Order fulfillment is one of the most crucial aspects of running an eCommerce business. But it can be a complex task with many moving parts to keep track of.
One effective way to ease the fulfillment process is by teaming up with a third party fulfillment provider. They handle most of the hard work for you, taking a huge weight off your shoulders.
Still, deciding to outsource order fulfillment is a big step for any business. That’s why we’ve created this comprehensive guide to give you all the information you need to navigate outsourced fulfillment in 2023.
We’ll cover what it is, how it works, its advantages and disadvantages, what to consider when choosing a provider, how it can save on costs, and much more.
Keep reading to get a better grip on outsourced order fulfillment and make smart decisions for your eCommerce business.
What is outsourced fulfillment?
Warehousing, picking, packing, shipping, delivery – there’s a lot that goes into order fulfillment. It can be a struggle to manage the entire supply chain process alone – especially for smaller eCommerce businesses. Wouldn’t it be nice if you could hand it all off to someone you could trust to get it done so you could focus on running the rest of your business?
That’s where outsourcing comes in. Outsourced fulfillment refers to hiring a third party to manage some or all aspects of your order fulfillment process.
How does outsourced fulfillment differ from in-house fulfillment?
If these terms sound like polar opposites – that’s because they are! As we just learned, outsourced fulfillment is where a third party stores, packs, and ships your products for you.
In-house fulfillment, on the other hand, is precisely what it sounds like. It’s when your company handles all these tasks independently on its own premises without outside help.
Advantages of outsourcing fulfillment services
The main advantages of outsourcing fulfillment include:
Freedom to focus on core activities
By outsourcing fulfillment, your business can redirect its valuable time and resources.
This means the long hours spent storing inventory, packing boxes, and printing labels can be reinvested into your business’s core activities. You’ll have more time to create, improve, and promote your products.
Cost savings
Outsourcing not only saves you time; it can save you money, too. With outsourced fulfillment, you no longer have to worry about renting a storage warehouse, buying equipment, or hiring extra hands just to pack and ship your orders.
Third party fulfillment providers benefit from economies of scale, meaning they can efficiently handle large orders.
This ultimately leads to lower costs per unit of work and reduces overall operational expenses for your business.
Scalability
Many eCommerce businesses experience dips and spikes in their sales activity over time. Whatever stage your business finds itself in, an outsourced fulfillment partner can scale their services to match your changing needs without it becoming a big deal.
Industry expertise
But how do you know you’re placing such a vital system of operations in trustworthy hands? From order processing to packing and shipping – third party fulfillment partners are experts at what they do.
With access to this level of professionalism, you can rest assured that your orders are handled with care and delivered to your customers on time and in perfect condition.
Access to the latest technology
You already know that it takes regular updating and innovation to make sure you’re offering the best possible products and services – and fulfillment technology is no different. Professional third party fulfillment providers use advanced technologies to manage inventory, handle shipping, and track orders.
When you outsource fulfillment, your business can access these high-tech tools without having to buy them yourself.
Disadvantages of outsourcing fulfillment services
Despite the many advantages of outsourced fulfillment, these services come with their own unique set of drawbacks, including:
Loss of control
When you outsource your fulfillment, you’re giving up some of the control you have over how your supply chain is handled.
This can be uncomfortable for some businesses, especially at first. Remember, when you choose a fulfillment partner you can trust and set clear expectations with them, you can learn to strike the right balance in your collaboration.
Communication challenges
Sometimes wires get crossed, even between long-time teammates. Communication between your business and an external fulfillment partner can sometimes present challenges. Miscommunications can potentially affect order accuracy and customer satisfaction. Clarity is key!
Quality concerns
It’s easy to ensure things get done according to your standards when you do it all yourself. Handing order fulfillment to an external partner means trusting their quality standards, too.
Partnering with a reputable fulfillment center is the best way to guarantee high-quality packaging, shipping, and overall service.
Long-term costs
While outsourcing can provide initial cost benefits, it can sometimes add up, reaching – or even exceeding – the costs of managing fulfillment in-house over time.
That’s why it’s crucial to consider the long-term financial impact before you decide.
Data security risks
As a critical element of your business, data must be handled with care. Sharing important customer and business data with a third party fulfillment center comes with data security and privacy risks.
Coming to a clear agreement about how your data will be protected is the best way to reduce these risks.
What types of businesses benefit from outsourced fulfillment?
Outsourced fulfillment isn’t for everyone, but many types of business can benefit from working with a third party. However, it can be especially beneficial to:
- Small-to-medium-sized businesses
- eCommerce stores
- Subscription box companies
- Fast-growing businesses
- Businesses offering fast or express shipping
- Companies with limited storage space
- Seasonal businesses
What factors should I consider when choosing an outsourced fulfillment provider?
So, you’ve decided to outsource. Now it’s time to pick a provider to work with. Choosing the right outsourced fulfillment provider is a critical decision that can significantly impact your business operations and customer satisfaction.
