September 20, 2023
Everything You Need to Know About Outsourcing Fulfillment, Part 2
This article is part of a three-part series on how to shift from in-house to outsourced fulfillment operations. Read Part 1: "Everything You Need to Know About Outsourcing Fulfillment" here.
As we outlined in the previous article, the differences between in-house and outsourced fulfillment are simple. It’s clear that in-house fulfillment is beneficial when beginning your ecommerce business, and that outsourced fulfillment is needed once you’ve scaled your ecommerce business. But when is the tipping point? How do you know when to make the change? This article will reveal some common signs to watch for.
How To Know When It’s Time To Make The Shift to Outsourced Fulfillment
1. Your Delivery Standards Are Slipping
First and foremost, if your delivery standards are slipping, it’s time to outsource your fulfillment. 39% of customers won’t return to your store following a poor delivery experience. If the growth of your order volume is leading to late or incorrect deliveries, it’s time to consider outsourced fulfillment.
Third-party fulfillment providers have the expertise, space, and staff to deal with an increase in orders—whether it’s a gradual increase as your business expands or a seasonal increase due to the types of products you sell. You are guaranteed perfect deliveries each and every time—keeping customers happy and loyal.
2. Your Cart Abandonment Rates Are High
Logistics is one of the biggest reasons for cart abandonment. If slow delivery speeds and costly shipping options are turning your customers away, a small business fulfillment service can overcome this by:
- Enabling you to offer a variety of delivery speed and cost combinations
- Allowing you to satisfy customers paying for fast shipping subscriptions by qualifying you for programs such as Amazon Prime and Walmart Free 2-Day Shipping
- Generating shipping cost savings that can be used to offset the costs of free shipping
3. Your Merchant Ratings Are Low
Feedback ratings are crucial for converting customers, improving organic search result placement, and marketplace advertisement eligibility. If your inability to meet shipping deadlines and standards is affecting your ratings, it’s time to outsource your fulfillment to a company that guarantees high shipping standards—before irreparable damage is caused.
4. Your Conversion Rate Is Low
With cart abandonment rates at 70%, you won’t be alone in trying to increase your conversion rates. You’ve likely lowered your prices, added free delivery options, and started sending cart abandonment emails. But have you considered the impact of logistics on your cart abandonment rates?
Outsourcing your fulfillment enables you to guarantee fast shipping times, which qualifies you (often automatically) for fast shipping programs such as Walmart Free 2-Day Shipping. Fast shipping programs increase conversion rates by offering customers guaranteed fast shipping by a brand that they know and trust, and outsourced fulfillment ensures that your delivery rates are good enough to get on and stay on these programs.
5. Your Listings Aren’t Visible
If you’re on the second line of the search results for your keywords, you’ve got a battle ahead. Optimizing your listings for increased search ranking is a great start but supplementing this with free and fast shipping badges is even better.
Another benefit of outsourcing your fulfillment to a 3PL partner like Flexport is the ability to get your products in front of more customers, and increase sales and trust with fast shipping badges and reliable delivery dates. Eligible customers will automatically see estimated delivery dates (e.g., “Free next day delivery”) on social sales channels, at no extra cost to your business.
6. Your Costs Are Too High
You’re running an ecommerce business to make a profit, so you should always be looking for ways to reduce your costs. As your marketplace, stock, and marketing fees grow, so do your warehousing, staffing, shipping, and packaging costs.
Outsourced fulfillment can give you more money to invest in free shipping, marketing, or your bottom line. How? Outsourced fulfillment providers have the expertise and geographical locations to deliver your items in the fastest way possible, as cheaply as possible – saving you immediate shipping costs. You’ll also spend less on warehousing space, staffing, and packaging materials.
Tip: If costs are your motivating factor, use this fulfillment calculator to see if your business is ready to outsource fulfillment.
7. You Want To Expand
If your online store is ready for expansion, you must ensure that your fulfillment processes are too. Managing multiple sales channels, increased order numbers, and more marketing activities is time-consuming. In-house fulfillment can take you away from these important tasks, especially when you’re fulfilling more orders.
