Things to Consider When Outsourcing Fulfillment
This blog was contributed by Chris Nikoloff, Vice President, Sales & Marketing for Complemar, a full-service fulfillment and contract packaging company. Chris has a record of leadership and growth in the logistics marketplace. His previous positions include Vice President of Business Development for Kable Fulfillment and Vice President and Sr. Director positions at Ingram Micro Logistics, Aero, and the Jay Group.
More and more consumers are making all types of purchases on the internet — from groceries to monthly subscription boxes. As a result, many new ecommerce retailers are starting to get in the game.
The problem is that when you’re just starting out, you likely won’t have an adequate logistics infrastructure. Unfortunately, customer orders do not pack and ship themselves. While this might not be an issue at the outset, you may quickly find yourself overwhelmed trying to keep up with order fulfillment.
Outsourcing fulfillment to a third party logistics provider (3PL) can be a solution to this problem. Instead of you picking, packing, and shipping orders, the 3PL manages each part of fulfillment per your instructions.
While this all sounds well and good, there are some things you need to keep in mind when deciding to outsource.
Does it make sense for my brand?
One of the hardest parts of making the choice to outsource is determining if it’s necessary or not. It might be more convenient, but it’s crucial your business is performing well enough to not only warrant using a 3PL but also afford it.
Ask yourself these questions when making the call:
- Am I too busy fulfilling orders to work on scaling my business?
- Do I have the space to hold all my products and still be efficient?
- Does my current infrastructure have the ability to support growth?
Depending on your answers, outsourcing fulfillment might be both desirable and necessary. Outsourcing at the right time must be a strategic decision to help you grow and build your brand. Because outsourcing at the wrong time can have the opposite effect.
What are the potential risks?
There are some potential downsides to outsourcing fulfillment that you should be aware of. While you can mitigate some of these by working with a well-established 3PL, others are inescapable. Here are some examples:
Your reputation is at stake.
How well you fulfill orders affects how shoppers feel about your brand. Poor packaging or late delivery can negatively impact your reputation. The delivery experience is the last part of a customer’s interaction with you. And it’s the first thing they will remember.
Human error is unavoidable.
No matter how good a 3PL is, there is always the potential for human error. Either too much or not enough of a product can get sent out. Perhaps an order is wrong altogether. When this happens, you may have to eat the return fees.
You won’t have 100% control of the post-purchase experience.
Miscommunication is another common issue when you add an extra step between you and your customers. All it takes is a small change in a minor detail to upset a customer — for example, a difference in packaging. Any number of seemingly little things can throw a wrench in your fulfillment gears. And the worst part is you won’t know until a customer complains.
All told, there are pros and cons to outsourcing your fulfillment. And those will vary from company to company. Take a moment and consider if your business is in a position to make the change before you make any decisions. If you do decide to outsource, make sure you’re working with someone who can get the job done right the first time. Let ShipStation and Complemar help you!