As any business grows, it’s important to consider how it plans to scale and where it wants to be. While many operations are doable in-house starting out, there comes the point where outsourcing specific areas of your business allow for more flexibility and growth – including your order fulfillment. 

But when is the right time to make the move? Here are some key considerations to help determine the right time for your business:

Order Volume

If your order volume is consistently growing and you find it challenging to keep up with the increasing demand, it may be a good indication that you're ready for outsourced fulfillment. Outsourcing can help alleviate the burden of order processing, packing, and shipping, allowing you to focus on other aspects of your business.

However, be cautious in this department. It can be common for businesses with big aspirations to anticipate large order volumes without historical data to prove the need. These companies then go to a 3PL where the ancillary costs of storage, software, and additional services quickly outweigh the support needed for their small volume orders. 

New brand owners often fall into this trap and don't realize their sales to start are on a bell curve and will bottom out before they start to build again on a steady linear trajectory. If you’re unsure when to work with an expert, talk with the team at ShipDaddy for transparent consultative support. 

Operational Efficiency

Managing fulfillment-related tasks can be a complex and time-consuming process for businesses. If you find that a significant amount of your time and resources are being spent on fulfilling orders, it can become a bottleneck that hinders your ability to focus on core business activities such as marketing, product development, and customer support. In such cases, outsourcing fulfillment can be a viable solution to alleviate this burden and streamline your operations.

Outsourcing fulfillment involves entrusting the responsibility of order processing, inventory management, packaging, and shipping to a 3PL provider. By partnering with a reputable fulfillment company, you can leverage their expertise and infrastructure to handle these tasks efficiently, allowing you to refocus your attention on strategic business functions.

Scalability

Outsourced fulfillment can play a crucial role in providing the scalability required to accommodate business growth and handle fluctuations in order volume. This is particularly beneficial when a company anticipates rapid expansion or experiences seasonal variations in customer demand.

Managing increasing order volumes can strain internal resources and infrastructure when a business is on a growth trajectory. By partnering with a fulfillment provider, you gain access to their established systems and capabilities that are designed to handle high volumes efficiently. They typically have the necessary infrastructure, warehouse space, and personnel to scale operations seamlessly, allowing you to meet the growing demands without significant upfront investments.

Geographic Reach

If you want to expand your customer base beyond your current geographical location, outsourcing fulfillment can be a valuable strategy to enable smooth operations and enhance customer satisfaction. One of the significant advantages of working with a fulfillment provider is their ability to offer multiple strategically located warehouses, which can facilitate faster and more cost-effective shipping to customers in different regions.

Expanding into new markets typically involves reaching customers geographically distant from your current operations. In such cases, the distance can significantly impact shipping times and costs, potentially leading to longer delivery windows and higher shipping expenses. This can result in customer dissatisfaction and hinder your ability to attract and retain customers in new markets.

Cost Considerations

Assess the costs associated with in-house fulfillment versus outsourced fulfillment. Calculate the expenses for storage space, equipment, packaging materials, labor, and shipping. Compare these costs with the fees charged by fulfillment providers to determine if outsourcing would be a cost-effective solution for your business. If you work with a partner like ShipDaddy, we can help you break down these cost considerations. 

Expertise and Technology

Partnering with a fulfillment provider offers businesses the opportunity to tap into specialized expertise and advanced technologies in the field of order fulfillment and logistics. These providers are dedicated to optimizing efficiency and accuracy in the fulfillment process, and they bring valuable resources to the table that may be lacking within your own organization.

Fulfillment providers have honed their processes over time through extensive experience in managing order fulfillment for various clients. They have developed standardized workflows and best practices that ensure streamlined operations, from receiving and inventory management to order processing, packaging, and shipping. By leveraging their established processes, you can benefit from greater efficiency and reduced errors in fulfilling customer orders.

In addition to expertise and technology, fulfillment providers often offer value-added services that can further enhance your operations. These services may include order customization, gift wrapping, kitting, and returns management. By utilizing these additional services, you can differentiate your brand, provide unique customer experiences, and efficiently handle returns or exchanges, increasing customer satisfaction.

The Bottom Line

Consider where your expertise and core competencies lie. If fulfillment operations are not a core strength of your business, outsourcing allows you to delegate those tasks to professionals, freeing up your time and resources to concentrate on activities that drive growth and differentiation.

The ultimate time to move to an outsourced 3PL partner is when that steady linear line of volume reaches a point when you physically cannot keep up with the demand. 

Find A Partner You Can Trust

Assess your specific needs, evaluate the potential benefits, and consider the impact on your operations, customer experience, and overall growth strategy as you consider working with a fulfillment partner. If you have any questions or aren’t sure where to start in this process, consult with fulfillment providers to understand their capabilities and how they align with your business requirements before deciding. ShipDaddy is here to help. 

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