Updated: Nov 6, 2020
Exporting inventory to a US fulfillment center or Amazon FBA can be complicated. Being an international seller means dealing with US Customs which can be incredibly stressful and difficult to manage. You need to get everything right to make sure your shipment gets to the warehouse safely and efficiently. One mistake can cost you tens of thousands of dollars in inventory and delays in fulfilling orders for your customers.
Unfortunately, there is very little information out there to actually help international sellers when sending their inventory to a US 3PL or Amazon warehouse. We made this guide to walk you through the process so you can feel confident your goods will get where they need to go safely.
There are a few things you need to consider when planning the import and export of your inventory. You can certainly figure out yourself some of the requirements for yourself. However, we recommend hiring a logistics expert, like a customs broker or freight forwarder, to take care of the process for you. The process can take some time, and there is a lot of paperwork to fill out. They will be able to ensure your goods get to their destination quickly and securely without the hassle of doing things yourself. It is important to note that your fulfillment provider will not be able to act on your behalf for these services, so you should reach out to your logistics expert directly for assistance.
When you reach out to a customs broker or freight forwarder to help you move your inventory from one country to a fulfillment company in another country, you will need to make sure you have a few terms down.
Exporter of Record (EOR):
This is usually the shipper. The shipper can be you, or you may be able to work with your customs broker or freight forwarder to get them to act as the EOR.
Importer of Record (IOR):
The IOR is the party in charge of ensuring the successful importation of your inventory into the destination country. The IOR must file all the required legal documents and pay any import duties and taxes. Your third-party fulfillment provider will not be able to act as the IOR.
Nonresident Importers:
In the US you can arrange to be the foreign IOR for the entry of your goods. There are a few steps and documents you must fill out to make this happen, however you need a customs broker to do this.
Power of Attorney
Once you sign the Power of Attorney, the customs broker or freight forwarder is able to act on your behalf to make sure your inventory gets through customs safely.
Deliver-to Party
Your fulfillment provider can be listed as the deliver-to party on your shipping documentation. Here are some examples of how this should appear on the shipping documentation:
Example:
OTW Shipping LLC
[Seller Legal Name] c/o OTW Shipping
9418 S Feulner Park Rd
West Jordan, UT 84081 USA
Ultimate Consignee
Again, your fulfillment center will not be the IOR. However, they can be listed as the ultimate consignee on your shipping documents. You must put “c/o“ (which means “in care of”) before the name of your fulfillment provider.
If you do list the 3PL warehouse as the ultimate consignee, you must arrange for your customs broker to contact your 3PL before you ship any inventory. The customs broker must obtain the company’s EIN or Tax ID # to clear customs.
Commercial Invoice
Once your inventory is ready to ship form the manufacturer or distributor, the shipper fills out the commercial invoice. If there are any issues with the commercial invoice, your shipment can be delayed at customs. You should include the following information on the invoice:
The date of the invoice
The names and addresses of the buyer and seller (Your 3PL is neither the buyer nor the seller on the commercial invoice)
The name and address of the manufacturer or seller
The shipper's contact name, company name, address, and Tax ID #
The ship-to address. Here, enter “c/o" or "In care of," and then the name and address of the fulfillment center where you are shipping the product.
Importer of Record. This field must contain the shipper's name, if the same as the owner of the products. Do not leave this information blank; this will result in the shipment being refused and returned.
Shipment method
Description of the goods being invoiced. Include the following:
- Customs Harmonized Codes, if known
- Number of units
- Unit values
- Total value of each product. For samples or products with no commercial
value, you must state a nominal or fair-market value for customs purposes.
The type of currency of the transaction
The terms of the sale. Note that correct terms must be Delivered Duty Paid (DDP). The shipper should pay all applicable duty and taxes and be responsible for clearing customs before delivery to the fulfillment warehouse. You cannot import goods in the name of your 3PL partner, not can you add them as the declarant or importer of record.
Shipment tracking number
Any certifications
Name of the carrier transporting the goods
Freight payment terms
Reason for export
Shipping Best Practices
Your fulfillment provider (especially Amazon) will have requirements for receiving any inbound shipments. You should consult with them before shipping your product to make sure that you are sending the inventory correctly. Usually, palletized shipments are preferred.
