In my last blog I discussed how having your own US retail shops provides a great opportunity to build your brand but it requires a considerable amount of cash to get started. A lower cost US market entry strategy is by using a fulfilment house to hold and ship your orders to consumers or retailers. This alternative is a mid-point between shipping every individual order from Australia and setting up your own US distribution operation.
What Do Fulfilment Houses Do?
The fulfilment house receives and holds bulk orders of your product and then sends it to your customers as they order it. This reduces your trans-Pacific shipping costs and also reduces the delivery time between an American customer ordering your product and when they receive it. Fulfilment houses can also offer other services such as invoicing, debt collection and a variety of customer service options. They can also offer a“pick-and-pack” service to put together a package of different items.
What Are the Costs?
Fulfilment houses have a variety of variable and fixed costs and each company will have a different fee structure. Typical
charges include the charges for establishing your account, monthly fees, charges for processing and shipping each item, and charges for other logistics or customer services. Often fulfilment houses will have a minimum monthly charge for the variable costs. Before signing a contract make sure you understand your commitment to paying the fixed and minimum variable
charges for the period of the contract.
Finding a Fulfilment House
Finding a fulfilment house is like finding an accountant or other service provider so the best screening process is getting recommendations from other companies. Also ask fulfilment houses for references from their customers and if they have
experience working with Australians. Your research should also determine if potential providers:
-Work with companies that are similar size to your company
-Have experience with foreign suppliers
-Have experience dealing with import procedures
The following are two operations that have experience working with Australian companies.
-ATC International (http://www.atcinternational.net/index.htm) is based in Los Angeles with an office in Washington DC and a warehouse in Maryland (near Washington DC). ATC International has extensive experience working with Australian companies.
-Ship2Anywhere (http://www.ship2anywhereusa.com/business-services/) is based in Melbourne and has a warehouse in the US.
Is a Fulfilment House a Long Term Solution?
When interviewing fulfilment houses you should explain your expected level of sales in the first year and ask for an estimate of their
associated charges. That estimate should explain what reports you will receive and how often, and if the cost of the reporting is covered in your standard monthly charges or if it costs extra. At this point you will have enough information to determine if a fulfilment house is a useful tool for your US market entry, and if it will be a long term solution or if it is a stepping stone to establishing your own US subsidiary.