To outsource e-fulfillment or not. That is the million-dollar question. There are many reasons why a company might decide to outsource its e-fulfillment. Some of these reasons are obvious other are not that obvious and many companies just do not pay attention to the benefits of outsourcing its fulfillment services.
The Obvious reasons why you should outsource E-fulfillment
- Lack of capital: Many Startups and even established companies do not have the capital to rent a warehouse, hire employees, lease a forklift, pay for insurance and many other charges. Using 3Pl companies to handle the fulfillment services is the way to go, not by choice in some.
- Faster Turn Around time: If you are selling products online and in order to succeed in the e-Commerce business you need to ship fast. customers these days just do not wait to wait a day or two to get their product. Most “fulfillment centers” have enough staff to ensure that the orders leave as quickly as possible, something you might not be able to do if you have limited resources.
- Focusing on your own business: A company needs to focus on its core competencies be it selling or developing new products. That is why several companies outsource their order fulfillment services. It is just wiser to worry about sales than receiving, warehousing, shipping and inventory shortages.
- Flexibility: Companies that are selling online can choose which 3PL company and which location to ship from. The company could be located in the middle of Utah yet its customer base is in Miami, they can choose any of the Miami Fulfillment companies to ship from. They also can have multiple locations to ship from without the haste of renting space in all of these locations.
The not so obvious reasons why you should outsource E- Fulfillment.
- Lower shipping rates: 3Pl companies usually have high shipping volumes which qualifies them for larger discounts and much lower rates than if you try or ship on your own. This applies to all forms of shipping such as Inland Transportation, or even Ocean freight.
- Expertise: many of the fulfillment centers have been doing this job for many years and developed the know how to help you with your business. You just can’t put a price on experience.
- Cross Selling: through working with the fulfillment company you get to meet potential clients. More revenue
- Global reach: if you are planning on exporting your products, you do not have to go somewhere else to get these services. Many of 3PL Companies are freight forwarders.
- Value added services: Fulfillment centers can help with branding and marketing in addition to other services such as collections and receivables management.
According to a study by the Harvard business school, it is much more economical and efficient to use a fulfillment company as opposed to doing the fulfillment yourself. Even Amazon outsources some of their fulfillment services to a company like International 3PL.