For shipments that are loose cartons instead of pallets, it may be cheaper to use a carrier service. Depending on the country, you may have different carriers available. If you use a carrier service, you should make sure the carrier can clear your inventory to customs with the commercial invoice you provide. If they can’t then you should contact a customs broker.
Logistics Companies
There are countless resources to help you determine rates and simplify shipping. The following are some links that have been useful for some sellers. Use them to approximate shipping charges for your inventory!
Looking for a US Fulfillment Center?
Are you looking to faster and cheaper shipping to your customers in the United States and Canada? CLICK HERE to get a free quote in minutes from OTW Shipping to see how much you could save!
You’re a business owner and you’ve been successful so far. Your company has progressed from a few orders per month to at least 5-10 a day. Everything is great... except your margins are getting killed by shipping costs and you’re spending more time packing orders than you are driving sales for your product.
Now, you’re looking into a 3PL (Third-Party Logistics) company to get discounted shipping rates and more time to focus on your product. You search for a fulfillment center near you and you’re bombarded with terms and fees like pick & pack, receiving, storage, and more! What does it all mean? How are you supposed to determine if a 3pl is right for you? Do you simply look for the cheapest fulfillment services or is there a difference in service? That’s the purpose of our Beginner’s Guide to Fulfillment Pricing. Each week, we will explain a different 3pl fee and what it means for your business, so you can feel confident when negotiating your rates. As we explain each fee, we will update this post with links to each post!
For week 1 we are going to provide an overview of the e-commerce fulfillment process, so you know how order fulfillment works and where potential fees come from.
Order Fulfillment Services
Order Fulfillment Process
1. Connect your e-commerce platforms to the 3PL’s software.
Any good 3PL will have software that contains an Order Management System (OMS) for you to track your orders, manage your inventory levels and incoming shipments, and communicate with customer service. If you sell on multiple platforms, your 3PL should be able to handle what is known as multi-channel fulfillment to track all your orders in one place. This is all done through API integrations. It is important to check to make sure a 3PL can integrate with all of your platforms (Shopify, Amazon, eBay, etc.). Once you’re connected, your warehouse will be able to see and fulfill your orders in real time.
Account/Maintenance Fees - To cover the time and costs of maintaining your account on the system, many 3PLs will have recurring monthly fees. These fees can kill a startup with low monthly order quantities before it even gets going.
Setup Fees - One-time fees that cover the labor associated with initially integrating your sales channels with their system.
2. Send your inventory to the 3PL warehouse.
Once your e-commerce store is integrated with the 3PL, you can send your inventory to the warehouse. Depending on the volume of the product you are sending, you may need to use freight shipping. These shipments can be LTL (Less-Than-Truckload) or FTL (Full Truckload). Almost all 3PLs will require your inventory to be palletized with a bill of lading and SKU labeled-containers to allow for easier unloading (normally no Mixed-SKU boxes are allowed). Additionally, many 3PLs require UPC codes on products to help with inventory management. Once the 3PL receives and unloads your shipment, they proceed to process your items for storage. This process can include verifying SKU quantities and checking for product damage, depending on the 3PL. After processing, the SKU is assigned a location in the warehouse and stored.
Inbound Shipping Fees - Many 3PLs have strict packaging requirements for inbound shipments. Inbound shipment fees usually occur when you fail to meet these requirements and can range from a small slap on the wrist to a complete denial of your shipment which is sent back to you at your expense.
Receiving Fees - Receiving is a crucial part of the process. Beware of any company that claims free receiving - that cost is usually wrapped into their pick & pack fee.
Storage Fees - Each SKU needs to be stored separately for efficient and accurate picking. So, the more SKUs you have, the higher storage costs you should expect.
3. Orders come in and the 3PL picks, packs, and ships the order to your customer.
After your inventory has been processed, you're ready to transfer your fulfillment services over to your fulfillment company. The next time you receive an order, it will go directly to your 3PL's software. The center will then print the label, pick the correct items for the order, pack them into the necessary packaging, and put them in a carrier-specific container. At the end of the day, the orders will be picked up by the specified mail carriers and begin their final journey to your customer.
Pick & Pack Fees - The process of picking units from storage and packing them when an order comes in. This is the main fulfillment fee and there are many different ways the fee is priced. These ways can include a flat fee for the first item with an additional item fee, a flat order fee, or a flat fee per item.
