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Although outsourcing order fulfillment can seem daunting, it is a great way to ensure long-term sustainability for your online business. Although informal pick-up, packing, and shipping can be a great option for new businesses, it is not the best way to grow your business. Rapid and/or unexpected growth will require a formal agreement. Outsourcing order fulfillment can be a time-saver, establish and maintain a good reputation and let you and your staff focus on scaling instead of worrying about logistics.
There are three scenarios where outsourcing is a good idea:
Similar: How to Ace Order Fulfillment for Your E-Commerce Company
1. Rapid growth can overwhelm operations
This is a great time to celebrate a growing business! It’s a good time to plan for scale, but it is also a great time to make investments in the right infrastructure. Outsourcing fulfillment can be a natural step in that process. There are several benefits to a rapid growth cycle:
* Managing & storing inventory. You will soon run out of room if your home doubles as your headquarters for your growing business. To increase your margins and prevent stock-outs from happening, you need to invest in inventory. You will also need to locate a place to store it. A fulfillment company can manage inventory and storage so that you and your staff can focus on other elements, such as sales and marketing.
* Meeting deadlines. Startups are often small and have limited resources. This can make it difficult to meet deadlines during periods of unexpected growth. While it may have been possible to do what was initially done with a handful of people around the kitchen table, this quickly becomes overwhelming. Customers also expect fast delivery. According to Narvar’s customer service platform, 53% will not purchase anything if they aren’t sure when it will arrive. Third-party fulfillment can ensure that your orders are picked up, packed, and shipped quickly. It can even advise you on the most cost-effective shipping options.
* Minimizing errors. Human error in order fulfillment cannot be avoided with the assistance of a small number of employees or family members. With outsourcing, you have access to automation in picking and packing and software verification that makes mistakes extremely rare.
Similar: Three Things to Do To Scale Your Ecommerce Company
2. If key members of the team are focused on wrong things
Chances are you or your team have played different roles in the business you’ve bootstrapped. To avoid costly backlogs, staff who are involved in rapid growth or unanticipated expansion of a business often have to pick and pack orders. You are wasting money if sales or marketing staff are putting together inventory boxes and inputting envelopes, instead of maximizing growth opportunities. Third-party fulfillment providers can assist with:
* Managing inventory. Physically managing inventory is more difficult as a company grows. Although you might have been capable of handling most items on your own, it becomes more difficult to manage large inbound shipment (palletized goods, floor-loaded containers etc.). Product assembly, bundling and quality assurance processes require substantial resources. You can partner with fulfillment companies that have these resources.
* Purchasing packaging materials. Ordering and reordering packaging material can be time-consuming and costly if you do your fulfillment. This tedious task can be eliminated by working with a partner. You will also get volume discounts on items like polybags and corrugated boxes, tape, void-fill, and pallets.
* Manage returns, cancellations, and exchanges. It will not be easy to pack hundreds, or eventually thousands, of orders every day if you’re running low. Your employees will be faced with new responsibilities when you add the joys and challenges of reverse logistics and returns management. Businesses in fashion, which receive an average of 30% to 40% return sales, are particularly affected. This field is highly skilled and Fulfillment Partners are great at helping businesses maintain their good name with all stakeholders. They can navigate customer requests and make difficult logistical decisions that will help them keep it in the best possible shape. The investment in this function can pay off.
3. As logistics requirements grow more complex,
Most businesses need to reevaluate their operations and prioritize growth. You may discover that your existing infrastructure and skills are not able to handle new challenges. You can take advantage of the economies of scale of fulfillment providers, which allows you to keep your focus on growth-related opportunities and preserves your energy. This partnership helps with:
* Managing multi-channel fulfillment. A lot of businesses start with one sales channel, such as an Etsy shopfront or a website. This allows for easy inventory management. However, once companies start offering the same product to multiple customers, their operations can become more complicated and time-consuming. These challenges are not new to fulfillment providers, who manage multiple sales channels for clients every day. Their powerful software solutions will help you to solve this problem.
* Engaging wholesale customers. Engaging with wholesale customers can dramatically improve your company’s profitability. However, these customers are a challenge for many companies. Working with experts who have experience in serving large customers will ensure that you comply with the often complex routing guidelines, minimize any chargebacks or shipment rejections, and help to keep your wholesale growth goals on track.
* We must maintain high accuracy standards. In order to remain competitive in the fulfillment market, accuracy has been a key requirement for both sellers and customers. Amazon has high standards in speed and accuracy, which are extremely difficult to achieve if you pick and pack through informal arrangements.
Similar: How to Start a Fulfillment Business by Amazon
Publited Sat 28 August 2021 at 21:18.32 +0000