{"id":7782,"date":"2019-04-04T16:43:17","date_gmt":"2019-04-04T16:43:17","guid":{"rendered":"https:\/\/michaeljbrumm.com\/dclcorp-phase2\/blog\/amazon-fulfillment\/save-money-outsourcing-3pl\/"},"modified":"2020-12-12T11:05:47","modified_gmt":"2020-12-12T19:05:47","slug":"save-money-outsourcing-3pl","status":"publish","type":"post","link":"https:\/\/michaeljbrumm.com\/dclcorp-phase2\/blog\/3pl\/save-money-outsourcing-3pl\/","title":{"rendered":"How Startups Can Save Money by Outsourcing to a 3PL"},"content":{"rendered":"

A common misconception among startups and small business owners is they will lose money by <\/span>outsourcing fulfillment<\/span><\/a><\/span> if they do not have thousands of orders each month. It\u2019s possible to find a <\/span>third-party logistics<\/span><\/a><\/span> (3PL) provider that fits your business needs and can work with your budget. Startups with low order output can rely on the expertise of their 3PL to help them get into new sales channels. An established logistics provider can often be the catalyst that helps grow a company\u2019s monthly shipping counts. <\/span>
\nIt seems at first glance that outsourcing fulfillment can cost too much for startups and small companies. But there are innumerable expenses to keep in mind that add up quickly when \u00a0fulfilling orders in-house. Here\u2019s a short list of some factors, large and small, that can make a big impact on your fulfillment costs. Consider the sum of all these factors (which would all be included in a 3PL monthly minimum) when deciding if it\u2019s time for you to outsource your fulfillment. <\/span><\/p>\n

Warehouse<\/b><\/h2>\n

 <\/p>\n

Rent:<\/b><\/h3>\n

The fixed cost of leasing a space large enough to accommodate product storage and order growth can restrict cash flow that might be better spent on sales, partnerships, or marketing. If you run your business from your home or office, factor in a regular commute to the warehouse to put out fires, and ensure everything is running smoothly. Additional cost will likely need to be spent on \u00a0employing a warehouse manager, or two, to oversee your <\/span>fulfillment center<\/span><\/span><\/a> when you\u2019re not there.<\/span><\/p>\n

Equipment:<\/b><\/h3>\n

Often overlooked, the equipment required to correctly set up an efficient pick, pack, and ship operation\u2014shelves, label printers, packing tables, pallet racks, and more\u2014can add up quickly. Plus any that get damaged or old will need replacing at some point. <\/span><\/p>\n

Labor<\/b><\/h2>\n

There\u2019s a very good change that your number one area of expertise is <\/span>not<\/span><\/i> fulfillment. If you are picking and packing orders yourself, it is taking time away from what you\u2019re really good at, which is likely why you started your business in the first place. You do have the option to hire <\/span>Picker Packers<\/span><\/a><\/span> so that you don\u2019t have to do personally fulfill orders. But that will run your bill up, plus your time will still be compromised by \u00a0vetting them, training and retaining them throughout the year. If your business is seasonal it will be even more challenging and time-consuming \u00a0to adjust the number of personnel needed on a month-to-month, or even day-to-day basis.<\/span><\/p>\n

Utilities<\/b><\/h2>\n

A very common forgotten factor in budgeting warehouse space is utilities\u2014water, sewer, electric, etc. There are many costs associated with running a warehouse; even if your lease or rent contract is all-inclusive, you\u2019re still paying for utilities.<\/span><\/p>\n

Insurance<\/b><\/h2>\n

Just like utilities, the moment you rent warehouse space, you\u2019ll have to obtain claims insurance to cover theft, fire, flood, roof collapse, missing inventory, damage during handling, insufficient facility maintenance, to name a few. The list can get extensive.<\/span><\/p>\n

Materials<\/b><\/h2>\n

You may think that you are selling products that will pay for all the warehouse expenses, and everything will even out. But quickly you will start incurring a new set of costs associated with fulfilling orders: boxes, tape, cartons, shrink wrap, labels, safety equipment. These are all necessary expenses to ensure your orders make it to your customers in the same condition they left the warehouse.<\/span><\/p>\n

Inventory Management Software<\/b><\/h2>\n

Once your product output start to really ramp up, and you\u2019re selling more and more orders you controlling inventory will become a job in and of itself. When you\u2019re just starting out, you might be able to get away with manually fulfilling orders that come through your website. As you grow, though, you\u2019ll need to invest in <\/span>inventory management<\/span><\/a><\/span> software that integrates directly into your shopping cart or marketplace, for automatic product importation. Inventory software can be pricey, but it will become imperative to ensure order accuracy, review analytics, forecast inventory, and permeate more sales channels.<\/span><\/p>\n

Shipping<\/b><\/h2>\n

Even if you\u2019ve implemented the above seven factors, and you\u2019re still breaking even, you will see a major difference in <\/span>shipping<\/span><\/a><\/span> costs if you compare in-house fulfillment to outsourcing. Not only will a 3PL guide you in following \u00a0best practices to reduce shipping costs, but you\u2019ll get access to their extremely low shipping rates due to their overall shipping volume per day. <\/span><\/p>\n

On top of all that, having professionals handle your customs forms, bill of ladings, shipping contracts and other restrictions exponentially reduce the number of risks your business is exposed to by in-house order fulfillment.<\/span><\/p>\n

 <\/p>\n

Bottom Line<\/b><\/h2>\n

Fulfilling orders in-house can be a great option when a business first gets off the ground. But as you grow and expand, you should strongly consider outsourcing your order fulfillment to a third-party logistics provider. The expertise of an established 3PL can go a long way to cut company costs and help grow your product sales.<\/span><\/p>\n

 <\/p>\n

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

A common misconception among startups and small business owners is they will lose money by outsourcing fulfillment if they do not have thousands of orders each month. It\u2019s possible to find a third-party logistics (3PL) provider that fits your business needs and can work with your budget. Startups with low order output can rely on […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[2],"tags":[19,22,26],"class_list":["post-7782","post","type-post","status-publish","format-standard","hentry","category-3pl","tag-fulfillment","tag-fulfillment-center","tag-inventory-management"],"acf":[],"yoast_head":"\nLearn how startups can save money by outsourcing to a 3PL provider - DCL Logistics<\/title>\n<meta name=\"description\" content=\"Partnering with an established 3PL to outsource order fulfillment can be a great way for startups to save money and scale their business.\" \/>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Learn how startups can save money by outsourcing to a 3PL provider - 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