When a company is just getting started and trying to create a customer base, self-fulfillment is a straightforward and cost-effective approach to getting orders out the door. However, fulfilling orders may become a greater drain on your company’s resources as order volume increases. As the scale of e-commerce businesses selling directly to consumers grows, the fulfillment process can become overwhelming. 

When’s The Right Time To Outsource Order Fulfillment For Your Buseniss
outsourcing fulfillment

When a company begins to struggle with order fulfillment, it may be time to consider outsourcing fulfillment to a 3PL supplier. Knowing whether to outsource fulfillment makes sense for your company is critical for keeping order fulfillment costs low, while maintaining a level of service that satisfies consumer expectations.

In this blog, we’ll look at key signals that it’s time to outsource fulfillment and take a look at how your company will benefit from outsourcing order fulfillment.

What is outsourced order fulfillment?

Outsourcing fulfillment is when a company hires an external fulfillment partner to manage the order fulfillment process on their behalf. Outsourced fulfillment is the alternative to in-house fulfillment, which includes inventory management, order processing, picking and packing, shipping, client support, and return management. 

Typically, third-party logistic companies will provide their clients with both storage and fulfillment locations. The cost of fulfillment will include anything from personnel expenditures to the technology and infrastructure required to efficiently deliver orders.

What is “third-party logistics” (3PL)?

A 3PL (third-party logistics) provider provides outsourced logistics services, which include management of one or more aspects of procurement and fulfillment activities. Third-party logistics companies provide end-to-end e-commerce solutions to help your company stay competitive, regardless of the challenges you and your industry are now facing. End-to-end solutions provide a wide range of services that aid in order fulfillment, which will streamline your organization’s procedures and ensure that your direct-to-consumer processes are as efficient and accurate as is feasible.

When’s the right time to outsource your order fulfillment?

Businesses may find it difficult to make the decision to outsource order fulfillment. Especially when it comes to deciding when it’s the right time to outsource order fulfillment and relieve yourself of this burden?

If your company is experiencing one or more of the following problems, it’s a good indication that it’s time to outsource fulfillment:

1. You are struggling to offer fast and free shipping

Canadians are growing more demanding of shipping speed, which begins with getting the item out the door. It is commonly accepted that providing fast and free shipping is one of the most efficient tactics to increase e-commerce sales. If you are unable to do this through in-house fulfillment, it may be time to consider outsourcing. If you want to satisfy customer expectations for next-day or even same-day delivery, you’ll struggle if you manage fulfillment in-house. Outsourcing order fulfillment to a 3PL provider with a network of fulfillment centers puts you in close proximity to your clients, allowing for faster delivery.

2. You’re falling behind to keep up with the order volume

Every company wants to see an increase in orders. However, demand from consumers may be both a blessing and a curse. While having a stream of new clients is fantastic, you must be able to keep up with the order volume. If there is a persistent backlog in processing or shipping orders, this indicates that your organization is no longer able to meet client needs.

On the other hand, as order volumes increase, storage and staffing costs will need to increase in tandem to keep pace. This can quickly increase your in-house fulfillment costs; bearing the entire tab for additional personnel, inventory storage, and inventory management software implies that in-house fulfillment is unlikely to save money in the long run.Outsourced fulfillment solutions provide far greater cost savings, because 3PLs may spread the cost of infrastructure and utilities among numerous clients, resulting in businesses paying less per order than they would if they fulfilled orders on their own.

3. Your fulfillment cost increased significantly

Shipping expenses can quickly cripple a small business or startup. Order fulfillment can quickly become expensive, from inventory storage to personnel. While you outsource order fulfillment will have to pay third-party costs for order processing and warehouse storage, it will be a fraction of the expense of doing it in-house. Third-party fulfillment businesses are experts at optimizing the process, whether it’s receiving shipments or decreasing packing materials. Your company is probably spending significantly more for delivery than is necessary. A 3PL may be able to help you cut shipping expenses if you’re seeking to strike a balance between offering free shipping and safeguarding your profit margins. A 3PL can do more, and they can do it better, faster and cheaper. For Canadian startups, that level of experience can be invaluable.

4. Your business is entering to new markets

Expanding either domestically or abroad necessitates a significant shift in your fulfillment strategy. These and other questions can be stressful when you’re simultaneously attempting to maintain an online store and keep orders coming in. 

Expansion provides incredible prospects for business success, but it also has the potential to harm your brand’s reputation if you fail to provide the service that customers expect. Outsourcing fulfillment to a 3PL ensures that you have the support and know-how to ensure the success of your expansion ambitions.

5. You need more storage space

If your SKU count is growing or you need larger quantities of merchandise to satisfy demand, you’ll need more storage space until it’s time to fill orders. However, one of the most difficult aspects of growing an e-commerce business is organizing and preserving inventory. It’s simple to lease warehouse space, but handling demand peaks and troughs might turn this into a bad investment. For example, businesses will often see an increase in fulfillment activity from October to December in the run-up to the holiday season, followed by a drop into the new year. 

Because of their larger footprint, fulfillment companies provide scalable storage options that allow businesses to add and decrease warehouse capacity in accordance with their sales calendar, resulting in significant long-term cost savings.

6. Your technology is outdated

When an e-commerce company is first established, it normally manages the fulfillment process on its own, without the use of order management software or automatic systems. However, the ability to minimize manual processes and obtain complete visibility over your organization is critical to successful fulfillment. While using Excel spreadsheets to manage inventory and orders may work when order numbers are low, it quickly becomes unsustainable as sales increase.

A 3PL partner who is technologically savvy will be able to provide you with the systems you need to attain real-time visibility. As a result, your company no longer has to worry about time-consuming inventory counts, returns, and backorders since your 3PL will do everything for you.

7. Inventory accuracy has become an issue

Inventory is the core of any e-commerce operation and often accounts for the highest financial line item on a company’s profit-and-loss statement. Incorrect inventory counts are caused by a multitude of factors, including manufacturing faults, receiving procedures, system errors, human errors, and returns. The results of inaccurate inventory can have a big impact on any organization, including backorders, canceled orders, negative customer experiences, and loss of revenue. If your organization is having problems with inventory accuracy, it may be time to consider outsourcing your order fulfillment operation.

8. Customer service is deteriorating

Customers in the social media era frequently expect e-commerce businesses to give quick service. If you’re having trouble meeting these expectations with an in-house crew, especially if they’re also in charge of printing shipping labels or taking orders to the post office, it’s time to outsource.

While not every fulfillment firm will provide customer care as a fulfillment service, the automation and fulfillment technologies available to them will assist you in streamlining your customer service strategy. For example, integrations with self-service return portals, email confirmations, and order tracking hubs will help you reduce support tickets, giving you more time to focus on other aspects of your business.

Businesses might easily become overwhelmed by the in-house fulfillment process. Rising shipping prices, an unexpected spike in order volume, or trouble keeping track of inventory can all derail a fulfillment operation, leaving a lot of dissatisfied consumers behind. Outsourcing fulfillment allows your company to focus on what it does best while leaving order fulfillment to the pros. By deciding to outsource fulfillment when the above scenarios arise, you can preserve your brand’s reputation while also positioning your company for more strong growth opportunities, better customer service, and faster, scalable fulfillment.

Are you ready to outsource order fulfillment for your Canadian e-commerce business?

SPExpress provides comprehensive e-commerce solutions to support your company’s growth. Contact us today to find out how we can assist you in improving your supply chain operations.

Are you looking for a reliable third-party logistics partner in Canada? SPExpress Fulfillment assists firms in streamlining their shipping procedures by providing necessary infrastructure and skills. Click here to discover more about our services.

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