Fulfillment is one of the most crucial pillars of running an eCommerce store, and a substantial amount of your success or failure will be determined by your order fulfillment service. Outsourcing order fulfillment would require you to pass along the keys to one of the most essential parts of your ecommerce company. Is it worth taking the chance? Is it the right time? Those are valid questions you have when you think about outsourcing your order fulfillment.
Order fulfillment is complex, it always presents unique difficulties you have to deal with – picking, packing, shipping, customer service, workers, administration, storage, and so on. Ecommerce order fulfillment is like art – there’s a number of different layers that can be added to improve your fulfillment and produce an ecommerce fulfillment strategy that will help your business thrive. Unfortunately, many companies struggle with order fulfillment and by doing so, they’re never able to experience that next level of growth they want to achieve.
In this article, we’re going to explore the exact questions you need to ask yourself before you outsource your ecommerce order fulfillment and how each can benefit you. Let’s get started.
1. Do you have enough time and energy to focus on the growth of your company?
Ecommerce fulfillment is a time-consuming and demanding task. It consumes a lot of time, energy, attention, effort, and money. Order picking, packing, and preparation take time. It’s easy to handle fulfillment when you have a small ecommerce store. However, when sales start to grow and demand increases, order fulfillment is going to be a challenge.
When you find yourself having trouble delicate either your company or fulfilling orders, it’s time to make a change. You’ll eventually have to choose – do you want to spend your time, money, and effort on order fulfillment or expanding your business? As a business owner, your most important job is growth – if your time is focused on order fulfillment, you should consider outsourcing order fulfillment.
2. How much are you paying for order fulfillment now?
If you’re doing self-fulfillment, you already know that it’s costing you a lot of money. Between leasing out space, warehousing costs, maintenance, employees, it can easily be one of the biggest expenses you have. Furthermore, if you’re still growing, what do you do to get more available space? Sure, you can lease, you can rent, but that costs more money. In this scenario, many companies can’t afford to get new space due to the expenses.
If you’re strapped to a specific location or no longer have space available, outsourcing your ecommerce order fulfillment can be a big weight off your shoulders. This is one of the only ways you’re going to reduce overhead costs and expenses. You start focusing on outsourcing ecommerce order fulfillment to a 3PL order fulfillment company that knows how to handle your unique scenario.
3PL Melbourne stands for third-party-logistics, these companies can handle all of your order fulfillment and order management needs. They often charge you a flat storage fee, which means you only pay for warehouse space you need. If the amount of units are not changing, your storage expenses stay the same.
3. Are shipping costs killing your margins?
One of the biggest expenses of ecommerce order fulfillment is shipping. Due to the shipping volume of large 3PL fulfillment companies, they can save you a lot of money with shipping costs due to the high volume of shipments going out. While the amount you save will vary depending on who you choose to outsource ecommerce fulfillment services, you can typically expect to save 10-15% in shipping costs. Some customers may see savings of up to 20% or more by outsourcing their ecommerce fulfillment services.
Even more so, some 3PLs have shipping software that allows them to compare shipping rates from many carriers – giving them an advantage in finding the best possible shipment costs for consumers.
When you transport your goods at pre-negotiated rates, you may also take advantage of the 3PL warehouses’ purchasing power to decrease drayage expenses. When transporting small volumes (LTL)/Full Truckload (FTL) shipments, you will be able to do so without having to use containers, which can also help you save money.
4. How are you handling the customer service?
Most companies have the goal of growing a successful business, so many business owners are focused on growth. More sales can bring more challenges if you’re not prepared for them. Overnight success sounds like a promising thing, but it can be enough to destroy your business if you’re not ready for growing sales.
Most of you can handle a few additional sales per day, but what happens when that turns into 100 new sales a day? 1,000 new sales a day? Do you have a process in place for that volume? Most companies don’t and if customers don’t get what they ordered, they’re going to let you know about it.
You have to prepare for quick growth, this is another reason why outsourcing order fulfillment can be a great idea. Large 3PL fulfillment companies can handle increased volume for you. The largest 3PL service companies can handle any amount of new product sales, so you always want to choose wisely.
Some 3PLs help with returns management, they handle all the product returns – that’s a very helpful service. You’re also going to find order fulfillment companies that help with customer service. Now, not all 3PLs are going to offer that, but there is a few that do.
5. Do you want to keep your business lean?
If you want to keep your business lean or downsize your labor force, you have options. Backend logistics is a time-consuming operation. Backend fulfillment services may complicate your company structure. It implies you’ll have to rent extra space for your workers, hire them, train them, and pay them before they can begin working. It’s a huge expense.
By outsourcing, the 3PL logistics service provider is in charge of staffing and recruiting staff, this is going to allow you to keep your business structure lean and avoid all the hassles that come with hiring and managing workers in your fulfillment center. This will also help you save money on salaries, equipment, maintenance, and electricity.
If you’re going to outsource order fulfillment, choose carefully.
Handing the keys off to another company can be scary, but you have to understand, these companies are going to become strategic partners. If you do outsource fulfillment, the 3PL is going to be your partner, but there’s a few tips I want you to keep in mind before you choose a company to go with.
Experience matters, you should go with an order fulfillment company that has years of experience, decades of experience.
What services does this 3PL fulfillment company provide? Aim for a fulfillment company that offers a wide range of services you can benefit from.
You’re going to need an ecommerce fulfillment company that has multiple fulfillment centers, this is going to help you save more on shipping costs.
Now, every scenario is different, partnering with a fulfillment center may not be the right option for you. On the other hand, for some of you reading this, it’s exactly what you need to take that next step.
It never hurts to reach out to a 3PL and let them know about your situation. If you’ve been on the fence about outsourcing your ecommerce fulfillment for some time now, the clarity it can give you can make a big difference in your business.
Just like you are now, take time to do your research. Some of the largest companies in the world are using outsourced fulfillment services. They’ve been wildly successful in doing so, it can work for your business if it’s the right time to make that decision. If not, that’s fine, you leave the conversation more informed.
It’s a big decision nonetheless, so take your time with it.