Working with ecommerce fulfillment companies

I'm about to launch a new ecommerce startup and I'm considering using this e-fulfillment company until I can afford my own. But I have some concerns:

1. E-fulfillment companies often run a bunch of their own ecommerce sites. Should I get them to sign a contract saying they will not copy my products and target market (which is entirely different from anything they've ever conceived) should it be successful?
2. If I become way more successful than any of their ecommerce sites, I'm afraid they will get jealous and deny me services. Should I get them to sign a contract saying that they are not able to terminate our operations without at least a year's prior notice?

This is a great question and I totally understand your hesitation. It's difficult letting a third party company handle an important part of your business. But do rest assured that there are some great companies out there and their business is to store and ship - they're really not interested, nor do they have the time to start another competitive business.

If you're overly concerned, you can absolutely ask for a confidentiality, non-disclosure, and non-compete components to your agreement that you sign with them. These are legitimate requests, as they may uncover certain trade secrets in doing business with you.

The other thing that you should do is make sure that you're considering the best fulfillment companies in your search. If you use some of the high quality companies, then you'll put yourself in a better situation in terms of people that will operate on the "up and up".

So you're looking for something like Amazon's fulfilment services?

You're clearly a cautious man - some might even say paranoid judging by the tone of your other questions ;) - so turn the tables :-

If you were the e-fulfilment company what dangers would you see in agreeing to #2?

IMHO re: #2 no company in its right mind is going to agree to those terms unless you're extremely well established and are giving them a large amount of stable, ongoing & profitable business.

On the other hand - you should always have contingency plans in place for your key suppliers. What if they don't 'get jealous' but do go bankrupt?

I have experience working with, and for a number of ecommerce order fulfillment companies and can say with 100% certainty that most if not all (excluding Amazon of course) have no interest in selling products themselves nor doing anything to get in the way of their best customers. You should not let either concern stop you from outsourcing your order fulfillment. That's said, many will not work with start ups because of the cost to bring a new customer on board. A start up will not generate the order volume a fulfillment operation needs to cover those costs for a long time. Don't be surprised if some fulfillment companies will not be interested in your business because they have been burned by startups that went nowhere in the past... just something to keep in mind.