For online retailers, order fulfillment and transportation costs can make or break your bottom line. When you’re in a hypercompetitive industry, any chance you get to have a leg up on the competition and lower these expenses is crucial. Most successful e-commerce companies have gotten to where they’re at because they chose to prioritize efforts to streamline their packaging and shipping processes.
This is where it gets tricky though. Should you outsource to a third party or keep your fulfillment in-house? A lot of businesses attempt to oversee this process on their own when they first start out; however, that route typically only gets you so far. So, here are the top 4 reasons why most companies tend to eventually outsource their fulfillment.
1. Increased Flexibility
Retailers are no strangers to the ups and downs of order volumes that come along with seasonal trends. Unfortunately, if you have too many fixed costs for things like warehousing space and labor, adapting to this volatility can be pretty difficult. This is why working with a third-party logistics provider (3PL) can be the best of both worlds. It gives online retailers the resources they need to meet peak season demand without forcing them to make large investments they’ll only be tied down to later. Because outsourcing offers a kind of pay as you go opportunity, it’s far more flexible than the alternative.
2. Better Technology
Technology plays a huge role in making today’s fulfillment and shipping processes more efficient and easier to manage. While it allows companies to improve the flow of data between different sales channels and inventory counts in addition to identifying the best rates, it ain’t cheap. Integrating new technology like a TMS or OMS can also be a pain, so rather than going after the newest unaffordable thing on the market, take advantage of the leading software solutions 3PLs have to offer.
3. Lower Costs
Purchasing shipping and sourcing materials in bulk, such as packing fill or cardboard boxes, is usually your best bet because you can pay less per unit when you buy more upfront from suppliers. 3PLs can provide you with the same material costs and shipping rates they receive, allowing you to benefit off of prices you would never get unless you suddenly decided to order enough packaging material to last you a lifetime and then some.
4. Expert Guidance
You’ve got an online business to run, which means you most likely don’t have the time to become an expert on picking and packing or to search for the countless ways you could be saving money. It’s a 3PL’s job to spend the time and energy doing those things for you. Their value-added services, customization capabilities, and innovative approaches have the potential to differentiate your products on another level. You’ll be better off focusing on what you know and outsourcing the rest to those that have the experience to get you where you want to go.
To learn more about the advantages of outsourcing your e-commerce order fulfillment to a third party, visit O’Neill Logistics and explore why this is a decision worth making.