08 Jul Things to Consider When Outsourcing Order Fulfillment
With more and more consumers making ALL types of purchases through the internet – everything from groceries to monthly grab-bags – many new ecommerce retailers are starting to get in the game. The problem is, when you’re just starting out, you likely won’t have the logistics infrastructure to back it up. You will soon find that customer orders do not pack and ship themselves. While this might not be an issue at the outset, as you continue to build your customer base, you might find that you’re quickly overwhelmed by trying to keep up with order fulfillment.
A solution to this problem can be looking at outsourcing your fulfillment. Here, instead of you being the one to pick, pack and ship orders to your customers, you employ a 3PL (third party logistics). This fulfillment provider will warehouse your goods, pick and pack orders, and ship them per your instructions. While this all sounds well and good, there are some things you need to keep in mind when deciding to outsource.
Is it Necessary?
One of the hardest parts of making the choice to outsource is determining if it’s really necessary or not. While it might be more convenient, it’s crucial that your business is performing well enough to not only warrant it, but afford it. When making the call ask yourself these questions:
- Am I too busy fulfilling orders to work on growth and development?
- Do I have the space to hold all of my products and still be efficient?
- Does my current infrastructure have the ability to support growth?
Depending on your answer to these questions, outsourcing might not only be desirable but necessary. Outsourcing at the right time SHOULD be a strategic decision to help you grow and build your business. However, outsourcing at the wrong time can have the opposite effect.
An Assumed Risk
There are some potential downsides to outsourcing that you should be aware of aside from just the costs of doing so. While some of these can be mitigated by working with a well established 3PL, some are simply unavoidable.
- Your reputation is based on fulfillment- Remember, this is the last part of your customers interaction with you and the first thing they will remember. Poor packaging or late delivery can negatively impact your reputation.
- Human Error- No matter how good a fulfillment 3PL is, there will always be issues. Either too much or not enough of a product can get sent out. Perhaps an order is wrong altogether. When this happens, you could find you’ll have to eat the return fees.
- Whisper Effect- Another common issue that happens when you add an extra step between you and your customers is miscommunication. All it takes is a minor detail to be changed, a difference in packaging, vendor changes a spec on a product, any number of seemingly little things can throw a big wrench in the works, and the worst part is; you won’t know till a customer complains.
All told, there are pros and cons to outsourcing your fulfillment and those will vary from company to company. It’s important to take a moment and consider if your business is in a position to make the change before you do. If you do decide to outsource, make sure you’re working with someone who can get the job done right, the first time.