The fast-paced growth of the ecommerce marketplace has given an immense boost to outsourced fulfillment solutions including third-party logistics providers(3PLs). However, there exists a wide section of the market—especially the smaller, newer ecommerce businesses—who might be reluctant to outsource their fulfillment operations or even consider a professional fulfillment provider. Here are ten common misconceptions about outsourcing order fulfillment to a 3PL.
Getting Orders is the Hard Part; Fulfilling Them is Easy
While the base of any business is getting more and more orders for your products, it is equally important to have a seamless, cost effective and fully optimized order fulfillment process in place to ensure repeat customers, better revenues and even better profits. Many small and new businesses believe that having a good product to sell is all they need to achieve success. However, what they miss is that order fulfillment is an ongoing issue that will slowly grow so big that it would be tedious and not profitable to do it all by themselves.
Outsourcing Fulfillment is Only for Big Companies
3PLs can benefit businesses of any scale. The key is to tap the right fulfillment partner for your business’s needs. A bit of research and having clarity of what you need from your fulfillment partner can be far more beneficial and economical than doing it all by yourself.
Outsourcing Order Fulfillment is Expensive
At first glance, yes, outsourcing fulfillment can be a costly undertaking. But once you give it a closer, more detailed look you will learn that it’s an investment that will save you a lot more down the road. If you are an ecommerce business handling your own order fulfillment, you know how high your fixed costs have gone. You can cut them down by outsourcing your order fulfillment to a 3PL. Imagine not having to bear the cost of that warehouse?
As a Smaller Company We Don’t Need a Complex Solution
Small ecommerce companies often believe that outsourcing their fulfillment may end up complicating their otherwise simple delivery process. On the contrary, if you wish to grow and scale up your business in future, it is far more important to have the right processes at an early stage. Letting fulfillment experts set up your base can actually save you a lot of time, money, and effort of revamping at a later stage.
DCL has a good reputation for helping smaller companies grow their sales channels from net time zero to actually shipping to customers.
We Know our Business and Customers Best
Most retailers are driven by the thought that they know their business and their customers well and no third party can match up to the standards of reaching out to their customer. Remember, just like you, the 3PL or fulfillment providers are experts of their business and your delivery services may actually not match up to their efficiency and standards. Let the experts handle the task.
DCL’s experience helps inform our decision making. It gave me confidence that DCL has worked with similar products, but also that the account managers are willing to share best practices in the industry. Knowing that you’ve got a 3PL that can process the deliveries and understand the returns process—all of that and also give guidance is helpful.
Outsourcing Order Fulfillment Only Works if you Have Enough Volume
Smaller businesses often go through fluctuations in their sale volumes. Seasonal demand on ongoing promotions can sometimes give a huge spike in order volume which can become highly difficult to manage in terms of product deliveries. Having a fulfillment partner ensures that you receive the scale up and down of order fulfillment resources without having to either increase your fixed costs or lose market credibility with poor deliveries.
We Will Lose Control of our Company
Business owners worry that having their warehouse stocking, logistics and shipping out of their main system may lead to losing sight of their product and control on their deliveries. However, the truth is that modern 3PLs give better control and supply chain visibility to business owners. With providers offering real time tracking, order fulfillment can simplify your operations.
It’s Only Packing and Shipping, What Extra Would They Do?
Most small to midsize companies are not fully aware of the offerings of modern day 3PL’s and thus fail to see the benefit. Order fulfillment companies are way beyond a pick, pack, ship player. Their extensive value added services can really help your business grow.
They May Stunt Growth
For the ambitious ones, being stuck with a 3PL is a scary thought. Yet having selected a ‘fit to your needs’ fulfillment partner and having a great working relationship can help you scale faster than you could do yourself. Your partner scales up as your business grows.
If my Inventory Moves Slow it will be More Expensive
Yes, it’s a fact that there may be chances of you paying extra on storage for slow moving inventory. However, collaborating with a good fulfillment partner who gives you a good picture of your stock and analytics, can help you avoid the scenario of slow moving inventory in the first place. Additionally, 3PLs offer value-added services such as special kitting for product promotions which can help the slow inventory move faster.
Bottom Line
When evaluating a 3PL that you are considering outsourcing fulfillment to, it is important to take a close look at how that relationship is going to work. By dispelling some of the misconceptions about how a 3PL partnership might affect your company, you can go a long way in meeting your ultimate goals: making your customers happy, saving you time and effort, and improving your profit margin.
If you are looking for a 3PL partner to work with we would love to hear from you. You can read DCL’s list of services to learn more, or check out the many companies we work with to ensure great logistics support. Send us a note to connect about how we can help your company grow.