Packaging Fees - Either your 3PL will include packaging in the cost of fulfillment, or they will charge based on the cost of the packaging. The bigger the box, the more expensive it is. Most poly mailers and boxes will run you between $0.10 and $0.75 with standard product sizes.
Dunnage Fees - This refers to any material that is put inside a package to protect the product (i.e. Kraft paper, Bubble wrap). Almost every 3PL includes this in the packaging/fulfillment cost.
Shipping Fees - 3PLs get huge volume discounts on shipping. They are able to let you use their rates and pass these discounts on to you. This helps offset the costs of using a fulfillment center. Make sure to ask which carriers a 3PL uses, because some may not use the carriers you plan on using for your product.
Returns Fees - This process can be a real hassle. You must communicate with your 3PL ahead of time to put procedures in place to determine whether a return needs to be returned to inventory, sent back to you, or thrown away. Because the process is so time-intensive, returns are usually somewhat expensive.
Insert Fees - Usually considered the marketing or promotional material that can be added into packages to encourage incentives to repeat purchases.
Kitting Fees - If you sell multiple units in a custom set that is packaged and sold as one item, or if the product uses custom packaging that needs to be assembled.
Summary
Obviously there are lots of costs associated with a fulfillment center. The important thing to note is that each 3PL will have its own custom pricing model so it's important to do your research. However, price is not everything. You get what you pay for - especially in the ecommerce fulfillment industry. Make sure to find a company that gives you transparent rates upfront and that you feel comfortable with in your communication. You need a fulfillment company who you can trust with your product more than anything.
If you're considering outsourcing your order fulfillment, CLICK HERE for a free quote and consultation in minutes from our team of experts at OTW Shipping!
Are you considering outsourcing fulfillment services for your Shopify store? Learn when you should consider using a 3PL (“Third Party Logistics”) company – also known as a fulfillment center – and why you should.
What is a fulfillment center?
A fulfillment company is a warehouse that manages the receipt and storage of inventory, and the packaging, shipping, and returns of orders for your company.
Fulfillment Services
When do I need a fulfillment center?
You’re shipping at least 5-10 orders a day.
Fulfilling orders is simply taking too much time.
What are the benefits of using a fulfillment center?
Same day shipping.
Faster shipping speeds.
Huge discounts on shipping.
More time to focus on driving sales and customer support.
No need to hire employees to pack and ship orders.
No need to lease storage space or buy packaging supplies for inventory.
You’ll have the technology to keep track of your inventory.
What to look for in a 3PL for Shopify?
1. Shopify Integration - Fulfillment centers have built-in integrations that connect your store with their software. When an order is placed on your site, all of the information is sent to the warehouse for the 3PL to fulfill the order. Obviously, it is very important to make sure the fulfillment company integrates with Shopify, so you have a seamless fulfillment process.
2. Low & Transparent Pricing - You want a partner you can trust with your product. So, be on the lookout for fulfillment centers with lots of hidden fees like Shipbob. Their deceptive pricing is meant to draw you in and once you sign up your actual fulfillment rates are much higher. Stick to companies that show you all your rates up-front and are open about their fee structure.
Common Fulfillment Fees:
Implementation/Account Fees – The costs associated with setting up or maintaining an account with your 3PL provider.
Receiving – The counting, processing, and storing of inventory from inbound shipments.
Types of Pricing
+ Per hour
+ Per item
Pick & Pack – The picking of items from storage and packing of items into packaging.
Types of Pricing
+ Flat rate per shipment
+ Flat fee for 1st item, plus a smaller fee per every additional item
+ Flat fee per item
Storage – The cost of storing your inventory in the warehouse.
Types of Pricing
+ Per Cubic Foot
+ Per Bin/Pallet
Shipping – The cost of shipping an order to the customer.
3. Good Customer Service
If the fulfillment center you are looking at does not have an easy to find contact number, that is a major red flag. You will have lots of questions and small issues will come up with orders all the time. It is crucial to have a dedicated account manager who you can always get a response from within 24 hours to sort things out.
Best Fulfillment Services for Shopify
With an advanced Shopify integration, friendly fulfillment pricing, and unmatched customer service, OTW Shipping is your best bet for fulfillment services for Shopify.