Home Business The Benefits of Outsourcing Your Ecommerce Inventory Fulfillment

The Benefits of Outsourcing Your Ecommerce Inventory Fulfillment

written by Shane "Geek" Lundberg May 8, 2017

Congratulations! Your online business is booming. Your month-over-month sales are increasing and you’re far busier than you ever anticipated prior to starting out.

While you’re not complaining about good business, you are finding yourself becoming a tad overwhelmed. What once was a relatively simple operation that consisted of yourself, a few suppliers and a couple of scattered (yet dedicated) employees, has now evolved into a full-fledged organization. Who would’ve thought!?

Your days are spent managing your warehouse, customer service inquiries and returns, with little-to-no-time spent developing a catalogue of products. There comes a time for every successful business owner that they spend so much time working in their business that they never have time to work on their business.

This is where outsourcing can come in handy and actually free up a lot of time to help you guide your business in the way you want.

What is Outsourcing?

For the completely uninitiated, “outsourcing” is the act of delegating specific responsibilities (within your business) to other organizations that specialize in those particular processes. For example, if you’ve started an online furniture store, it may no longer be feasible to house product yourself — meaning you’ll have to hire a larger shipping company or warehouse to manage your inventory for you. Which is something you must think about as the owner of an online furniture store as, according to ibisonline.com, online furniture shopping made $10 billion in profit in 2014.

Even though your enterprise has grown into a huge operation, there is still always ways to streamline production.

Saves on Shipping 

For online retailers, shipping costs are one of the largest expenses in their budget. Shipping rates are based on volume, meaning that the more you ship, the cheaper your costs will be. Using a third-party shipping company gives you access to lower rates, as they will fill their trucks with inventory from other companies along with your own.

Faster Delivery 

In-house fulfillment is typically completed from an area that is close and convenient for you. This kind of thinking needs to be replaced as your enterprise expands to regions further than what is easily accessible to you. The shipping facility that is closest to you may not be in a location that provides the best rate or delivery times for your customers. If you work with a centrally located shipping facility in the middle of the country you’re selling in, you can save on shipping costs (which in turn lowers costs your customers) and boost your delivery rates. When you start a furniture business, you don’t exactly expect the fastest shipping rates, however, this doesn’t mean that you shouldn’t be striving for better results at every opportunity, either.

Lower Operating Cost

Owning and operating your own warehouse comes with a lot of overhead expenses that you might not have been able to foresee. This includes labor, rent, equipment, insurance, utilities and a whole variety of other costs associated with a warehouse’s day-to-day operation. This means that no matter how many items you ship — 10 or 10,000 — you’ll have to pay to ship those items on top of all the other expenses.

Opting for a third-party shipping company, you will pay on an activity-based rate, which means you only incur costs when someone places an order. You are also less likely to be locked into any building leases or long-term contracts.

Latest Inventory Technology 

Any third-party order fulfillment warehouse worth their salt will have the latest technology powering their operation. This will include seamless integration with your sales channels as well as other management tools and inventory tracking technology that make shipping & receiving product a snap.

Improved Customer Service

If customer service and returns are part of your everyday struggle, a third-party fulfillment center can help lift the burden. As an outsourced entity, they will handle all of the customer support and returns as part of an efficient, dedicated process. This means that not only does outsourcing your order fulfilment get you an improved shipping experience, but it also boosts your customer service presence!

Outsourcing order fulfilment can help free up the day-to-day operations of your ecommerce store, so you can focus on the growth and development of your now-thriving organization.

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