Pick and Pack Warehouses

Pick and pack is a warehousing and order fulfillment method. A list of items is generated by a computer and removed from their place in the warehouse. When the order is complete it is packed together and taken away for transportation.

The advantage for the warehouse is self-evident. Bulk items can be stored on pallets or in sizable crates and then individual items picked from the shelves to satisfy an order. Items arrive at the storage warehouse in bulk form and is then shipped out in smaller quantities as part of mixed orders.

For example, if your business provides copper wire in various assorted lengths, colors and sizes for hobby purposes. You could keep huge amounts of the stuff in your storage warehouse and cut it into the appropriate lengths as the orders came in.

The advantages of pick and pack warehouses for drop shipping companies

A drop shipping company will often use the pick and pack strategy when when dealing with storefront operators who partner with them. The shipping company sells and ship small amounts of many different items via a distributor network. The distributors are typically associates, but are single e-store owners.

The advantage for drop ship companies is that numerous small orders quickly add up to high amounts of items sold. The advantages to the store owner is that they makes a profit on all sales they direct to the drop shipping company, and just as importantly, the e-store doesn't have to stock or warehouse any inventory. Many drop shipping companies will even go so far as to help set up a budding entrepreneur.

Often, the online retailer isn't forced to deal with just one drop shipping company - he or she is free to do business with as many different drop shippers they desire.

When an order is received by the drop shipping company, they just pick and pack the items and send them off. A verification will often be sent via e-mail both to the business owner and the final customer.

The costs and benefits of pick and pack warehouses

While pick and pack can be an extremely economical system, there is one essential consideration. Sales must be high enough to warrant keeping bulk inventory. Because of this a drop shipping company has to stay on good terms with affiliates.

Some pick and pack drop shippers will charge a fee to "small cap buyers". "Small cap buyers" are affiliates that do not meet regular minimum sales limits. This is often not justified. After all, every single sale, no matter how modest, will have the same costs to the drop shipping company.

Costs should always be minimal. As soon as you set yourself up as a valuable affiliate, try to extend your credit. What this means is that your credit card will not be charged to back-up payment from your customers. Wherever possible, let the drop shipping company take the risk. This is particularly true whenever there are a significant number of returned items.

The primary benefit of pick and pack warehousing for entrepreneurs is that they have access to products and warehousing that would otherwise cost much more. Drop shipping companies sell to their associates at wholesale prices. The profit margin comes from reselling at prices.

One slayer of ecommerce in the drop shipping model is the charge-back. If customers are likely to challenge an order made by credit card because the item is damaged or faulty, you could be in for a real headache. If a purchase is disputed, it is very rarely worth challenging - the fees and trouble involved can destroy any possible gain. Because of this, you should investigate any drop shipping company you intend to do business with.

Jeff Ehrlich is the President of FulfillmentPlusNY which delivers fulfillment services for a litney of clients across the country. Contact Jeff for assembly services