Shopify Fulfillment Network (SFN): A Guide

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The Shopify Fulfillment Network is a service provided by Shopify that provides storage, inventory management, picking, packing, and shipping for Shopify sellers. Sellers ship their merchandise to a distributed full-service network of Shopify fulfillment warehouses, where items are stored and accounted for until they are sold. When items are sold they are processed, shipped out same-day, and tracked via end-to-end package tracking.

Shopify Fulfillment Network

Leveraging its existing set of distribution centers and warehouses, Shopify has created its own platform designed to manage your warehouse and fulfillment needs. Companies that use this network can send inventory to Shopify partners and have them fill orders as they come in, simplifying any warehouse and inventory work you need to do. It can be a smart alternative if you’re struggling with managing this side of your business, though it might not always be the right choice depending on your size and more.

Shopify says that it has vetted all of the fulfillment centers in its network and that it will guarantee both a high-quality result and a safe workplace. The Shopify system connects all fulfillment services, so you won’t have to handle anything individually beyond tracking inventory counts.

For some, it will make sense as a way to manage sales from your website and more, so let’s take a more in-depth look at the Shopify Fulfillment Network (SFN).

How it works

Using the Shopify Fulfillment Network starts with an application. If the company reviews your store and shipment needs, you’ll then begin the process of working within its fulfillment network. It’s a pretty straightforward process and is managed through your existing admin panel. Here are the significant steps:

  1. You designate what products will be shipped by the Shopify Fulfillment Network and get them approved.
  1. Work with Shopify to determine how products are packaged, including specialized boxes, inserts, infills, kits, and more. “Get free packaging included with your pick pack rate or send us your branded material to use instead.”
  1. You send products to Shopify partner locations. Shopify will make specific recommendations for where to locate your goods, including volume levels.
  1. When you make a sale on a Shopify channel (your store, Facebook, Amazon, Etsy, Instagram, etc.), SFN distributes these out to different fulfillment partners to have orders picked, packed, and shipped.
  1. Use the admin panel to determine inventory amounts and resupply partners when they fall below established thresholds.

Shopify keeps it simple for the SFN, and you won’t find an overly complicated system from your end. You also get metrics and dashboards added to your existing Admin panel, making overall management relatively simple. You won’t have as much control as you would if you picked your own 3PL, but it can be useful if you need a lot of decisions made for you.

Once approved, Shopify will handle everyday fulfillment tasks for you, including:

  • Receiving shipments and putting the inventory away
  • Picking orders as they happen, regardless of sales channel
  • Packaging order, either with standard boxes or custom packaging you send to each distribution center
  • Buying shipping and automating the delivery of tracking orders and carrier tracking information
  • Inventory management, including recommendations for reallocation, resupply, and minimum inventory levels.
  • Returns and exchange processing, including verification of goods so that they can be added back to your active inventory.

Do you need to be a Shopify customer?

Shopify approves each business on a case-by-case basis, so there’s no guarantee you’ll get to use the SFN. That said, the company has put out some general guidelines, and we’ve spoken with a few businesses who said they added to the SFN after meeting these requirements.

For your business, SFN will work if you:

  • Have a Shopify account and sell through it
  • Want to fulfill sales in the United States
  • Offer fewer than 2,000 SKUs
  • Ship at least 10 orders per day
  • Ship under 10,000 orders per day
  • Don’t offer any prohibited or regulated products

So, yes, you will need to be an existing or new Shopify customer and sell directly through Shopify channels to access the SFN.

The big caveat: Restricted items

Perhaps the most important thing to know about applying for and using SFN is that you can’t offer any products that are heavily regulated or are perishable. The regulations that Shopify mentions are likely meant to cover its set of restricted items. Significant restrictions on that list include a variety of firearms.

However, you’ll also want to look at the company’s Payment Terms for a separate list of prohibited items. Review agreements for illegal “services,” too, just in case.

Beyond that list, you also cannot sell or fulfill anything related to drug use, high-risk businesses, multi-level marketing scheme products, pseudo pharmaceuticals, anything designed to mimic drugs, and more.

Give everything a close look before you apply, because you don’t want to get caught later on after you’ve invested time and money into the SFN.

Shopify Fulfillment Network pricing

If you’ve ever worked in the logistics space, you know the common refrain to any question on pricing: “It depends.”

The Shopify Fulfillment Network is the same! According to the company, you’ll get a specific quote based on your product SKUs, volume expectations, size of products, locations, and more. Every company gets custom pricing broken down into four segments:

  1. Inventory storage. This covers total products and how much space they take up across all fulfillment centers used.
  2. Pick pack rate – standard rate based on how many orders you’re filling.
  3. Transportation. The cost to ship orders to customers. While you set options (such as two-day shipping), the Shopify platform will automatically choose shipment methods to meet your requirements, with the company saying it’ll “automatically search for the most affordable rate so you don’t have to.”
  4. Special projects. Bundling, receiving, validating inventory, and more. We’ve got a deeper dive into Special Project Fees next.

An essential feature of the Shopify platform is that you get a single monthly bill when you join the SFN. Shopify will add all SFN charges and costs to your existing Shopify subscription and clearly label each charge.

What’s a “Special Project Fee?”

