How Ugmonk forgoes 3PL providers and handles ecommerce fulfilment in-house by Jeff Sheldon
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I started my career as a designer, but always wanted to launch my own business. This dream became a reality when I introduced my clothing brand called Ugmonk in 2008.
At the time, there weren’t a lot of digitally-native brands like this. I took zero outside funding. I didn’t use any flashy advertising tactics. Much of the business growth came from word-of-mouth referrals.
I took pride in building my business in a slow, deliberate way. I started small, even going as far as to screen print and ship my products (which were self-warehoused in my apartment.) This approach allowed me to put a hand on every single order that went out to customers, ensuring that every product and package were perfect before being shipped out.
“We liked that we didn’t have to rely on another company and its employees who didn’t care about our customers in the way we do. That level of concern just doesn’t transfer to someone external to your organization.”
As the business started to grow in the following years, high-touch quality control around products remained a core focus. The reason: It resulted in a better overall customer experience and stronger customer relationships.
Scaling up & outsourcing to a 3PL provider
After moving the growing Ugmonk inventory into my parents’ basement, all of the brand’s online orders were still handled, quite literally, in-house.
But in 2017, I launched a new organization-focused product on Kickstarter called Gather. The response was remarkable: More than 2,500 backers pledged over $430,000 to help bring this product to life.
The rapid uptick in demand for this product created a near-instant need to scale up their order fulfillment process, so I decided it was time to finally outsource this piece of the puzzle to a third-party logistics (3PL) provider.
By handing off fulfillment to an external partner that was well-established in the realm of managing ecommerce fulfillment, the Ugmonk team would be able to offload all of its operational logistics (from warehousing to delivery) and focus on other aspects of the business. In short, it was an option that allowed us to rapidly scale up without having to hire lots of new in-house help.
Plus: working with a 3PL would be a major value-add, as managing our day-to-day supply chain-related issues (like inventory forecasting, picking and packing, and transportation) were often time-intensive and tedious. With thousands of orders to get shipped out, I felt it was the right time to take the plunge. It just seemed like a natural progression.
After asking around, I built a shortlist of 3PL providers that friends and peers in the ecommerce space recommended. I did my homework, researched pros and cons of working with 3PLs, spoke with multiple providers, evaluated various providers’ pricing, and finally landed on a partner after hitting things off with the owner of the company.
The bad news was: Everything that could have gone wrong...did.
The pitfalls of outsourcing to a 3PL provider
Outsourcing order fulfilment to a third-party logistics partner turned out to be a nightmare experience for me. What I initially imagined would be a seamless, pain-free handoff to the 3PL provider quickly evolved into a time-intensive scramble to fix countless errors (and save long-standing customer relationships.)
After getting word that the 3PL provider had lost items and created time-consuming inventory count issues, I found myself having to fly down to their physical warehouse space to inspect my merchandise first-hand.
For days, my dad and I sorted through boxes of products one by one in the warehouse’s 90+ degree temperatures to manage quality control, find broken or damaged items, and address the inventory issues.
“It wasn’t our space to do this inspection in, so we had to take everything out and then put it back each day. It was a huge headache. The only plus was that the 3PL provider allowed us to scale up quickly, but overall, the experience left a bad taste in my mouth.”
While I thought I’d done sufficient due diligence, the reality was I’d missed things around their execution processes when evaluating their company culture and day-to-day operations.
Pricing doesn’t show things related to non-numbers, like the competency of a team, their relationship management, and so much more.
As a result, I often found myself without any answers to many questions that started with: “What happens when ______?” These unanswered questions meant things started falling through the cracks, and customer experience was what suffered as a result.
The experience with outsourcing to a third-party fulfillment partner made me realize that moving forward, and I wanted to keep things in-house. I want our customer experience to be airtight.
“When we get a returned item, for example, we want to be able to physically pick up the package, open it, and resolve the issue for the customer ourselves right away. It’s hard to do this well when your support team is working remotely with limited information.”
Taking fulfilment back in-house
Moving forward, I decided that working with an external 3PL provider wasn’t the way I wanted to go with Ugmonk. This aspect of the customer experience was too critical to leave so many variables to chance.
So in October of 2020, I signed a contract on a 2,400-square-foot warehousing space outside of Philadelphia: a 35,000 square-foot adaptive reuse multi-tenant building that started its life as a paper mill in the 1700s.
With 13-foot ceilings, a view of the Brandywine River outside the windows, and limited cell service, this space was right up my alley—and there’s room to grow, too.
Since then, I have been splitting my days volleying back and forth between the white-collar work of running the business and the manual labour of building out this space (building shelving, painting, using pallet jacks, etc.)
The experience hasn’t been without its fair share of surprises, though.
One thing that’s been surprising is how expensive it is to build out a warehouse space and the countless decisions that have to be made each day. From working with contractors to purchasing essentials like shelving and equipment, the costs do add up.
While I feel that space is still far from perfect, I work toward near-perfection and optimizing for the long-term, knowing this hard work and up-front cost will pay off with time.
My takeaways on working with a 3PL for ecommerce fulfilment
I was not aiming for rapid growth with Ugmonk. Instead, I was happy with a slow and steady pace, as it sets the tone for what I was working to build. The goal is to be small but best-in-class rather than huge and growing.
3PL providers are attractive if you want to scale quickly but you have to remember that they are truly an extension of your brand. If they’re not delivering the level of customer care you want to be associated with your company, you’ve got a problem.
For other retailers who are considering taking a growing order fulfilment operation in-house, here are a few things I recommend keeping in mind:
1. Start small
Don't jump into a long-term lease on a space until you know the general trajectory of your business. It's also good to look at flex spaces that have the option to expand or shrink from year to year, so you don't run into physical space limitations.
2. Be willing to DIY everything in the beginning to save money
You don't need to start with expensive shelving and equipment. We bought and refinished a lot of our shelving off Craigslist, which saved us thousands of dollars.
3. Software is your friend
We’ve been using Shipstation for many years, and it allows us to process and automate a lot of the shipping process.
4. Shop around with different carriers to get better rates
We used only USPS for many years because we thought UPS and FedEx were too expensive, but once we talked directly with a FedEx representative, we were able to get much better pricing and more reliable service.
For Ugmonk, this new space presents some other exciting opportunities beyond mere order fulfillment in the future. While I am considering subsidizing and helping other small brands with fulfillment, our brand’s 2,400 space is almost at maximum capacity, especially with the latest round of Kickstarter order fulfilment.
I have lots of ideas for this space beyond mere warehousing, too. Down the road, I plan to use one area as a photo studio, another for the customer service team and am considering using it as retail space and in-person community-building events down the road.
Big-picture, my vision is the same as it was when I first started the company more than a decade ago: High quality, small batch, and slow, deliberate growth.
Taking back the order fulfilment aspect of the business is just the next piece of that puzzle.