{"id":7780,"date":"2019-03-28T16:48:55","date_gmt":"2019-03-28T16:48:55","guid":{"rendered":"https:\/\/michaeljbrumm.com\/dcl-v3\/blog\/amazon-fulfillment\/time-to-outsource-fulfillment\/"},"modified":"2024-01-11T12:12:40","modified_gmt":"2024-01-11T20:12:40","slug":"time-to-outsource-fulfillment","status":"publish","type":"post","link":"https:\/\/michaeljbrumm.com\/dcl-v3\/blog\/fulfillment\/time-to-outsource-fulfillment\/","title":{"rendered":"Top 8 Signs It Might be Time to Outsource Order Fulfillment"},"content":{"rendered":"

Many small ecommerce businesses start by fulfilling orders in-house<\/a><\/span>, but there can be many costs to that in the short and long-term. At any stage of running a product based business, it\u2019s important to weight all the costs to make an overall efficient decision. \u00a0And just because you can currently handle your ecommerce\u00a0fulfillment<\/a><\/span>\u00a0in house does not mean that it is the smartest long-term solution. Plus spikes in sales might cause your fulfillment operations to need extra hands or space or resources, quick. Being prepared for what comes next can help with operational pains that plague all companies, like delayed shipments, stockouts, juggling multiple products, and many others.
\nHere are eight tell-tale signs that you should consider working with a\u00a0third-party logistics<\/a><\/span>(3PL) company for\u00a0outsourcing\u00a0order fulfillment<\/a><\/span>\u00a0as well as some of the order fulfillment\u00a0services\u00a0 and benefits of outsourcing that business owners can expect from a good fulfillment partner:<\/p>\n

1. You are spending all your time on fulfillment<\/h2>\n

While agility is unquestionably a valuable characteristic of small businesses and startups, when you get bogged down by fulfillment management, you will quickly lose the agility to scale quickly, respond to peaks in sales growth, and work on the next iteration of your product. Product fulfillment and shipping orders can be very time-consuming and quite a hassle. On the other end, if you continue prioritizing critical business operations like sales, marketing, or financial management, you may inadvertently be ignoring important fulfillment needs and therefore letting your customers be a last priority. If fulfillment is in any way a distraction from the other tasks that will grow your business, it will likely either overrule your company resources, or be neglected and become an afterthought. As an online retailer you also might take time away from managing your ecommerce\u00a0platforms such as shopify or other sales\u00a0channels, which is a critical aspect of any ecommerce\u00a0operation.<\/p>\n

Even if you are able to keep up with orders now, what about three months from now? Ideally sales growth will dictate that you have to start outsourcing. And when that day arises, you likely won\u2019t have time to do a thorough vetting of fulfillment companies. If you have increasing sales growth and are doing in-house fulfillment, there\u2019s never a bad time to research 3PLs that can help outsource fulfillment when the time is right.<\/p>\n

2. Your storage space is vanishing<\/h2>\n

Don\u2019t let lack of storage hinder you when\u00a0forecasting inventory<\/a><\/span>. By partnering with a 3PL, you will have help to accurately predict inventory levels. You\u2019ll be able to store sufficient amounts of your product at the 3PL\u2019s\u00a0fulfillment centers<\/a><\/span>\u00a0(also called fulfillment warehouses) based on market demand without having to factor in more warehouse space<\/a><\/span>. Since businesses selling CPGs (consumer packaged goods) receive significant discounts for ordering in bulk, your price break from ordering a higher volume of inventory can cover a portion of the cost associated with outsourcing fulfillment. This solution is cheaper in the long-run and much more convenient than renting a storage unit\u2014and also far more convenient than storing your product in your office, basement, or laundry room.<\/p>\n

3. Your fulfillment costs are rising<\/h2>\n

It may be the case that your fulfillment costs weren\u2019t that high when you started doing it. But with sales growth comes fulfillment growth, which means both time and money; there will be a tipping point when it becomes more cost effective to begin outsourcing to a 3PL. The key is to know when that tipping point is for your business and act on it.<\/p>\n

If you\u2019re hung up on the total costs to outsource\u00a0order\u00a0fulfillment, do a thorough comparison of in-house vs. outsourcing. You might be surprised at the cost savings a fulfillment provider can provide. Once you factor in the cost of printers, scales, shelving, facilities, storage, labor, packaging, supplies, plus the time to research best carriers and shipping costs<\/a><\/span>, it\u2019s not uncommon to find that the total cost to outsource fulfillment is less than the cost to do it yourself. This also doesn\u2019t take into account the value your time, your employees time\u2014freed-up working capital, which might be your most important resource.<\/p>\n

By doing all of your fulfillment in-house it may seem like you are saving on costs, but until you look at the itemized details, you might be paying more by doing it yourself. Plus, you will definitely \u00a0miss out on the extensive network that a well-connected fulfillment center could provide\u2014industry knowledge, how to lower costs, best practices, etc. .<\/p>\n

Delegating the repetitive process of receiving, warehousing, picking<\/a><\/span>, packing, and shipping to an established company can, over time, be the deciding factor in the battle between growth and stagnation.<\/p>\n

4. You can\u2019t keep track of all your SKUs<\/h2>\n

If you\u2019re a small business, you might not need for the latest in automation technology to get your product from a shelf, put it in a box, and label it.<\/p>\n

