Managing order fulfillment is a complex, expensive, and time-consuming task. Although most business owners can take care of the fulfillment process while the organization is in its infancy, it may become overwhelming as the business grows.
Fulfillment in-house is a cost-effective way of handling product orders. However, once order volume reaches a certain point, challenges arise. From limited warehouse space to higher shipping costs, order management becomes increasingly difficult.
At some point, it may be recommended for businesses to shift from in-house to outsourced fulfillment. Let’s look at some signs that you should consider outsourcing.
What is a Third-Party Logistics (3PL) Company?
A 3PL is a fulfillment company that provides outsourced logistics services to ecommerce businesses. Outsourcing to a 3PL can involve one or multiple services, including storage, warehouse management, transportation, and more.
There are several benefits to outsourcing to a 3PL. It allows management to focus on the core aspects of the business, grants them access to advanced logistics technology, improves efficiency, and ultimately leads to cost savings.
While it’s advantageous to own your own warehouse, fulfillment center, or logistics company, they are expensive to build and run. It is not a practical or realistic option for many e-commerce businesses.
Reasons to Switch to Outsourced Fulfillment
Fulfillment Costs are Too High
It’s normal for small businesses to make a loss to get a foothold in the market. However, at some point, turning a profit is essential. Businesses must be constantly on the look for cost reduction tactics.
If in-house fulfillment is costing too much money, it’s time to consider outsourcing fulfillment. You can rest assured your orders are being handled professionally while you have some extra money to reinvest in your business.
Delivery Times are Too Slow
The shipping industry is highly competitive, and customers expect delivery of their goods within days of placing their order. If your delivery times are slower than the competition, your business is likely to suffer. Customers are more inclined to abandon their carts if the delivery estimate is too slow.
You must strive to meet the demands of your customers. If outsourcing fulfillment speeds up your delivery times, it must be considered.
As a specialist service, a 3PL can guarantee fast shipping times. By promising that your customer will receive their product in 1 to 2 days, you can gain a significant advantage over the competition.
You Want to Expand the Business
Expanding a business involves branching into new markets, increasing order numbers, ramping up marketing activities, and successfully managing all facets of the organization.
External fulfillment companies are often better positioned to facilitate the expansion of a business. With strategically placed centers along key distribution links, targeting new geographic locations and customers is easier with a 3PL.
Outsourcing also allows you to fully commit to expansion without having to worry about shipping products or who’s available to pack and ship merchandise.
You Need to Alleviate Responsibility
A common mistake made by small business owners or e-commerce management is that they take on too much responsibility. While this is often necessary when the business is first established, it is a recipe for disaster in the long-term.
It’s possible to ship orders in an efficient and timely manner when order volumes are low. However, fulfillment is complex, expensive, and time-consuming. Outsourcing to a specialist service is an excellent way to improve efficiency, manage risk, and delegate responsibility.
To Gain a Technological Advantage
Modern logistics companies use advanced technology and expensive management systems to streamline their operations. By outsourcing fulfillment, your company can not only leverage the experience of specialist fulfillment services, but it can also gain a significant technological advantage.
You’re Lacking Warehouse Space
One of the most obvious signs that you need to outsource fulfillment is that you no longer have adequate warehouse space to store your products. If investing in a warehouse and implementing your own fulfillment process is beyond your current capabilities, outsourcing fulfillment is a great option.
Make the Right Decision for Your Business
Letting go of control and outsourcing fulfillment is not an easy task, particularly for a new business. However, it’s vital to make decisions that can benefit the organization. If there are glaring issues with an in-house fulfillment process, it’s time to consider outsourcing.
If you require advice or information on warehousing, shipping, or any other aspect of the supply chain, contact one of our experts at Asiana USA. As a world-class shipping organization, we are happy to provide whatever information you need. Call us today at (855) 500-1808.