While virtual fulfillment gets all the buzz these days — think downloadable tunes and tones, wallpapers and games — most brands still promise some type of tangible rewards. And shipping all those pallets of premiums, coupons or FSIs remains a logistical challenge.
Sometimes the answer lies outside your company. According to PROMO’s 2005 Industry Trends Report, 85.5% of agencies outsource the fulfillment side of their businesses. Ceding control of this vital function makes some uneasy, yet they often recognize the need to outsource to third-party logistics providers (3PLs).
John Cimperman, principal for East Aurora, NY-based Cenergy Sports & Entertainment, uses 3PLs for shipments related to high-volume gift-with-purchase promos.
“When you turn work over to a 3PL, you can lose control of where your inventory is going,” Cimperman says. His agency makes and markets SportsHeads candy dispensers, which are bulk shipped to major league baseball parks for game day promotions. Such a task could be fulfilled in house, but as Cenergy has grown, it is more apt to rely on outsourced fulfillment.
Don Lee, senior director at Relay Sponsorship and Event’s St. Louis office, agrees that some marketing materials — like the 155 kits it sent to Simon Malls for its December Thank You Very Much sweepstakes — can be handled in-house if an agency has the warehouse space.
“With Simon Malls, [in-house] made sense,” Lee says. “But with [our] Copa Coca-Cola campaign, it doesn’t. With quantities in the thousands, we outsource the fulfillment to someone who handles logistics best.” He called Summit Marketing, St. Louis, to assemble and ship thousands of kits for Coca Cola, each containing mini soccer balls, goal posts, bags and other premiums, to thousands of retail locations and grassroots Hispanic youth soccer events.
Relay uses Summit for campaigns that require “heavier lifting,” Lee says.
“Fulfillment is a complex discipline,” says Robb Romano, EVP-managing director of Alcone Fulfillment. “It’s not just about putting labels on boxes. It’s also about accounting for inventory coming in and inventory going out.”
Nine out of 10 new marketing clients come to the Saddle Brook, NJ-based firm (which is a subsidiary of Alcone Marketing) because their businesses are growing, Romano says, so they don’t have the time to ship and receive pallets on their own.
Automation available through 3PLs may make outsourcing a no-brainer. “Outsourced fulfillment has become a secret weapon for marketers,” says Rama Ramaswami, editorial director of Operations & Fulfillment (also published by PROMO parent Primedia Business).
In the past, a marketer looking to ship a pallet to an event called a warehouse, placed an order, then prayed the goods made it to their destination. Now a marketer can sit behind a desk, tap into a dedicated Web site, and track the fulfillment process from start to finish.
The evolution of bar-coding has also helped streamline inventory control and shipping accuracy of the fulfillment process. Goods can be shipped and re-inventoried with the same scan, virtually eliminating human error.
Such advances have cut fulfillment costs dramatically compared to a decade ago, which may explain why, although outsourcing has leaped in growth, only 4.8% of marketers polled for PROMO’s Trends Report listed fulfillment as one of their top three promotional spends in 2004.
What was outsourced?
| Premiums & incentives | 88.8% |
| Specialty printing | 86.5 |
| Fulfillment | 85.5 |
| Sampling | 81.6 |
| Event marketing | 80.1 |
| Source: 2005 Industry Trends Report | |
TOOLS for Do-It-Yourselfers
Though brands and agencies are relying heavily on third-party logistics providers for the processing of promotional products, many on-pack promotions can still be handled in-house, says Chetan Saiya, founder of software manufacturer Assetlink Corp., Pleasanton, CA.
The company has launched Marketing Operations Management (MOM) software to speed in-house fulfillment. The program helps marketers design packaging, customize artwork electronically, track warehousing and picking, and automate when and where the goods will be shipped.
“Supply chain management can be error-prone, but this helps automate the switch,” Saiya says. “It helps with the formatting and planning of the promotion and then ensures communication between the marketer and the supply chain manager.”
— TP
