As one of the most critical areas of your eCommerce business, fulfillment has a significant impact on your customers' experience from the moment they click "Purchase."
In the early days of your eCommerce business, you may find that you're perfectly equipped to manage fulfillment on your own- for a while, at least. It may also align with your strategy, as you are in control, and you can offer a more personalized service to your customers. As your business grows, you're likely to find these tasks simply more challenging.
Does this sound familiar?
You can't cut angles when it comes to effective fulfillment strategies. With more orders to ship out and more products to store, you're likely in need of a better solution.
That's where outsourcing comes in.
With outsourcing eCommerce fulfillment, you outsource your fulfillment services to a fulfillment provider, also known as a third-party logistics (3PL) provider. In recent years, the demand for 3PL providers has exploded following the exponential growth of eCommerce.
Most Fortune 500 companies (86 percent) and 96 percent of Fortune 100 companies use the services offered by 3PL providers. While there are many costs associated with outsourced fulfillment (ranging from the 3PL's pricing model to how many shipments occur each month), the benefits of outsourced fulfillment far outweigh these fees.
Today, we'll be discussing what outsourced fulfillment is, how it works, and why it may be the best option for your eCommerce business as it grows. If you're wondering, "why outsourced fulfillment?" "we'll be offering all of the information you need to make an informed decision for your business."
What is Outsourced Fulfillment?
There are various benefits of using outsourced fulfillment for your eCommerce business. 3PL provides a warehouse for your products, fulfilling orders on your behalf. To accomplish the fulfillment services, usually integrate their software with your eCommerce store to streamline the fulfillment process's entirety. Upon receiving an order from one of your customers, your 3PL provider will pick, pack, and prepare the shipment product.
Most 3PL providers charge a flat monthly storage fee. The flat fee ultimately determines by the number of bins/pallets you warehouse in their facility. Once an order is shipped, your 3PL provider will charge additional fees for this service. Fulfillment providers coordinate and schedule shipment pickups with mail carriers such as UPS, USPS, and FedEx.
Why It's Important to Choose the Right Outsourced Fulfillment Provider
The efficiency of your fulfillment process directly determines your eCommerce business's success. In this way, a reliable and streamlined order fulfillment process is fundamental. When your order fulfillment process is well-structured, you can easily create loyal customers that return to your business time and time again. From the very second that an online transaction occurs, your fulfillment strategy is responsible for ensuring that your customers' products arrive at the recipient's address following a smooth, efficient, and accurate process.
Beyond this fact, why is choosing the right outsourced fulfillment provider so critical? According to a recent poll conducted by the supply chain management firm Arvato Management Solutions, more than 54 percent of online shoppers left their shopping due to expensive delivery fees. Further, the poll also uncovered an additional 24 percent left their shopping due to unsatisfactory delivery speeds.
Finally, 45 percent of shoppers reported, a convenient shipping process was a primary area to complete an online transaction.
As you can see, according to Arvato Management Solutions, your fulfillment process has everything to do with your income potential as an eCommerce business owner. In this way, it makes much sense that your business's order fulfillment standards directly impact whether you can retain and grow a loyal customer base in the long-run.
What Are the Benefits of Outsourcing Ecommerce Fulfillment?
Now you have a precise understanding of what outsourced fulfillment is and why it's crucial to your business's success, you're likely interested in knowing the benefits of using a 3PL provider like CDL Logistics. In this section, we'll introduce you to some of the most significant benefits of outsourcing your eCommerce fulfillment so that you can know what it can do for your business in the long-term.
1. Drastically Lower Your Shipping Cost
As an eCommerce business owner, we know you're looking to save money wherever possible. Luckily, the fact that outsourced order fulfillment drastically lowers your shipping costs is a massive benefit of working with a 3PL provider. Many order fulfillment providers have facilities all over the country, as well as overseas. For this reason, you'll be offer low shipping rates on your products- resulting in bulk delivery discounts.
While the exact extent of your savings on shipping costs will depend on the 3PL provider you choose, it estimates that eCommerce business owners working with 3PL providers can save between 15 and 35 percent off published shipping rates. Further, fulfillment providers also utilize software that allows them to browse shipping rates across various mail carriers to select the most cost-effective rate for you.
2. Extend Your Reach
If you're an eCommerce business owner with dreams of growing into an international company, working with a 3PL provider can make your dream a reality. Regardless of whether you receive an order from another state or another country entirely, the right outsourced fulfillment provider can take your business to a new level.
Most fulfillment providers are structured to ship and deliver orders to any part of the world. Using their global platform, you can extend your reach while growing into new markets.
3. Reduce Your Operating Cost
According to IBISWorld's Public Storage & Warehousing market research report, the storage and warehousing industry within the United States alone holds a value of $22 billion, employing an estimated 600,000 people. The growth of the warehousing and fulfillment industry is most direct because an increasing number of businesses realize the potential to reduce their operating costs.
When using fulfillment services, you will only ever pay for what you use. 3PL providers usually charge a flat storage fee for warehousing your products. Beyond that, you are only charged for picking, packing, and shipping your orders. While you may be used to spending a boatload of money on shipping and packaging while handling your fulfillment process, these prices will significantly reduce when working with a 3PL provider.
4.Save Valuable Time
Do you know the famous quote, "time is money," and nothing could be more true when it comes to the eCommerce industry? If you have been responsible for fulfilling your eCommerce orders up to this point, you're likely well aware of the amount of time this has cost you. As a business owner, you have to wear many hats, and handling your company's fulfillment process single-handedly means less time for more pressing responsibilities.
As an example, with the time you regain by working with a 3PL provider, you could refocus this time on additional marketing efforts to increase sales or developing new products and services. Suppose you're currently spending time shipping your orders. In that case, the time wasted when you could've been a focus on actually growing your business. Outsourced fulfillment services give you that valuable time back.
5. Eliminate the Need for Warehouse and Storage
Where are you storing your products currently? Further, how do you keep these products organized? How are you monitoring your inventory? When filling your orders, these are all questions that you have to consider.
Depending on the size of the product you're selling, holding stock may require additional warehousing space, which costs you. When you outsource order fulfillment to a third party, however, these logistics are handled for you.
An order fulfillment center will not only receive your product and unload it from the truck but will also store it in their warehouse and access what is needed to pick up and pack your orders. Third-party logistics providers are well-experienced at dealing with inventory, so they will be able to manage your inventory efficiently with minimal losses.
6. More Professional Packaging
Finally, another significant benefit of outsourcing your fulfillment is the quality of packaging provided by 3PL providers. While some business owners can professionally package their products, many more struggle with this.
After all, the supplies and tools required to create professional packaging aren't always affordable to small business owners, especially when they're just starting. Logistics companies are experts in packaging and work closely with shipping companies to print the most professional-looking shipping labels.
Outsourced Fulfillment Services You Can Rely On
Now you got to know the benefits of outsourced fulfillment services. You're likely looking for a provider to manage your fulfillment. Look no further than CDL Logistics!
At CDL Logistics, we recognize that technology plays a critical role in your overall supply chain and utilize the best technology to control your entire fulfillment process from start to finish. Further, we are conveniently located on the East and West Coast, close to airports and the sea. This location puts us in the prime location to offer an expansive service area to our customers.
Since 1996, we are experts in serving the logistics industry for efficient, reliable, and budget-friendly outsourced fulfillment services. Do you wish to know more about how we can help you? Contact us today or may reach out to us using (732) 354-0043!
We are excited to assist you on your journey as you grow and develop a successful eCommerce business.