For ecommerce businesses selling direct-to-consumer, the process of fulfillment can begin to become overwhelming as they grow in scale. While self-fulfillment of orders is a sensible option for retailers just starting out, there reaches a point where it can drain your business of both time and resources, take your focus away from core business objectives and lead to falling standards or mistakes.
When a business starts to experience struggles with fulfilling orders, it may be time to consider outsourcing fulfillment by using a 3PL provider. In this post we’re going to look at 11 signs it’s time to outsource fulfillment and get back to focusing on other business objectives such as growing a loyal customer base.
What is fulfillment?
Fulfillment is the process coordinated by either an ecommerce business or 3PL partner to deliver orders to the end customer. The process includes:
- Receiving and storing inventory
- Order processing
- Picking and packing orders
- Shipping and delivery
- Return management
With large retailers like Amazon leading the way in fulfillment, customers have high expectations regarding convenience and speed, making it crucial for any ecommerce business to get its order fulfillment process right.
Businesses that outsource order fulfillment to a 3PL partner can achieve more streamlined and cost-effective fulfillment that yields a competitive edge.
Signs you should consider outsourcing order fulfillment
Nearly all ecommerce businesses begin with an in-house fulfillment process, with most outsourcing it once they have scaled to a certain point. But where is the point when businesses should make the switch to outsourcing fulfillment operations?
1. Delivery standards are slipping
Slipping delivery standards is probably the best indication that it’s time to outsource fulfillment. A large number of customers will not return to your store following a poor delivery experience, so if building a loyal customer base is the goal, you should consider your outsourcing options before standards are drastically affected and customers experience late or incorrect deliveries.
Outsourced order fulfillment partners such as 3PLs providers will have the knowledge, staff, and crucially space to deal with an increase in order volume as you grow or seasonal trends kick in. You are much more likely to have correct and timely deliveries, keeping customers happy and, crucially, loyal.
2. High basket abandonment rates
Logistics are one of the most common factors in basket abandonment. Customers who face slow delivery speeds and costly shipping options are likely to think twice about completing purchases.
Small businesses can overcome this and bring down basket abandonment rates by streamlining fulfillment processes through outsourcing. Efficiency in outsourcing will generate shipping cost savings that can be used to offset a free shipping option.
3. Low seller ratings
Low feedback ratings are a telltale sign of unhappy customers. If you are unable to meet shipping deadlines and falling standards lead to errors, it’s time to outsource your fulfillment to a company that is able to maintain high standards before irreparable reputational damage is caused.
4. Low conversion rate
If your conversion rate is low despite reducing your prices, offering free delivery and sending basket abandonment emails, you may be missing the impact of logistics on your success. If you are only able to offer slow shipping times, customers are much less likely to convert.
Avoid this by outsourcing to a provider who can enable your customers to receive fast, economical shipping.
5. Costs too high
The main goal of any ecommerce business is to make a profit, so any way to reduce costs should be investigated. As your business grows, so do the overall warehousing, staffing, shipping and packaging costs. Outsourcing fulfillment will save your business money which can be reinvested into free shipping and marketing, or simply added to profits.
Providers such as 3PLs have the expertise and geographical locations to deliver your items as quickly and cheaply as possible, as well as saving you money on warehousing space, staffing and packaging materials.
6. Looking to expand
If your online business is primed for expansion, you should ensure that your fulfillment processes are too. Managing several sales channels, increased order numbers, and ramped up marketing activities is time consuming. Trying to manage fulfillment as well can distract you from these important tasks, especially when fulfilling more orders.
Outsourcing fulfillment takes the stress and more importantly time off your plate, allowing you to focus on your expansion plans. It also means that you don’t have to worry about the capabilities of your technology, warehouse and staff in the face of growth - your fulfillment provider will handle all of that for you. Learn more about the benefits of partnering with a tech-enabled 3PL.
7. Already expanding
Growth is one of the most common reasons that small businesses make the switch to outsourcing fulfillment, but why? As a business grows, you can no longer get by being a jack of all trades and controlling every aspect of the order process with all the various competing demands on your time.
Another aspect is capacity; as orders mount up, handling them becomes trickier resulting in missed deadlines, overworked staff and poor standards. Having enough space to hold more stock that comes with an increase in orders is another common problem with growing ecommerce retailers yet to outsource fulfillment.
Another benefit of outsourcing is fulfillment providers will have multiple warehouses in locations all across the country, allowing you to expand your delivery locations without incurring additional warehouse costs.
Finally, growth generally requires the employment of additional temporary and permanent employees. You can avoid the cost and hassle of additional staff through outsourcing.
8. Lack of expertise
You have an eye for identifying gaps in the market and selling, but you may not know much about the fulfillment process. A fulfillment partner will know the most cost effective way possible to store, pick and ship items, leading to higher profit margins and a better service for your customers.
9. Struggling to offer fast and free shipping
It is common knowledge that offering fast and free shipping is one of the best ways to drive ecommerce sales. If you are not able to offer this with in-house fulfillment, it may be time to look at outsourcing.
Fulfillment partners have the technology and knowledge to meet tight delivery turnarounds, regardless of volume. With efficiency, you will also be able to make savings that can be used to offset the cost of free deliveries.
10. You want to simplify and streamline your fulfillment process
If your current fulfillment process is a complicated combination of different services and partners, you may want to consider outsourcing. This will allow you to unify your processes and achieve cost savings, increased efficiency and consistency across marketplaces - especially useful for ecommerce businesses that operate a multi-channel selling model.
11. It’s taking up too much time
When starting up an ecommerce business, it may be your dream to one day sit back and watch it run itself - not spend late nights packing orders and visiting distribution centres. If your day is spent performing several tasks in the order fulfillment process, it may be the time to consider outsourcing.
Get back to managing your business rather than running it. Outsource your order fulfillment to a partner who will handle everything under the shipping process while you can invest time and attention back into growing your business.
What to look for in a fulfillment provider
If you are looking to outsource your order fulfillment and get back to growing your ecommerce business, partnering with a knowledgeable provider with the latest fulfillment technology is absolutely essential.
Look out for providers which utilise a system like Mintsoft. With 150+ integrations, including automated accounting and billing, Mintsoft’s 3PL management system allows 3PLs to fulfill orders, send and track invoices with simplified 3PL charging, monitor inventory levels and keep on top of your cash flow – all from a single platform.
If you’d like to learn more about how automation and streamlined software can help improve efficiency, read our guide on warehouse management systems.