Three benefits of outsourcing order fulfillment

by | Aug 22, 2018

By Rachel Burns, Content Marketing Specialist, ShipBob

When your e-commerce company is still new, self-fulfilling orders can be a manageable, affordable fulfillment model. But as your business grows and more and more orders come in, it’s time to start considering outsourcing order fulfillment to a third-party logistics (3PL) provider.

Today’s customers expect fast, affordable shipping everywhere they shop online. If your e-commerce order volume has increased to the point where it is no longer sustainable for you to fulfill orders yourself, a 3PL can help you save time and money while meeting your customers’ shipping expectations.

Here are the top three benefits of outsourcing order fulfillment to a 3PL.

1. It saves you money on infrastructure and shipping

As your business grows and your order volume increases, you can’t keep storing inventory and packing orders in your living room or garage. You’ll have either rent a warehouse and hiring a team to fulfill orders or find a 3PL to outsource fulfillment.

As you scale your e-commerce order fulfillment in-house, you’ll need to:

  • Lease warehouse space with adequate square footage, loading docks, and space for storing, packing, and labeling orders
  • Purchase or rent all necessary equipment, such as forklifts and conveyors
  • Regularly pay taxes, utilities, and other admin costs
  • License warehouse management software
  • Hire, train, and compensate staff for warehouse operations and management
  • Provide shipping and packing supplies, including tape, labels, printers, boxes, and bubble wrap
  • And so much more…

Those costs add up fast and can easily become more expensive than outsourcing order fulfillment. A 3PL already has the warehouse management system, fulfillment infrastructure and related costs built into their business model, which means you can leverage their expertise and volume to save money on shipping.

Another opportunity to save money by working with a 3PL is in shipping costs. Because 3PLs ship so many orders every day, they are able to negotiate bulk shipping rates with major carriers. In addition, 3PLs can help you cut costs by reducing the distance orders travel to the end customer by splitting inventory across fulfillment centers.

2. It frees up your time to focus on strategic tasks

There’s an age-old saying that “time is money,” and when you run a small business, it certainly rings true. All of the fulfillment necessities mentioned above take time away from more strategic, high-value tasks that can help you grow your business.

By eliminating the time-consuming fulfillment tasks from your to-do list, you can free up your time to focus on product development, marketing, customer service, and growing your business.

You can make fulfillment more efficient by working with a 3PL that offers technology-enabled shipping and fulfillment solutions for e-commerce businesses like yours. This includes seamlessly integrating with your e-commerce platform(s) to automatically send orders to the 3PL after they are placed, as well as automated shipment tracking, inventory management, and more.

3. It creates a better customer experience

As mentioned above, today’s customers expect fast and affordable — often even free — shipping when they shop online. While this may seem daunting, outsourcing order fulfillment can help you exceed customer expectations, creating a great experience that will keep them coming back time and time again.

We recommend working with a 3PL that lets you distribute your inventory to multiple fulfillment locations. This reduces the number of shipping zones your shipment travels to its destination, which in turn reduces the shipping cost and time in transit, saving both you and your customers time and money. This also allows you to offer the shipping options that customers have come to expect, like two-day shipping, more affordably; when your product is stored and shipped near your customer, you can use ground shipping instead of more expensive expedited air.

Working with a 3PL also offers you a complete view of every order from the moment it’s placed online to the moment it is delivered to your customer’s doorstep. This gives you the most up-to-date information to answer customer questions, ensuring better, more transparent customer service.

Conclusion

If you’re outgrowing your current shipping strategy, you have two options:

  1. Build out your fulfillment infrastructure and take on all associated costs, tasks, hiring, etc.
  2. Outsource fulfillment to a 3PL

We hope this article helps you see the benefits of choosing the latter: saving money, freeing up valuable time, and creating a better experience for your customers.


Rachel Burns
Content Marketing Specialist of ShipBob

Rachel is a Content Marketing Specialist at ShipBob, where she creates content that helps e-commerce merchants grow their businesses. ShipBob empowers e-commerce businesses of all sizes to offer two-day shipping and maintain control over inventory, orders, and shipments.
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SPS Commerce Blog Team

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The SPS Commerce Blog Team is your resource for insider knowledge, news, research reports and best practices that will boost your business.
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1 Comment

  1. jyoti sharma

    Outsourcing order fulfillment has many benefits, such as lower shipping rates, reduced operating costs, and a broader reach to help you grow into new markets. And working with a fulfillment service provider allows you to focus on other aspects of your business and continue to grow.

    Reply

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