Okay, so which is the best use of your managers’ time?
Working to source great products and get them in front of people who want to buy them
Managing the reordering of shipping supplies, such as cartons and packing tape
Constantly juggling labor to ramp up from last Friday’ 37 orders to Monday’s 512
It seems pretty clear that #1 is the best answer. However, I sometimes speak with folks who can’t imagine outsourcing their order fulfillment: “It’s a core function of our business”. That's just wrong. Fulfillment is a critical support function, but if fulfillment is a core competency of your eCommerce company, then you’re in the wrong business.
There are many providers who are better at fulfillment than you are, just as UPS is better than you are at driving order #15-834728 out to Stanley K. Schmitz in Peoria. So let’s look at five reasons why outsourcing your fulfillment makes sense.
1. Focus Management on What Matters Most
Your management group has X units of time to solve problems and to grow your business. It should spend that time finding great customers and great products, and then brokering a profitable marriage between the two. Everything else is a distraction.
As an eCommerce brand, performing that marketing marriage has got to be your core competency. You should be evaluating literally every other function for outsourcing. Most brands contract their manufacturing, so why not contract your distribution?
2. Avoid a DIY Fail
We have a client who have been making olive oil for over a century. We do not make olive oil. Sure, we could watch some YouTube videos or consult a wikiHow. But we’re never going to be half as good at it as our client is. Why would we even try?
Similarly, experienced fulfillment specialists are way better at fulfillment than you are. Fulfillment is all they do, every single day. A good fulfillment provider has better purchasing power and the ability to flex resources - think space; equipment; management; labor and technology - between clients. That provider might earn a profit margin of 10% of revenues.
So if you can’t be certain that you are more than 90% as efficient as companies that do nothing but fulfillment (you can’t), then you should seriously consider outsourcing. A well-chosen fulfillment partner is also going to deliver to you, at no cost, some incredibly valuable lessons that were learned the hard way on someone else’s time and dime.
3. Invest in Some Success Insurance
Living with a static fulfillment delivery system is like betting against your own marketing team. It’s not so difficult to pump out customer orders on a Thursday. And maybe you can bring in some folks from the office to help pack the Monday order rush. But what are you going to do in November? And what happens if social media discovers your product and it goes ballistic?
In other words, what are you going to do if your marketing team succeeds? The answer is that you are likely going to choke. At the most important time for your business, you may fail to perform because you’re just not built to scale your fulfillment up (or down) as activity fluctuates.
This is what fulfillment providers do. We balance our clients so that we can shift staffing from a client who is in a slow period to help to cover your peak. We also know that we’re going to be adding staff and additional shifts in November and December, because that is mostly what we are thinking about from January through October.
4. E Pluribus Unum: Get Sweet Shipping & Packaging Discounts
We ship a lot more packages than you do. Because of that, we buy supplies and shipping services at better rates than you can buy them. A good fulfillment partner shares these discounts with its clients, reducing client costs and adding value to the relationship.
The big parcel carriers don’t care how nice you are. They are not excited about your cool products. What they love is volume, and you don’t have it. We do. Well, our clients collectively do. By teaming with the right fulfillment partner, you go from being Schenectady State to being Ohio State. Who gets better discounts on Gatorade?
And it doesn’t stop at discounts. We also get better service options. How would you like to stop paying dimensional weight charges? What if you could combine your parcel volume with other merchants’ and ship your orders for a fraction of what you’re paying now? How might your business grow if you could ship orders globally for less than $10 each?
A solid fulfillment partner brings access to shipping options and services that are likely not available to you. It’s not because we’re brilliant, though our moms like to think so. It’s because this is what we do every day.
5. Let Crop Dusters Help Your Business
Most eCommerce brands are in the cities. It’s a great place to live, and a great base for hiring top talent. But it’s an expensive place to run a warehouse. The costs that drive fulfillment operations are facilities and labor, and neither are cheap in a metropolis.
Most fulfillment companies are located in rural places not too far from the cities. This keeps us close to airports, seaports and highways, but without the high costs associated with urban life.
While our warehouse is within 2 hours of four major airports and two major seaports, there is a field of potatoes growing next to our parking lot, and our building is regularly buzzed by crop dusters. This ain’t Rodeo Drive, but your customers will never know or care. All that matters is that they got what they ordered, packed beautifully and delivered on time.
So give 3PLs a shot. Even if you don’t believe that we can save you money or improve your service levels, you owe it to yourself to both qualify and quantify that belief. And while we charge by the hour for certain services, sales consultation is not one of them.
I will be following up this post with a companion: Outsource Your Fulfillment: How & When. You can check out our company, or take a 10 minute survey that will tell us all that we need to know to quote pricing to you. I’m also always available to discuss your fulfillment questions, whether you’re a client, a prospect, or just a fulfillment nerd like me.
About the Author
After starting my career as a suit-wearing, MBA-toting commercial loan officer (pictured), I fell into a nascent fulfillment industry just in time for the birth of eCommerce. While I’ve since enjoyed stints conceiving and executing original brands, I’m again hooked on the addictive draw of perfectly executing the dreams of others.
I am Vice President | Client Development for Warwick Fulfillment Solutions. Email me at email@example.com.