Why outsourcing fulfillment is important for eCommerce operations
When it comes to growth, you need to think of ways to improve your eCommerce infrastructure, optimize costs, and reduce risk.
Here are the main benefits of choosing third-party outsourcing services for order fulfillment.
1. It helps you to fully focus on business growth
According to a 2021 survey conducted by MetaPack, 75% of eCommerce retailers state a flexible logistics network is a top priority. This is no surprise, considering how complicated and time-consuming order fulfillment can be.
If your business has many products and orders, it can quickly become overwhelming. For example, you may be trying to juggle all the different products, shipping rates, taxes, and inventory levels through in-house systems.
A huge benefit to outsourcing your fulfillment is that you can focus on growing your business by getting involved in more aspects of your company’s development. It also allows for more growth in the long run because you have more time and energy to invest in marketing, sales, and expansion.
2. Your customers will be happier
The ups and downs of fulfillment make it difficult to keep up with orders, especially when they’re coming in faster than they can be processed. During high-demand periods, there’s usually a lag between when an order is placed and when it’s fulfilled — and being unable to fulfill orders is bad for business. In fact, almost 70% of consumers who are not informed about delays are less likely to order from you again.
As Gary Grant, Executive Chairman and Founder of the famous UK toy store The Entertainer, says, “I don’t think customers will put up with long lead times — they are expecting an outstanding level of service.”
Not only do customers get frustrated by the lag time (and likely abandon their shopping carts) but they also might not return to your site if they feel like they’re getting poor service.
A study from Voxware found that 69% of consumers are less likely to shop from a retailer if an item is not delivered as promised, and 86% of customers have higher expectations during the holiday season.
With an outsourced fulfillment center, you can relax and let your partner take care of the deliveries.
3. Your shipping will be faster and more efficient
Using a fulfillment center is great for many reasons, but one of the primary benefits is their ability to manage orders with technology that makes order management and tracking more efficient.
You’ll probably be able to customize reports to see which items are selling best or which areas of your store need improvement, as well as track different metrics for customer satisfaction — all in real-time!
Your 3PL provider should be able to provide tools like barcode scanning and radio-frequency identification (RFID) tags that allow you to track inventory from its point of origin until it reaches the customer’s doorstep. You can also get notifications from your fulfillment center about a product in transit or when/if it reaches its destination.
4. You will lower costs by paying for what you use
When you’re an up-and-coming eCommerce business, it’s easy to try to control every aspect of your business in-house. It may seem like this is the most direct route to profit. But that’s not always true.
With an in-house order fulfillment solution, you’d find yourself managing and paying for everything from:
- warehouse storage and workers
- software solutions
- transportation, etc.
If you choose to go with a 3PL (third-party logistics) company instead, they’ll handle all the heavy lifting for you. That means that no matter how much or little fulfillment your business requires, you won’t pay any more than what you’re actually using.
For example, you could avoid the risk of renting out a whole warehouse that’s half-empty when you haven’t got the inventory to justify 100% capacity requirements. This is a significant cost that lots of retailers with in-house solutions face.
To keep shipping costs down, businesses can opt for 3PL order fulfillment. A 2022 study by NTT DATA shows that 64% of businesses opting for 3PL solutions, and 86% of 3PL providers collectively, agree that 3PL contributes to a reduction in logistics costs.
Source: NTT Data