What are the pros and cons of outsourcing my order fulfilment?

When you’ve started a business from scratch and you’re used to doing everything yourself, the benefits of outsourcing your order fulfilment are not always obvious, especially if you know relatively little about the e-commerce fulfilment industry.

Outsourced order fulfilment isn’t right for every business and it can be a daunting prospect if you’re not sure it’s the best move. This article outlines the pros and cons of warehouse outsourcing, so you can make an informed decision about whether it’s the right approach for your business.  

PROS:

The benefits of outsourcing your order fulfilment

You’ll have more time to focus on your core business

Order fulfilment can be time-consuming and stressful, especially in a small business with limited staff. By outsourcing you can remove the stress of delivering your products, so you can focus on key areas like expanding your range, marketing, adding additional sales channels and growing your customer base.

Expand while controlling your overheads

You can increase your stock and take on new customers without the need for a substantial investment in premises, IT systems and staff. You just pay for the services you need.

Increase efficiency and minimise waste

In the fulfilment industry “waste” is unused time or time that is used ineffectively, which could be used to generate profit. A professional fulfilment service and warehouse management system is designed to increase efficiency and minimise waste.

Reduce your labour costs

During peak periods, such as Christmas, you don’t need to hire temporary workers or stay until the small hours packing orders yourself. By outsourcing your picking and packing to a fulfilment partner and you will have a pool of highly trained staff that can be deployed to meet changing order levels.

Increase your competitive edge

Outsourcing to a specialist e-commerce fulfilment company gives you the opportunity to compete with bigger companies in your industry who have in-house support services.

Although a fulfilment house would be located remotely to you geographically, the business will run as one operation and you won’t have to make the investment that your competitors have. In fact, you have more room to grow, can do so faster and with less risk.

Reduced shipping costs

Due to the economies of scale, you’ll benefit from cheaper e-commerce shipping costs using a third-party logistics provider. This is particularly beneficial if you’re looking to sell globally.

A skilled workforce

Large projects may require skills that your staff do not possess in-house. Outsourcing to a fulfilment specialist is a good way of expanding your team and gaining people with the skills that you really need without the expense of taking on new staff. 

CONS: 

The disadvantages of outsourcing your order fulfilment

Control

Some company owners or managers like to have physical sight of their stock. Walking into a warehouse and seeing the shelves bursting with stock gives them a sense of security – they can see where their investment lies. 

One solution is to outsource your fastest selling lines to see how the process works. If you use a shopping cart such as Shopify or Magento, you can assign, at the product level, which items of stock will be fulfilled by which service: your own or your fulfilment partner. 

Learning curve 

Although the concept of outsourcing your order fulfilment is simple, the actual steps to achieve this will require some thought. These are the things you should consider:  

Do all your products have unique barcodes?

All modern warehouses use barcodes to identify and manage your products within the warehouse so your products will need to be barcoded with individual barcodes for each product type. 

Do you have processes in place so that you can run your business without needing to handle your stock?

You will need written processes for the following:

• Ordering stock from suppliers based on sales and stock figures
• Despatching goods by different delivery methods and the customer delivery promises
• Dealing with stock discrepancies in the warehouse and on the website
• Capturing errors from customer issues
• Refunding returned orders

Do you have someone who understands your business who can work with your fulfilment provider to agree the service levels and measure the success of your business?

Low volumes 

If you have very low volumes, then the storage costs may eat into your profits. Our fulfilment customers typically receive 250 + orders per month. 

Besides the obvious time savings, there are many advantages of outsourcing your order fulfilment, however, every business is different so it’s important that it’s the right move for you. If you’d like to discuss your order fulfilment requirements with one of our experts, please get in touch or you can get an estimate using our order fulfilment calculator.