For most businesses, from start-ups to the most well-established corporations, their choice of outsourcing fulfillment services is a secondary concern to making sure that products are flying off the shelves and into shopping carts—both literal and digital.
And once you hit the point where you’re overwhelmed with trying to fulfill your orders, you have a limited number of options:
- Keep fulfilling orders yourself and never sleep again.
- Hire someone for shipping only. You now have a shipping department. Figure that your costs include salary and benefits, space, packaging supplies, shipping costs and probably some shipping department equipment.
- Use a third-party order fulfillment company
Most, unsurprisingly, choose the third option.
Why Should You Outsource Inventory and Fulfillment?
Some believe outsourcing inventory and order fulfillment services is a needless expense, but the right outsourced partner can offer considerable value. Many manufacturers that sell their products directly to consumers or through retailers are always trying to find a way to keep production costs from cutting into profit. The cost of space, for example, is a perennial concern.
Moving a factory that has heavy manufacturing equipment inside is an expensive and onerous task. In addition to moving costs is the time the plant is not producing. The only solution is to buy new equipment and abandon or sell the old equipment. These major expenses have a negative impact on the profits.
However, if the inventory and fulfillment activity goes to a 3PL company, plants can expand into the vacated space and add production lines, with little or no down time. This is a far more attractive solution. Outsourcing inventory and shipping functions offers manufacturers several advantages.
- Outsourcing fulfillment allows the company to concentrate on its core business of making and selling product(s). The time you gain outsourcing gives you more time for marketing and growing your business.
Location, as the old saying goes, is everything. It’s true for real estate development, and it’s true for order fulfillment, too. Having a partner with centralized warehouse locations can be critical for customer satisfaction (and your bottom line)— cutting shipping time, trimming down costs and getting your products to your customers more efficiently.
- It gives your company the competitive edge of scalability. While your company is growing, you are not worrying about having to add infrastructure for storing, packing, and shipping your products. You simply increase the space you need at your fulfillment company.
- Do you know how to make international shipments? It is a complicated process with lots of paperwork. However, if you use a 3PL company your concern is sourcing your product.
The cost of outsourcing fulfillment and the inventory, therefore, is typically less expensive than keeping it in-house and offers additional value in the long run.
The Right Partner
Selecting a 3PL is not usually as simple as just picking out the fulfillment service provider that offers you the best price. The old saying "you get what you pay for" certainly holds true when it comes to fulfillment and shipping. Many fulfillment companies will put penalties and severe limitations on the services they offer in the following circumstances:
- The product you sell is complicated to pack and comes with a list of complex fulfillment instructions or specialized packaging.
- The product is oversized. This is relative, but large products take a lot of warehouse space. Using a great deal of warehouse space is costly and often is prohibitive to outsource.
- You only sell a limited number of products. Your fulfillment costs are not just a function of how often you ship, but also a function of how many items you ship. Most services see better returns on large volume orders, and offer better rates to those companies who do more business.
If you've chosen an outsourced partner based solely on cost, you may want to stop and take a moment to think more seriously about who it is that’s handling your products. To learn more about how customized, cost-effective fulfillment services can win loyal customers for your business, contact Aero today.