When an e-commerce company first launches, it is often easier for the owners and/or company executives to plan to do everything in-house. After all, it helps keep costs down, it allows you to keep your fingers on every part of the business and – typically – your initial fulfillment requirements are minimal…a small storage area for your inventory, a few boxes and some packaging materials, a workspace for your pick/pack/ ship process and a computer to process your orders.
But as the company grows – and as the demands of your business require you to devote more time to business development and an aggressive sales and marketing effort – it can often make sense to consider outsourcing the fulfillment part of your organizational processes.
Following are four of the biggest benefits to outsourcing your fulfillment operation to a third-party services provider:
1. Turn your fixed costs into variable costs
As your volume grows, and you need more space to ensure adequate inventory of your product line, do you really want to sign a long-term lease for a warehouse-size space, incurring the rent that accrues each month, regardless of your volume? In addition, you would need to hire employees to manage your in-house fulfillment process, paying them whether you have orders to fill or not. And don’t forget that eventually you’ll need things like racking, a forklift, dock-high freight doors, scales and the other requirements of operating a real shipping operation.
In addition to all of that, you’ll also be faced with the cost of utilities, insurance, Workman’s Compensation, employee benefits and payroll taxes, just to name a few.
2. Concentrate on growing your business
What’s the best use of your time? We’re willing to bet that it’s not hiring and managing a warehouse staff, packing boxes or manning the phones. By outsourcing your fulfillment needs – along with other “back end” issues of your operation such as staffing a Call Center, managing your database, monitoring your inventory and tracking your shipments – to a qualified service provider, you can spend the bulk of your time growing your business.
3. Accommodate rapid growth and/or seasonal spikes
If your business is planning for rapid growth, expecting significant media coverage, or dealing with seasonal spikes – like a major push at the holidays – the onus for keeping up with your order volume will be on your fulfillment service provider, not you. And if you’ve chosen a professional fulfillment services company – with an experienced team that knows how to ramp up for a growing business or a seasonal surge – that company will be able to plan for and accommodate your business’ needs. Plus, their ability to adjust their staffing levels at various times is likely going to be much greater than yours. After all, fulfillment is what that company does day-in, day-out, for 12 months a year.
4. Flatten your learning curve by turning to professionals
As with all true professionals, a quality fulfillment services provider has experience in all of the many variables that take place in an operation and can react much more quickly – and more knowledgeably – to the constant demands of growing your business.
In summary, as you contemplate starting or growing your business, consider that the fulfillment portion is often the “customer satisfaction” element that can mean the difference between one-time purchasers and long-term, loyal customers. And that customer satisfaction can ultimately determine the success or failure of your business.
Turning this important element of your business over to the experts will allow you to transform fixed costs into variable costs commensurate with your volume, and enable you to focus your efforts where they need to be…on growing your business.