Starting, running and growing a successful eCommerce website is a lot like trying to juggle 500 plates at once. Beyond the typical responsibilities of a standard business (sales, marketing, finance, legal…), an eCommerce store has the added complexities of inventory management, order processing and fulfilment, warehousing, specialised operations management and much more.
With this added workload and raft of extra tasks that need to be managed and completed, its no wonder that new eCommerce entrepreneurs and businesses struggle with the sheer scope of what has to be done daily (to achieve scale, growth and profitability).
This is where outsourcing becomes not only a viable option for warehousing and order fulfilment but a necessity that allows new eCommerce businesses to focus on marketing, sales and other growth activities. This all happens while an outsourcing partner shoulders the load of warehousing and order fulfilment services and facilities. Partners can be generalised and work across many products/ industries or are specialists in a particular area i.e. like Printful who work with companies to provide embroidery fulfilment and warehousing services.
The above point is not the only reason though to consider outsourcing; here are six more reasons why outsourcing might be the right choice for you.
Table Of Contents (Quick Links)
Reduction in capitals costs and physical space
Having a warehousing partner storing all your stock negates the need for physical storage space, massively reducing the capital cost that would need to be employed to meet the businesses storage needs otherwise. Not only does this minimise capital expenditure but it also means there is additional capital free to be deployed for more growth-focused activities (marketing campaigns, product development, product marketing), enabling business growth at a much faster rate than would have been possible if an investment was made in physical space.
Having your stock stored at a reputable partners facility also brings with it a significant amount of risk reduction in terms of physical danger to your inventory. This is because a professional warehousing and order fulfilment centre/company should have world-class security facilities, fire suppression systems and building standards that ensure a much higher level of stock safety (than could be practically be achieved in your own facility without massive investment). Also make sure they have relevant buildings insurance and stock insurance in place for added protection.
Additionally, depending on your agreement, there should be some level of insurance in place to cover you against any loss of or damage to your stock (additionally given the responsibility to care for the stock resides with your partner, this takes away from the risk of negligence on your part voiding an insurance claim).
Ensuring correct stock levels
Your warehousing partner should also have their own industry-grade software for managing stock and fulfilling orders. This eliminates the need to acquire this technology and gives you access to the cutting edge in stock management, allowing you to ensure the correct stock levels (reducing loss from dead stock and enabling you to plan accurately for the future).
A specialist fulfilment and warehousing provider will also have access to an array of shipping partners and distribution facilities close to the end customer. This will enable you to provide faster delivery windows while increasing customers retention and satisfaction. At the same due to the volume of product delivery being carried out (for you and other eCommerce stores), they will have access to better shipping rates than you could otherwise get, reducing your overall shipping costs (due to volume/bulk discounting).
Simplification of people and processes
With no need for physical space, you do not need additional staff members to manage a warehousing space or fulfil orders; you also won’t need the technology that would have been required (i.e. heavy machinery and equipment /asset finance likely required…). The majority of the management of the stock and orders are under the purview of your partner; this massively simplifies the process and number of people required to store and fulfil an order from the perspective of your business (reducing costs and moving parts).
Due to the high volume of returns from eCommerce transactions (in some areas 30/40%), many warehousing/fulfilment partners will additionally be able to handle your returns from start to finish. Reducing the need for your team to work on a non-growth activity and allowing your partner to shoulder the burden of running a world class customer service/returns department (depending on your arrangement).
Does outsourcing make sense?
Given the above and with most warehousing/order fulfilment providers facilitating easy integration with the majority of eCommerce software/solutions. Its arguably not a question of if you get a partner in this space but a matter of which partner you want to work with.