For small businesses, outsourcing fulfillment services to a third party has disadvantages. For instance, a fulfillment partner might charge $3 for picking and packing an oversized item priced at less than $25. In other cases, a fulfillment company may go belly up and leave you with unfulfilled orders or, even worse, unpaid invoices. Building your own order fulfillment center may be the best solution for your small business.

Organize your catalog of products into a logical system of individual SKUs (product identification numbers). Products should be categorized, and variables such as size and color should also be coded.

Build an e-commerce website or draft a print catalog to sell your products. Websites such as Yahoo have cookie-cutter systems to build e-stores, so you do not need to make one from scratch. For each product, provide a photo, a text description, a list of specs and a price. Establish policies and procedures that explain how customers can order from your website. For instance, determine shipping options such as USPS, FedEx or UPS. Also determine shipping and handling costs and return policies. All of this information should be readily available for the customer.

Hire a credit card processing agency to process credit card transactions. Funds should be wired into your business’s bank account.

Hire a fulfillment manager to process orders for your business. When someone buys an item from your website or phones in an order, the fulfillment manager will receive a notification with the details. Depending on the size of your business, the fulfillment manager can ship the product himself or ask an assistant to do it.

Secure a space for your fulfillment center. For larger businesses, a warehouse may be needed. However, you may be able to store all of your goods in the back room of your shop or even in your home garage. In any case, make sure the products are stored in a suitable environment.

Store your products at the fulfillment center. Make sure they are shelved in an organized fashion. The less time the fulfillment manager needs to pick and pack a shipment, the more efficient your business.

Buy relevant packaging supplies such as boxes, tape and packing peanuts.

Run a test order through your processing system to confirm the fulfillment center is ready for action. If so, go live.