We asked an industry expert, and a member of one of our trusted network of fulfillment companies to share some perspectives on why companies should consider investing in third party fulfillment services.
Many third party fulfillment companies are constantly approached by retailers whose operations are bursting at the seams and who aren’t able to keep their fulfillment performance consistent in the face of their brand’s growth. By that time, it’s likely that customer service, order accuracy, and possibly your bottom line have already suffered in some way due to inefficient fulfillment practices. So stay ahead of the curve! If you’re experiencing any of these 9 signs, it may be time to consider outsourcing your order fulfillment operations.
#1: Other parts of your business are taking a backseat.
Operations are the backbone of a direct-to-consumer business, but good marketing and merchandising efforts are the keys to making it grow. Spending all of your time managing inventory, scheduling a labor force, and maintaining a warehouse makes it very difficult to implement new campaigns and pursue additional avenues for growth. If you find that other aspects of your business are getting pushed back in favor of current operational needs, outsourcing can help you get back on track.
#2: You’re growing faster than you can manage.
What a great problem to have! But rapid growth does have its drawbacks, too – and it’s pretty easy to tell if your operations are no match for your expansion. If you’re struggling to get orders out the door within 24 hours of receiving them, or are finding that your delays in the warehouse are causing packages to miss their delivery deadlines, you might need to turn to an expert.
#3: You’re terrible at returns management.
No retailer likes processing returns – but if you’re doing it inefficiently, you’ll be losing a lot more than just a sale. Proper returns management involves staff and warehouse space dedicated to opening returned orders, re-entering them into your inventory, then either refurbishing the product (if needed) and restocking it or preparing it to be returned to your vendor. If your returns process is costing you excessive time, money, or inventory that you can’t recover, talking to an outsourced provider can help.
#4: Poor operations performance is causing customer service issues.
Are your customers complaining about incorrect orders or damaged products? When warehouse staff are stretched too thin or operations are overloaded, things get chaotic. This leads to slipping order accuracy and a lack of quality control at the pack station. Never, ever let your operations affect your brand – because fulfillment can break promises as quickly as it can build loyalty.
#5: Your infrastructure isn’t prepared for your growth.
Another great problem to have – until you have to make a decision to sign a lease for more warehouse space, hire additional workers, and even update your ecommerce technology to support a rapidly-expanding business. Increasing these things all take time, expertise, and mostly important – capital. If you’re not prepared (or unwilling) to outlay those things to grow the back-end part of your business along with the rest of it, outsourcing may be a good alternative.
#6: Your shipping rates are killing your bottom line.
Unless you’re an expert negotiator, love working with freight carriers, and ship millions of packages per year, you probably aren’t a fan of your current freight rates. Third-party fulfillment providers ship far more packages per year than the average retailer can achieve alone, so outsourcing allows you to take advantage of the economies of scale and experience lower shipping rates for both inbound and outbound freight. In fact, outsourcing to a fulfillment provider can often improve your shipping times-in-transit, too!
#7: You struggle with inventory management.
Receiving product, reconciling inventory, rotating stock on the warehouse shelves… all of those need to be done frequently (even daily) and with a strict attention to detail. An incorrect inventory count can throw everything else out of sync – including making your customers very unhappy. If you don’t have the technology and expertise in place to manage it effectively, find somebody who is to manage it for you.
#8: Dealing with vendors isn’t your strong suit.
Managing multiple product vendors can be a tricky task for any retailer to executive effectively. If you don’t have staff with the skill set or bandwidth to maintain these relationships, it’s wise to allow an expert to step in. A good outsourced fulfillment partner will often take over the vendor management process for its clients, overseeing everything from stock reorders, to inbound freight, to accounting and returns processing.
#9: You want (and need!) to expand your capabilities.
Maybe your customers are clamouring for overnight or next-day shipping, but that’s not economically or operationally feasible in your current situation. Perhaps you want to offer more personalization options to your customers, such as embroidery or engraving but don’t have the ability to do it in-house. Through outsourcing, you can select the perfect partner who already offers all of the services you need to continue growing your business – and at a much lower cost than implementing them yourself.