Partnering with an outsourced fulfillment provider takes the stress and time of fulfillment out of your hands—allowing you to dedicate more time to your business expansion plans. It also means that you don’t have to worry about the capabilities of your technology, warehouse, and staff to manage a growing business—your outsourced fulfillment provider will handle that for you.
8. You’re Already Expanding
Growth is one of the biggest reasons that small businesses like yours outsource their fulfillment operation. Why?
Being a “Jack of all trades” is a common entrepreneurial trait, and it helped you get this far. But with growth come competing demands on your time. Outsourced fulfillment allows you to concentrate on business growth, rather than delivery speeds.
As orders mount up, your ability to handle them in-house diminishes—resulting in missed deadlines, poor standards, and overworked staff. A small business fulfillment service increases your capacity to handle overall order growth, as well as helping you ride out the peaks and troughs.
More orders equal more stock, which necessitates somewhere to store it all. If your warehouse is bursting at the seams, and you don’t have the resources to increase size, an outsourced fulfillment provider is a solution. Plus, choose a fulfillment provider with multiple warehouses across the country, and you can expand your delivery locations without expanding your warehouse costs.
And finally, a growth spurt requires the employment of additional permanent and temporary employees. Outsourcing your fulfillment gives you access to extra resources without employing additional staff—extra hands without extra heads.
9. Your Expertise Is Lacking
You started an ecommerce business because you saw a gap in the market, you know how to sell, and you know your products inside out—not because you’re an expert in fulfillment. Small business fulfillment services know how to store, pick, and ship items in the fastest and most cost-effective way possible. That knowledge is extremely beneficial to your business, but not easy to obtain on your own.
10. 10. You’re Struggling To Offer Fast and Free Shipping
In 2022, more than 60% of shoppers expected their online orders to ship free and arrive within three business days. If you’re not meeting these customer demands, it’s time to use a small business fulfillment service to help you offer:
By meeting two-day delivery turnarounds across the country, through efficient handling, picking, shipping, and warehouse locations—regardless of volume.
By negotiating preferential shipping costs and storage fees to reduce your delivery spend and enable you to offset the costs of free deliveries.
Tip: If cost is your biggest influencer, calculate the costs of fast shipping using our Cost Calculator.
11. You Want Your Fulfillment All in One Place
Is your current fulfillment process a scattered combination of in-house fulfillment, Amazon Prime, and outsourced fulfillment? A small business fulfillment service can help unify your fulfillment to achieve cost savings, increased efficiency, and consistency across marketplaces—making multi-channel selling easier to manage and benefit from.
12. It’s Taking Up Too Much of Your Day
You started your online business because you wanted to one day sit back and watch it run itself—not to spend late nights packing orders and visiting the post office.
If your day is spent parceling up products, printing shipping labels, and chatting to the delivery person, it’s time to outsource. Start managing your business instead of running it, by using a small business fulfillment service to handle your shipping, while you invest attention and time into growing your business.
Pro Tip: You Can Combine the Best of Both
In-house or outsourced fulfillment aren’t the only options. If you think your business might be ready for outsourced fulfillment, but you’re not entirely sure, why not try both? Send some of your high-selling and fast-moving items to an outsourced fulfillment partner and keep your low-sale products in-house to see what works best.
As we learned in part 1 of this series, 3PL fulfillment partners handle the hassle while bringing significant profit boosts, cost savings, and time to your business. But the benefits don’t stop there. Return for part 3 to uncover how outsourcing your fulfillment also creates a unified ecommerce experience to help you sustain long-term business growth.
The contents of this blog are made available for informational purposes only and should not be relied upon for any legal, business, or financial decisions. We do not guarantee, represent, or warrant the accuracy or reliability of any of the contents of this blog because they are based on Flexport’s current beliefs, expectations, and assumptions, about which there can be no assurance due to various anticipated and unanticipated events that may occur. This blog has been prepared to the best of Flexport’s knowledge and research; however, the information presented in this blog herein may not reflect the most current regulatory or industry developments. Neither Flexport nor its advisors or affiliates shall be liable for any losses that arise in any way due to the reliance on the contents contained in this blog.
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