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Why Should You Outsource Your Order Fulfillment ?

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Why Should You Outsource Your Order Fulfillment ?

In the print-on-demand or drop shipping industry, Order fulfillment outsourcing even plays a more important and essential role. If you are working on this, I would recommend you to get some parts outsourced.

To run a business successfully on your own is not an easy task. And actually, we can not do it all in perfect ways. Sometimes, you will need to know how to delegate and focus on what you are excellent at only.

Definition


Order fulfillment covers activities of receiving goods, processing, and delivering them to end customers. 

It starts when a customer places an order and ends after they receive it. If they are not satisfied with the product and want to return it, it still needs to manage the return transaction. 



In general, there are five steps involved in the this process:

  • Receiving inventory shipments
  • Inventory storage
  • Order processing
  • Shipping
  • Returns processing

Based on its characteristics and every business’ situation, you can choose to handle order fulfillment in-house or outsource the process to a third-party logistics company (3PL).

6 Reasons for Outsourcing Order Fulfillment Services



By outsourcing this services, you can focus on your good skills and better build your business. Brendan Heegan from Boxzooka once said that online retailers should hire a team or provider to perform any tasks that are not their core competency. He also added that wasting overqualified resources to keep order fulfillment in-house may result in very high costs rather than outsourcing. 





In fact, the business of your online stores depends on many factors: quality of products, customer service, and also the quality of it. Just imagine that you invest a lot in product quality and you think that your customers would be satisfied when they receive it. However, any delayed, missing, or incorrect shipments can all ruin customers’ buying experiences and make them turn back to your online stores. That’s why order fulfillment is extremely important. And if your team can not perform this task well, it’s time to outsource. 





To help you better understand the importance of this process, we have collected six benefits that outsourcing can bring as below. 

1. Lower Your Shipping Costs 

There are many big companies having facilities not only over the country but also overseas. So, there is a solid foundation to offer lower shipping rates. On average, you can save around 15% to even 35% off shipping rates depending on the providers you choose. Besides, these companies utilize some software that allows them to know shipping rates from many carriers to pick the most cost-effective rate. 



Let’s take an example for your better understanding. If you pay 5USD per shipment for your in-house fulfillment service and you have 100 orders per month, we have:

  • $5.00 (per shipment) X 100 (orders per month) = $500 (monthly shipping costs)
  • $500 (monthly shipment costs) X 12 (months per year) = $6,000 (annual shipping costs)

However, if you can take advantage of bulk delivery discounts from your partners, let’s say 15% off - you will save a big amount of money. In details:

  • $500 (monthly shipping costs) X 0.15 (15% discount) = $75 (monthly savings)
  • $75 (monthly savings) X 12 (months per year) = $900 (annual savings)
  • $6000 (annual shipping costs before discount) - $900 (annual savings after discount) = $5,100 (annual shipping costs after discount)

 2. Reduce Your Operating Costs 

IBISWorld’s Public Storage & Warehousing market research report reveals that the warehousing and storage industry in the U.S. alone is valued at $22 billion and there are more than 600,000 people in this industry. Warehousing and fulfillment is a very potential industry partially because more and more businesses recognize cost-savings that outsourcing order fulfillment can bring. 





When you outsource the fulfillment services, you just need to pay for what you use. In general, fulfillment providers charge a flat storage fee for your warehoused products. Then, when you get the order, you will be charged for picked, packed, and shipped orders. This means that your base costs don’t change even though there is a seasonal increase or decrease in sales. Your storage expenses only change when you change the number of warehouse units.

3. Extend Your Reach

Many fulfillment companies such as Kingify can perform delivery to many parts of the world. So, there are almost no limits for your target market’s destination. You don’t need to reject any customers just because your in-house fulfillment team can not deliver to their address anymore. Instead of that, you can take advantage of their global platform to extend your reach and then grow into new markets. 

4. Outsourcing Order Fulfillment Contributes to Improvement in Your Customer Service 

Having good customer service is a big plus for your online stores. Fortunately, this can be well covered by order fulfillment providers. Most of them offer 24/7 support via email or phone, so any time your customers have feedback or need help with their orders, they will immediately contact the customers to solve the problems including tracking, return, or exchange. 





Besides, order fulfillment services can help online stores offer fast delivery and pickup options to meet customers’ satisfaction.

5. Using Technology to Streamline Order Fulfillment

Many fulfillment companies use the latest technology to receive your orders, and process and deliver the products to your end customers. If you work with them, their systems will integrate with your e-commerce store. Then, you will have a streamlined order fulfillment process including the below services:

  • Inventory management
  • Item tracking
  • Security
  • Shipping and handling
  • Carrier selection
  • Payment processing




6. You Can Focus On Selling (And More) With Outsourcing Order Fulfillment

Another advantage of outsourcing your order fulfillment is the efficiencies it brings to your online business. When your business grows and has a bigger size, you may have some difficulties with increasing numbers of orders. In this case, you can leave the heavy lifting to your order fulfillment partners and spend more time focusing on what you are good at — growing your business. 

Above is 6 reasons why we recommend you outsource order fulfillment for your business. Hopefully, this post is useful to you when choosing the most suitable types of order fulfillment!

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