Pros and Cons of Outsourcing Your Order Fulfillment

Outsourcing order fulfillment is a way to offer a great customer service experience while allowing your company to focus on innovation, growth and other key areas.

As e-commerce continues to grow and customer expectations shift, modern day businesses have had to rethink their traditional logistic operations models to tend to the rising customer need of on-demand shipping. Supply chains play an imperative role in customer retention and loyalty — how efficiently and effectively a company reacts to an order directly correlates to customer satisfaction. Customers don’t gauge their satisfaction on the quality of the product alone, but rather they consider the order fulfillment and delivery process as a whole. From the shopping cart to their front doors, consumers are actively paying attention to the journeys their orders take to get to them.

Outsourcing your order fulfillment is a way to offer a great customer service experience while allowing your company to focus on innovation, growth and other core competencies.

How does outsourcing order fulfillment work?

Full service 3PL fulfillment providers store your inventory and fulfill orders on your behalf. Most 3PL providers integrate with e-commerce stores and are triggered to pick, pack and ship products when orders are placed. Many 3PLs offer multi-node locations and consider the balance of inventory allocation and distance to recipient when initiating fulfillment processes. The coordination and scheduling of transportation is managed by the 3PL, often leveraging favorable volume-based shipping rates that may be inaccessible to individual merchants.

Lower overall costs

In many cases, outsourcing order fulfillment is key to raising the bottom line. Most 3PL providers support multiple customers within their facilities and ship large volumes of orders, resulting in heavily discounted shipping rates. 3PL providers with advanced technology, like Ingram Micro via its Shipwire Platform, are able to optimize the routing and rating of orders, surfacing the fastest and most economical shipping options. This capability can save brands and retailers money on transportation and enables products to be delivered to end-consumers faster. In addition to providing forward logistics services, many 3PLs also offer integrated reverse logistics solutions so that returned items can be returned to inventory faster, reducing carrying costs.

With a 3PL, your operating and overhead costs can also be reduced — it’s all about economies of scale. Fulfillment providers buy packaging and storage supplies in bulk. They charge you for the space you use, rather than requiring you to pay for an entire warehouse. And they provide you with access to experienced operations managers, account managers, and labor that can scaled up or down — saving you the hassle of recruitment, hiring, employee development and payroll while giving you access to the professional team you need to get work done.

Improved customer service

Order fulfillment providers help ensure ever-evolving customer expectations are met and even exceeded. Consumers have grown to expect same-day delivery options, curbside pickup, overnight shipping, and various other offerings. Performing and executing the logistics to keep up with changing consumer demands can be challenging for individual companies, but 3PL providers are experts in managing the details.

Good customer service builds strong relationships, trust, and positive brand reputations, and with the execution of returns and exchanges in the hands of the 3PL provider, you can focus supporting all other aspects of customer service.

Optimize technology to streamline order fulfillment

3PL fulfillment providers often utilize the latest innovations and technologies and outsourcing fulfillment allows your business to reap the benefits of the latest and greatest tools — including inventory management, item tracking, shipping and handling, carrier selection, security, payment processing, cost optimization, and robust data analytics. 3PLs use ERP systems or warehouse management systems to create streamlined processes and real-time results. Overall, the technology available through outsourcing fulfillment will drive supply chain efficiency and visibility, allow for integration between front and back office operations, and provide the business intelligence foundation to scale a business.

Scale business and reach international markets

By outsourcing fulfillment, companies have access to warehouses across the globe. Many 3PL providers offer access to multiple warehouse locations, compared to the limited locations available when fulfillment is kept in-house. Ingram Micro Commerce and Lifecycle Services has 154 global warehouse locations — allowing brands and retailers the opportunity to expand into different geographical regions faster and more effectively.

Focus on growing your business

There are never enough hours in the day. Outsourcing order fulfillment allows brands and retailers time to focus on the core competencies of their businesses. As a business scales, its fulfillment and logistics requirements become more and more complex. The heavy lifting can be passed along to a 3PL, freeing up time for innovation, marketing, sales, and growth.

Is outsourcing order fulfillment for everyone?

Despite the obvious benefits of outsourcing order fulfillment, there are some other factors to consider before deciding if it’s the right decision for you. When outsourcing, brands and retailers often worry about losing some brand control — 3PLs work within strict structure and operations are already set up. Your 3PL provider will be a reflection of your brand and trust has to be established, so approach the relationship like you would any other strategic partner and work in tandem to accomplish both of your business goals for the best possible outcome.

Have you outgrown your current 3PL provider? We are set up to enable brands and retailers to scale and with 200+ pre-built connectors, you can get set up quickly and integrate easily with retailers, marketplaces, shopping carts and other commerce tools. We focus on the end-to-end customer experience by prioritizing connectivity, transparency and consistency in every customer relationship and we adhere to Lean Six Sigma best practices to ensure operational excellence. If you’re looking to improve your current fulfillment logistics, check out the solutions Shipwire has to offer.

Casey Billings
Senior Product Marketing Manager at Shipwire
Casey Billings is the Senior Product Marketing Manager at Shipwire. Her work is devoted to product and feature launches, demand generation and understanding how our products make our customers’ lives easier. She’s previously spent time on our Global Account Management team, gaining a better understanding of our customers’ point of view and experiences first-hand. She has a passion for customer communications and nerdy product launches, as well as, tennis and hiking in the Pacific Northwest.
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