Just wondering if anyone had any insight on using a service such as this?

We're looking at starting up another warehouse location on the other side of Canada to better serve our customers on that end of things and I've been looking for companies that do this sort of thing. We're not ready to open up a completely new office/warehouse, but using a company that strictly warehouses and ships from a remote location.

Has anyone done this before easily?

What are some of the drawbacks and problems running things this way?

Does anyone know of any companies that do this in or around Ontario, Canada or Quebec, Canada?

We have done this in the past here are some of the pros and cons:

Pros:
-frees you up for core activities
-warehouse invests in new technology & other tools that you would not normally invest in which makes them more efficient

Cons:
-Can be pretty expensive
-Quality becomes a factor you have to make sure that they are not serving multiple clients with similar products
-Risk of them using the mailing info to sell your clients other products

The challenge with these is the big firms have the resources and technology but they are usually expensive the smaller firms dont but they are less expensive. Depending on your volume, you should have a direct interface into their ordering system so there are records of every transaction in a common system. A couple of pros that were missed:

-Don't have to deal with staffing issues
-Can handle surges in business

We have not used any firms in Canada so I cant be any help there

In a prior life we did this and it worked out fine but it was more expensive there were also soft costs that you overlook like flying out to the site for quality checks, time of the person overseeing the relationship, cost for software implementation etc - good luck

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Everyone mentions the "expensive" nature of this business model, but are the costs greater than the alternative, ie. Setting up a small warehouse and staffing it?

I agree it can get pretty expensive leasing a warehouse and staffing it. However a lot of small businesses use their basement and use existing staff if you have enough volume I would outsource it and see how it goes after a year then make another assessment.