Shopify’s network comes with Special Project Fees that can be charged at one time or for projects that you undertake with its providers. Fees are added to your monthly fulfillment rate and generally include elements such as inventory validation or if you use the service to create bundles and kits. You’ll also be charged a specific fee for products returned by customers — this fee will be outlined on your SFN Order Form.

However, Shopify also uses this fee term to cover penalties. For example, if you don’t meet the inbound product requirements in your contract, Shopify can charge you an applicable Special Project Fee that is “at least two (2) times the applicable receiving rate.”

Your agreement to use the network, called the SFN Merchant Order, will outline these fees and provide their calculations, but you’ll want to review each application to understand when you could be charged. 

Remember, ecommerce fulfillment shouldn’t come with surprise costs.

Benefits of the network

If your application is accepted and you can use the SFN, there are a lot of significant benefits. Here are a few of the favorite ones based on customer reviews:

  • Simpler inventory management. One platform and admin panel to control it all, regardless of total distribution nodes.
  • Analytics include support for demand forecasting, replenishment, and inventory allocation. Shopify makes recommendations as well based on typical customer locations, DC size, and more. Replenishment recommendations also take seasonal trends, days on hand, and DC location into consideration.
  • Support for exchanges and returns at each fulfillment center, allowing you to automate much of the process.
  • Reliable, fast shipping, and access to some discounted rates with UPS and USPS.
  • Same-day fulfillment is available in some markets — both your customer and the distribution center need to be located in a market, and there may be some size/volume requirements here.
  • You control and own your data. Shopify is trusted for data management, and this makes some people feel more comfortable than using Amazon, which has turned partner data into its own products and strategies.
  • Includes support for Shopify sales elements, including Flash Sales, wholesale channels for B2B, and subscription orders – though some additional costs may apply.

Shopify Fulfillment Network partners also use a variety of technology platforms and options from Shopify. One common element is the Chuck robotic picker support system from 6 River Systems. It’s a collaborative picking unit that’s interesting in its own right and can help reduce picking errors.

Additional support channels

Shopify customers get access to standard 24/7 support teams via phone and email. If you join the SFN, you’ll also get customer service options for a specific “Fulfillment Success Team” who know the SFN platform and can help you troubleshoot issues related to distribution, location, handling, customer concerns, and more. 

You’ll work directly with Shopify for any customer service concerns, instead of contacting the different companies who run these distribution centers.

A note about product dimensions and changes

We dug through the Terms Of Service for the Shopify Fulfillment Network and found a few critical things to bring to your attention. Most of it is straightforward, but you’ll want to be confident and proactive when it comes to the products you ship via Shopify.

First, the platform requires you to describe the weight and dimensions of each product accurately. You also need to provide the Harmonized Sales Tariff Code to Shopify. If what you put in differs from the product you deliver, the service’s cost estimator will be wrong, and you’ll be charged an additional amount to make up for the actual cost in shipping. That’s standard, but there are two big notes here:

  1. If you’re overpaying, Shopify isn’t going to refund the overpayment and may not notify you in that event.
  2. When your dimensions or weight are incorrect, and it causes an issue, Shopify will charge you for any related administrative costs it faces because of that mistake. When asked, a Shopify spokesperson said that these costs could compound if you make the same mistake multiple times.

The other important thing to remember about your products is that you need to give Shopify at least 30 days written notice for new product registrations or substantial changes to existing products. Shopify also needs to approve your new product for shipping through its fulfillment network.

If you don’t provide notice early enough or jump the gun and send something before Shopify approves it, Shopify may not fulfill it. If they decide against this or have to store the products for some time before adding them to the fulfillment network (and the delay is deemed your fault), you’ll have to bear costs and expenses that Shopify incurs to process and manage these new products.

Notably, you’ll on the hook for any Special Project Fees that company charges.

Control: A Big Concern For SFN

Shopify is a somewhat expensive option for its standard e-commerce offerings compared to other systems. However, it isn’t the cost that makes us worry a little about the Shopify Fulfillment Network. Our concern is that you have limited control over your inventory and shipping.

Shopify integrates with many different third-party fulfillment providers, and your inventory will likely be spread across multiple warehouses from multiple companies. That’s hard to handle and ensure consistent quality. The SFN service is relatively new, and there isn’t a lot of public information or customer reviews about quality control or how well the company manages disputes or issues with fulfillment companies.

Your fulfillment can dictate whether or not a customer is happy, and if they’ll repeat a purchase. While Shopify does some general management and vetting of its DCs, they don’t have an in-house team quality controlling every order. You might only discover an issue after a week or month or improper/inaccurate orders, late deliveries, and more. Those problems can stretch out even longer if you have customers who decide not to complain when there’s a problem — which is dangerous because it means they likely just choose not to buy from you again. 

Red Stag Fulfillment creates an individual relationship with our customers to avoid this. You’ll get to know us and our process, get regular updates, and have consistent audits to ensure that your orders are going out correctly, on-time, and meet your specific packaging standards. That’s all part of our commitment to you.

If you’re wondering whether SFN makes sense for your business, why not reach out to us? We can help you understand if it’s right for your business or if you have a better alternative available. Red Stag Fulfillment integrates with existing Shopify sales channels, allowing you to use the platform but know exactly who is handling your orders. Or, if we’re not right for your business, we’ll introduce you to another company that might be.

Click the red contact button at the top of this page, and we’ll work together to find a reliable solution that keeps your customers happy, manages costs, and makes it easy for you to expand.

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