subject: Pick And Pack Warehouses [print this page] Pick and pack is a standard warehousing and order completion technique. Here's how it works: A computer generates a list of items to be transported. The items are then plucked from warehouse shelves. Once the order is complete it is packed and shipped off.
The advantage of 'pick and pack' should be clear. Bulk items can be stored on pallets or in sizable boxes and later single items can be taken from the shelves to fulfill an order. Items come into the storage warehouse in bulk and leaves in smaller numbers as part of mixed orders.
Here is an example, if your company sells electrical wire in various custom lengths and sizes to say the construction industry. You could store large reels of the stuff in your warehouse and cut it into the appropriate lengths whenever required.
The advantages of pick and pack warehouses for drop shipping companies
A drop shipping company often prefer to use the pick and pack strategy when when dealing with storefront operators who partner with them. Drop shipping companies sell and ship small quantities of many different products through a distributor chain. The end retailers are typically affiliated, but are individual store owners.
The advantage to drop ship companies is that numerous smaller orders quickly add up to high numbers of stock sold. The advantages to the store owner is that he or she makes a profit on all orders they direct to the drop ship company, and just as importantly, the e-store doesnt have to stock or warehouse any inventory. Many drop shipping companies have been known to even help a budding entrepreneur get started.
Normally, the e-store owner isnt bound to deal with just one drop shipper they are able to offer several different products and brands to their customers.
When the drop shipping company recieves an order, they simply pick and pack the items and send them off. A verification and tracking information may be sent both to the online retailer and the customer.
Costs and benefits
While pick and pack is a highly economical way to warehouse and fulfill orders, there is one key thing to consider. Sales volume must be high enough to justify the storage of bulk inventory. This means that drop shipping companies must sustain good relationships with affiliates.
Many pick and pack drop shippers will charge a small fee to what they call "small cap buyers". "Small cap buyers" are vendors who regularly fail to meet sales targets. This is often not fair on the retailer. After all, every sale, no matter how small, has the same costs to the drop shipping business.
Costs should always be kept to a minimum. From the moment you start your business as a valuable affiliate, try to get your credit extended. What this means is that your credit card won't be charged to back-up payment from your customers. Whenever you can, allow the drop shipping company to take the chance. This is particularly true if there are a high number of returns.
The main benefit of pick and pack warehousing for the small business is the ability to access stock and warehousing without large expenditure. Drop shipping companies sell stock to their associates at wholesale rates. The profit margin comes from reselling at prices.
One killer of ecommerce in the drop shipping model is the charge-back. If clients are likely to dispute a transaction made using a credit card because of faulty or damaged merchandise, you could be in for a real headache. When a purchase is disputed, it is usually not worth challenging the fees and trouble can easily destroy any potential gain. For this reason, you should thoroughly investigate any drop shipping company before you agree to do business with them.
