstrapping my own 3PL, ShipDaddy, out of Central Pennsylvania. This was right before Covid. We started shipping games out of my parents’ garage. We scaled through four buildings in two and a half years and purchased a 140,000-square-foot warehouse, filling that up.
We ended up servicing many brands. We specialized in small parcels from companies with a 10:1 order-to-SKU ratio. We were competitive across all fronts for brands that fit that model.
In other words, we were able to do our own fulfillment successfully. So, yes, I encourage it for brands that have the capabilities.
We made mistakes. We bought our warehouse on the outskirts of town that didn’t have great highway access for trucks to approach us and back up to our building. We had five or six receiving docks, which is not optimal for a 140,000-square-foot space. So that’s one thing to look for. Make sure it’s easy for the trucks to back up, drop off inventory, and pick stuff up.
Bandholz: Where can people find you?