But once you have hundreds of different products that you need to ship simultaneously, you\u2019ll need to invest in some type of warehouse management system to keep track of inventory levels and sales forecasts. As your order volume rises it will become even more challenging to track inventory in real-time. Mismanaged inventories, whether deficient or excess, can create significant financial problems for even the most robust of operations. When choosing a 3PL, always ask in-depth questions regarding their\u00a0fulfillment software<\/a><\/span>.<\/p>\n

It can vary, but they may have\u00a0inventory management<\/a><\/span>\u00a0and order management software access included in your monthly fee. This is another way you can cut in-house operational costs when outsourcing to an order\u00a0fulfillment\u00a0company.<\/p>\n

5. You pay more than you should for shipping<\/h2>\n

Unless you have previously utilized a 3PL, or you have spoken to someone who has, you may not realize that you are overpaying for the shipping options you use.\u00a0Shipping<\/a><\/span> can be extraordinarily expensive for small businesses that don\u2019t have the leverage to negotiate bulk costs and better rates, especially if you offer two-day or same day delivery<\/span>. Since fulfillment centers ship at high volumes, they customarily have negotiated discounted rates with various prominent shipping carriers.<\/p>\n

If you ship a particularly heavy, oddly shaped, cumbersome, or specialized product, you may find that your shipping costs consume your entire margin! Working with a 3PL partner who has experience with products of all shapes and sizes, will get you industry benefits that you wouldn\u2019t have known about by doing in-house fulfillment.<\/p>\n

Your \u00a0shipping overhead costs of daily UPS or FedEx pick up, or stamps.com fees, plus the cost of package processing software like ShipStation can add up quickly. All of these basic costs essential to any scalable operation can be avoided by outsourcing fulfillment.<\/p>\n

6. You are concerned that inaccurate orders will damage your brand<\/h2>\n

Unfortunately, most customers today give a seller only one opportunity to deliver on a promise. Therefore, it is imperative that you meet their expectations when they place their first order.<\/p>\n

No matter how familiar you are with your own product line, doing manual order fulfillment results in an error ratio much greater than doing it with software system. Compounding this issue is if you have multiple SKUs anyone who has done fulfillment knows more SKUs translate to more opportunities for error.<\/p>\n

This is not to say that fulfillment centers are perfect. However, most fulfillment companies have implemented state-of-the-art software systems and well-established procedures to ensure your order is picked, packed, and shipped accurately.<\/p>\n

7. You are expanding internationally<\/h2>\n

Outsourcing your international fulfillment is an excellent way to penetrate a new market without incurring the risk of opening your own warehouse abroad. With help from a 3PL, you can navigate this new chapter efficiently. Not only do 3PL\u2019s get better international\u00a0shipping rates\u2014bonus if they are strategically located in your target country\u2014but they\u2019re also experienced with export protocols and customs documentation, which can be cumbersome to figure out for a first-timer.<\/p>\n

8. You are worried slow shipping times will affect your business<\/h2>\n

Typically, most 3PL\u2019s are strategically located next to major shipping hubs. This facilitates faster delivery times and lower shipping costs. The physical location of your business may contribute to delays simply due to lack of access to\u2014or a relationship with\u2014the major shipping carriers. As many as two days can be lost due to transferral to a distribution center. The advantage of outsourcing to a 3PL is that shipping from a warehouse to a distribution center won\u2019t have to happen, they will all be within the purview of the 3PL. \u00a0Two days can prove instrumental in getting products to your customers, and\u00a0faster delivery times <\/a><\/span>will lead to better customer satisfaction and retention.<\/p>\n

Bottom Line<\/h2>\n

If you are considering outsourcing your order fulfillment process, finding the right 3PL<\/a><\/span> to manage your logistics and order fulfillment is one of many critical decisions you will need to make to ensure the long term health of your business. The right 3PL partner will properly support your businesses\u2019 growth and provide fulfillment solutions so you are ready to ship orders from you online store and improve the customer experience. They will become like a valued team member, help you navigate the complexities associated with logistics and supply chain<\/a><\/span>, and ultimately, keep your customers happy by getting your products in their hands quickly and accurately.<\/p>\n

While it may seem like a daunting task, it shouldn\u2019t be. With proper preparation and asking the right questions, you should easily be able to identify the 3PL partner that\u2019s right for you. Hopefully, these tips will help you with your preparation and decision making process.<\/p>\n

 <\/p>\n

If you\u2019re looking for help with outsourcing your order fulfillment,\u00a0send us a note<\/a><\/span>\u00a0to connect about how we can help your company grow. You can read\u00a0DCL\u2019s list of services<\/a><\/span>\u00a0to learn more, or check out\u00a0the many companies we work with<\/a><\/span>\u00a0to ensure great logistics support.<\/p>\n","protected":false},"excerpt":{"rendered":"

Many small ecommerce businesses start by fulfilling orders in-house, but there can be many costs to that in the short and long-term. At any stage of running a product based business, it\u2019s important to weight all the costs to make an overall efficient decision. \u00a0And just because you can currently handle your ecommerce\u00a0fulfillment\u00a0in house does […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","footnotes":""},"categories":[20],"tags":[2049,46],"class_list":["post-7780","post","type-post","status-publish","format-standard","hentry","category-fulfillment","tag-fulfillment-costs","tag-warehouse-management"],"acf":[],"yoast_head":"\nLearn about the benefits of outsourcing order fulfillment to a 3PL provider | DCL Logistics<\/title>\n<meta name=\"description\" content=\"This post explains 8 tell-tale signs that you should consider working with a third-party logistics (3PL) company to outsource order fulfillment\" \/>\n<meta name=\"robots\" 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