Get the knowledge you need to grow your business, straight to your inbox.Subscribe
This article was written by Priscilla Chung, from our partners at 3P Logistics.
As the online industry continues to grow at an ever-increasing pace, the demand for outsourced fulfillment companies has never been higher. After all, sellers don`t set out to become warehouse keepers when their main aims should be to source and sell great products.
Deciding to outsource your order fulfillment is all about timing, and centers around three essential trigger points:
3:The need to employ people or take on a warehouse
What is Outsourced Order Fulfillment?
To summarize , Order Fulfillment is defined as asking someone else to pick pack & ship your orders, so you don`t have to. Any leading third party fulfillment house would house numerous retailers under one roof, providing them with a range of additional support services. Such services could include everything from web photography and listing support through to inquiries handling and inbound telesales.
For a nominal cost per order, outsourced fulfillment companies take care of the physical elements of selling online, freeing you take care of the more virtual aspects of sourcing goods and marketing.
How would I know when to outsource?
Running a successful online business will normally result in various growing pains along the way. A lack of space, time, expertise and cash are common stumbling blocks normally associated with business growth.
Some sellers that have a clear business plan decide to outsource from day 1 and spend their time in other key areas of the business. Other sellers decide to keep things in-house until they have established “proven demand”. With outsourced fulfillment you only “pay for what you use” hence when orders are low your costs remain low.
A minimum of 100 orders per week, or around 15 orders per day is a useful threshold at which some of the above constraints should be evident and sufficient benefit can obtained from outsourcing.
Can I afford to Outsource?
The more pressing question is can you afford not to?
If space, time and knowhow are holding you back, then outsourcing to a reliable fulfillment house is a surefire way to regain control of your business. If you intend to sell on line for a bit of “pocket money” then fine - You should stay as you are, enjoy it and treat it as hobby.
If you have greater ambition to be a sizable seller, then sourcing great products at the right price and taking them to market will require dedication. Employing staff, taking on an industrial unit etc, all contribute to your fixed costs. Meanwhile your cost per order equivalent is more likely to exceed that of any flexible “pay as you use” alternative.
More often than not, Fulfillment houses are able to pool their throughput with the major carriers to obtain lower delivery tariffs. In tapping into such buying power, savings can be realized and often offset the cost of picking your orders.
How can I expect to benefit from letting someone else pick & pack my orders?
There are numerous benefits to be realized as result of “letting go” of the physical aspects, and these include:
Demand for outsourced order fulfillment is growing as quick if not quicker than the online world itself as more and more sellers realize the advantages of working with a third party fulfillment company.
A brief re-cap.
If you value your time and are serious about growing your online business then outsourcing should be a viable option for your business. Employing warehouse staff and taking on industrial or self-store units merely adds to your fixed costs, reduces flexibility and increases risk. Alternatively, you could consider moving some of your lines to a Fulfillment center as an initial move. Instead of taking on more staff or space, examine the possibility of moving stock that takes up an appropriate percentage of your orders into fulfillment and study the cost and time benefits incurred. It can offset your expansion costs, and open up your eyes to the benefits!!
Here at 3P Logistics we have a simple saying:“You source & sell - leave the rest to 3PL”.
To find our more visit us at www.3p-logistics.co.uk or call us 0844 871 2011
Speak to us to find out how Linnworks can connect and automate your commerce operations so you can capture every revenue opportunity.