Getting orders is the hard part. But that doesn’t mean that the order fulfillment process is any less important. Quite the opposite, in fact.
Your order fulfillment processes continue to shape the customer experience after they’ve purchased. From picking the right products to shipping in a timely manner, there are a lot of opportunities to boost your brand image and earn repeat customers.
To enhance order fulfillment, many companies choose to use a 3PL service provider. Third-party logistics specialize in post-order tasks, including picking, packing, shipping, and even receiving returns. Because their services are purpose-built for these tasks, they can usually perform them faster, better, and cheaper than companies could do in-house.
Let’s do a deeper dive into the benefits of outsourcing order fulfillment to a 3PL provider.
What will your business look like in six months? A year? Five years or more?
Every business goes through phases. Sometimes, these phases are unpredictable. If you experience rapid growth, for example, you’ll need to hire more people quickly and secure a larger space. Or, if the economy takes a nosedive, you may need to lay off employees or downsize your space.
No matter what’s happening inside or outside of your company walls, outsourcing certain functions can make you more agile to scale. You’re no longer limited by your own internal resources when it comes to taking care of more customers.
This is an important consideration if you experience seasonal fluctuations. As your orders ebb and flow, your 3PL can, too.
2. Lower Shipping Costs
Third-party logistics providers assist multiple customers with order fulfillment. Because they are shipping in such large volumes, they can usually negotiate lower rates with shipping services.
In order to negotiate discounted rates from the likes of UPS or FedEx, you must meet certain volume requirements. One thing’s for certain, 3PL companies ship significant volumes of packages and therefore get favorable rates from the carriers. It’s likely they can pass on some of the savings to you. This is a big advantage that may otherwise be out of reach of your small business.
In addition, many third-party logistics companies will have relationships with multiple carriers. They can shop for the best shipping rates on your behalf so you always get the best deal.
Another advantage is that many 3PLs will store your goods in warehouses across the country. This can be a good cost savings strategy for you, since the closer your items are to your customers, the less they cost to ship.
As an added bonus, this only helps to reduce shipping costs, but also shipping times. Your customers will be excited to get their items sooner, and you’ll look good in the process.
3. Less Overhead
Holding onto inventory can be expensive. In addition to the cost of the inventory itself, there are also expenses related to storing, packing, and shipping those items. You’ll need warehouse space, shelving, and technology to help you keep items organized. You’ll also need to staff the warehouse with employees to pick and pack items during order fulfillment.
In addition, you’ll need to order all the materials to send your items to customers: boxes, bubble wrap, packing slips, shipping labels, and tape, to name a few.
Third-party logistics providers usually purchase these items in bulk, which makes your costs lower, too. What’s more, you’re only paying a portion of the overhead since a warehouse usually includes inventory and personnel across multiple customers.
Those savings on overhead go directly into your bottom line. You can use those savings to amp up your marketing, invest in your team, and position yourself for growth.
4. Better Technology
There’s no doubt that a powerful order fulfillment system can do wonders to keep orders flowing. But these are often too expensive to justify for small businesses.
Instead, many small businesses that handle their own fulfillment rely on manual processes or older technology that doesn’t allow for flexibility or agility. Systems like Excel spreadsheets are often prone to human error, which can slow you down even more.
This isn’t the case when you outsource to the experts. Fulfillment providers handling very large inventories and high volumes of order fulfillment tend to be equipped with the best WMS software, which means better inventory accuracy, faster order fulfillment, and improved reporting to help you track operational performance.
5. Order Fulfillment Expertise
One of the most overlooked advantages of outsourced order fulfillment is the expertise that comes with it. When you put your trust in a purpose-built order fulfillment service, you can skip reinventing the wheel yourself.
3PLs have laid the groundwork for you and have order processing down to a science. They’re up to date on storage compliance and regulations (e.g., how to store foods, chemicals, etc.) and have tools and processes in place that could take you weeks or even months to recreate in-house.
What to Look For in 3PL Order Fulfillment Options
The turnkey benefits of outsourced order fulfillment are clear. Here are a few questions you should ask as you’re vetting your options:
- What all does the 3PL service include?
- Do I have to invest in end-to-end management or can I pay for just the services I need?
- How do my business tools integrate with the 3PL’s technology?
- Do they provide a web portal where I can see all my inventory and order activity in real time?
From dropshipping to e-commerce, direct response to retail, every business’s needs are different. Still, the advantages of outsourced order fulfillment are worth looking into, and might just be the one growth strategy you overlooked.
Discover how Zenventory makes it easy to partner with the top 3PL companies for ecommerce — schedule a call today!