3 times execution outsourcing makes sense
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Outsourcing order fulfillment for your e-commerce business may seem like a daunting prospect, but it can be a very beneficial step towards long-term, sustainable growth. While informal picking, packing and shipping operations – often supported by the help of family and friends – can serve new business owners well, rapid and / or unexpected growth usually requires arrangement. more formal. In most cases, outsourcing order fulfillment to a third party can save time, build and maintain a good reputation, and allow you and your team to focus on getting things done. scale without being distracted by logistics.
Three scenarios in which outsourcing makes sense:
1. When rapid growth overwhelms operations
If a business is growing, now is the time to celebrate! However, if you haven’t yet planned for scale-up, this is also an important time to invest in an infrastructure of the right size, and outsourcing the execution is a logical step in this process. Here are some benefits in a rapid growth cycle:
• Stock management and storage. If your home has become the headquarters of your business during rapid growth, you may soon be running out of space (if you haven’t already). As the number of orders increases, you will need to make a significant investment in inventory to increase margins and guard against stockouts, and you will also need to find a place to store it. Partnering with a fulfillment vendor puts storage and inventory management in their hands, so you and your team can focus on things like sales and marketing.
• Respect of deadlines. Most startups run lean, so deadlines can get tough during times of unanticipated growth. What could initially be done by a few people sitting around the kitchen table quickly becomes unmanageable, while customer expectations for speed of delivery remain ruthless. (According to the customer experience platform Narvar, 53% of buyers won’t buy something if they don’t know when it will arrive.) Outsourcing fulfillment to a third party ensures that orders will be picked, packed, and shipped quickly, and he can also advise you on the best shipping options.
• Minimize errors. With the help of a few employees and / or family members, human error in fulfilling orders is inevitable. Outsourcing provides access to automated picking and packaging functions and verification software that will make errors extremely rare.
2. When key team members focus on the wrong things
If you’ve started a business so far, chances are you and / or your team members have different roles within your operation. In the event of rapid or unexpected growth of a business that processes in-house orders, key staff members often need to help with preparation and packaging to avoid a costly backlog of orders. If sales reps sort inventory and fill envelopes instead of capitalizing on growth opportunities, you’re wasting money. A third-party service provider can help you:
• Inventory management. As a business grows, physical inventory management becomes increasingly resource intensive. While you have been able to handle most of the stuff on your own so far, the large inbound shipments (palletized products, floor loaded containers, etc.), product assembly and consolidation and a true quality assurance require substantial capacity. Outsourcing allows you to partner with service providers who already have such resources.
• Purchase of packaging materials. If you do your own fulfillment, ordering and rearranging packaging materials is time consuming and expensive. Partnering with a third party will remove this tedious element from the workflow and allow you to take advantage of volume discounts on items such as bubble envelopes, poly bags, corrugated cartons, duct tape, void filling and pallets.
• Management of returns, exchanges and cancellations. If you work lean, it will be difficult to pick and package hundreds (and possibly thousands) of orders every day, to say the least. Add to that the joys of managing returns and reverse logistics, and your employees will end up with a whole new set of full-time responsibilities. This is especially true for companies in the fashion industry, where between 30 and 40% of sales are returned on average. The implementing partners are very experienced in this area; they can help a business maintain its good reputation with stakeholders by skillfully handling difficult customer demands and logistics decisions. This feature alone can be worth the investment.
3. When logistical needs become more and more complex
For most businesses, growth requires a large-scale reassessment of operations, priorities and goals. As you prepare for new challenges, you may find that the existing infrastructure and operational expertise are unable to support growth. Outsourcing allows you to take advantage of the economies of scale of a fulfillment provider, conserving your energy and instead focusing on growth opportunities. Such a partnership helps to:
• Navigate the multichannel execution. Many businesses start with a single sales channel like an Etsy storefront or a proprietary website, where inventory management is streamlined and easy. However, once companies start offering the same product at multiple locations, operations become both complex and more urgent. Fulfillment providers are used to these challenges as they manage customers with multiple sales channels every day. Plus, their powerful software systems will do a lot to meet this challenge on your plate.
• Engage with wholesale customers. This mark of commitment allows your business to significantly increase its profit potential; However, while these clients play an important role in the growth of many businesses, they also make it much more difficult. Partnering with professionals experienced in serving large buyers will help you stay in compliance with their frequently excessive routing guides, avoid associated chargebacks and / or shipment rejections, and keep wholesale growth plans on track. the right path.
• Maintain high standards of accuracy. As the fulfillment space becomes more competitive, error free ordering has become the foundation for most sellers and customers. Amazon, for example, has high demands on speed and accuracy that are exceptionally difficult to meet if you choose and pack through an informal setup.