Here are some key factors to consider when weighing your options:
- Cost and pricing structure: Get a clear picture of the provider’s fees and make sure they align with your budget.
- Location and shipping zones: Look for a fulfillment center close to your customers for fast delivery at affordable prices.
- Scalability and flexibility: Determine whether the provider can handle surges in orders during busy periods.
- Technology and integration capabilities: Confirm that the provider’s tech tools work seamlessly with your existing systems. This way, you can streamline your order processes and keep your inventory in check.
- Order accuracy and quality control: Make sure the fulfillment center has high accuracy rates in order processing. Fewer errors mean fewer returns and happier customers.
- Customer service and communication: Choose a provider with a helpful and responsive customer service team. Good communication and timely support are key to a smooth partnership.
- Specialization and expertise: Find out if the provider specializes in handling products similar to yours. Specialized expertise can lead to better care and handling of your unique items.
- Returns management: Search for a fulfillment services provider with efficient returns so you can accurately manage inventory and keep your customers satisfied.
- References and reviews: Check customer feedback or read online reviews to get a feel for the end results of their fulfillment operations.
- Security and compliance: Make sure the fulfillment center complies with industry standards and regulations to protect your products and your customers’ data.
- Sustainability practices: If sustainability matters to you, ask the provider about their eco-friendly practices.
- Insurance and liability: Confirm the insurance coverage for your products during storage and transit for ultimate peace of mind.
How can outsourced fulfillment help with cost savings?
Outsourced fulfillment can lead to significant cost savings for your organization in several ways, including:
- No facility expenses: Avoid the cost of renting and maintaining a storage or warehouse space.
- No equipment costs: Access to all the technology and equipment you need.
- Less labor spending: Save on labor costs as fulfillment centers have their own workforce.
- Economies of scale: Fulfillment centers handle a large volume of orders from multiple clients, allowing them to negotiate better rates for shipping, packaging materials, and more.
- Efficient inventory handling: Fulfillment centers use smart systems to handle inventory. This means keeping just the right amount of products on hand, avoiding extra stock that can be costly to store and manage.
- Fewer mistakes: Accurate order fulfillment reduces costs related to order errors and returns.
- Flexible scaling: Adjust your operations based on demand levels without additional costs from acquiring more staff or storage space.
- Efficient processes: Fulfillment centers specialize in smoother order processing, reducing the time and expenses required for fulfillment
What are the key steps in the outsourced fulfillment process?
Outsourcing order fulfillment processes typically involves the following steps:
Receiving and inventory
The first step in the fulfillment process takes place when the fulfillment center receives your products. Staff members will check each item for accuracy and condition, before storing them appropriately in their warehouse.
Order processing
Whenever a customer orders through your online store or platform, the fulfillment center processes the order and confirms the details.
Picking and packing
Next, the fulfillment center staff picks the items the customer has ordered from the inventory shelves, carefully packs them, and attaches shipping labels.
Shipping and delivery
The packed items are handed over to shipping carriers for delivery. The fulfillment center selects the best shipping method based on the destination and customer’s delivery preferences.
Order tracking and notifications
Fulfillment centers provide tracking numbers to the business and the customer, enabling order tracking throughout the shipping process. Automated notifications are sent to customers about their order status and shipping updates.
Returns processing
If a customer returns a product, the fulfillment center manages the return process. This includes inspecting the returned item, updating the inventory, and processing a refund or replacement.
Can outsourced fulfillment providers handle international shipping?
Yes, many outsourced fulfillment providers can handle local, national, and international shipping.
These providers understand the complexities of international shipping, including customs regulations, duties, taxes, and shipping timeframes.
They have the expertise, infrastructure, and partnerships with various shipping carriers needed to facilitate shipping to destinations around the world.
The bottom line
Order fulfillment is a crucial component of any successful eCommerce operation. However, it’s important to recognize that these processes can be time-consuming, complex, and expensive.
Outsourcing order fulfillment to a trusted third-party provider is a valuable solution. By doing so, a substantial portion of the order fulfillment journey can be passed on to capable hands.
We’ve unpacked what outsourced fulfillment includes, how it differs from in-house fulfillment, its pros and cons, critical considerations when selecting a provider, and much more in this master guide.
With this deeper understanding of outsourced fulfillment services, you can start making informed decisions that steer your business toward enhanced efficiency and success.
Quiet, your trusted third party fulfillment company
At Quiet, we offer advanced eCommerce fulfillment services tailored to our clients’ needs.
As a trusted third party logistics partner (3PL), we’ve worked with top omnichannel and digital brands for over a decade, helping them improve their customer connections and cut costs.
Our Edge Fulfillment service offers scalable capacity to adapt to your evolving needs, while our Edge Delivery service ensures affordable shipping costs nationwide .
We’re proud to say that our solutions are designed for hassle-free integration with your eCommerce store’s current systems.
If you’d like to learn more about Quiet, talk to our team today.
