Key Points:
- An outsourced order fulfillment service is an arrangement where you rent space from a 3PL company that warehouses your products and processes your orders for shipment anytime a customer buys a product
- The main responsibilities of a 3PLcompany are: To receive and store your inventory, monitor and track your inventory levels, pick, pack, and prepare your orders for shipment, and coordinate and schedule shipment pickups with carriers
- Depending on where you outsource your eCommerce fulfillment services, you can save anywhere from 15% to 35% in shipping costs
Order fulfillment is a critical aspect of running an eCommerce business, and your success as a merchant will largely depend on the quality of your order fulfillment service. But order fulfillment is also a challenging, labor-intensive, and time-consuming process that requires a team with a different set of skills.
So, how can you get order fulfillment right?
Outsourcing order fulfillment services to a Third Party Logistics Company (3PL) company is one way of ensuring that you don't go wrong with this important process and avert costly mistakes that come with it. This article gives you an overview of an outsourced order fulfillment service, the benefits of outsourcing your eCommerce order fulfillment to a 3PL provider, and how you can leverage Easyship's fulfillment and shipping expertise to streamline this critical part of running an eCommerce business.
Table of Contents
What is An Outsourced Order Fulfillment Service?
Think of a business model where you don't have to run and manage a warehouse, pick, pack, and ship products yourself. You can then avoid all the hassle of order fulfillment and concentrate on growing your business and watching your money stream in.
That is what outsourced fulfillment services are all about, and there are excellent 3PL eCommerce fulfillment companies like Easyship that will help you achieve exactly that.
An outsourced order fulfillment service is an arrangement where you rent space from a 3PL company that warehouses your products and processes your orders for shipment anytime a customer buys a product.
First, you enter an agreement with a 3PL logistics service provider to warehouse your goods at a flat monthly fee depending on the space your goods occupy in their warehouse facility. You then integrate your eCommerce store with its inventory management system to help streamline the entire fulfillment process.
When a customer buys a product in your store, the order details are passed to your 3PL partners so that they can process the order and prepare it for shipment.
The main responsibilities of a 3PLcompany are:
- To receive and store your inventory
- Monitor and track your inventory levels
- Pick, pack, and prepare your orders for shipment
- Coordinate and schedule shipment pickups with carriers
Related resource: What's a 4PL? The Difference between 4PL vs. 3PL
8 Benefits Outsourcing eCommerce Order Fulfillment
Outsourcing your eCommerce order fulfillment to a reliable 3PL logistics provider has a whole lot of benefits. Here, we describe eight benefits of working with eCommerce fulfillment companies to handle order fulfillment on your behalf.
1. Avoid long-term lease agreements
Keeping order fulfillment in-house means that you have to enter into long-term lease agreements and other long-term financial commitments to rent warehousing space for your inventory. As your business grows, you will be forced to lease more space or build new structures to warehouse your goods. All these make overhead costs skyrocket and derail your ROI.
You can avoid such overheads by outsourcing eCommerce order fulfillment from 3PL companies. With these companies, you are charged a flat storage fee, and you only pay for space you use to warehouse your products. Unless the number of units you warehouse changes, your storage expenses remain the same.
When you use a 3PL company for your eCommerce order fulfillment you get the low-cost benefits of sharing such lease obligations –rent, equipment, utilities, and other operational overheads –with all the other retailers using the facility.
2. Keep your business structure lean
Backend logistics is a labor-intensive process. Keeping eCommerce order fulfillment services in-house can complicate your business structure. It means you will have to rent extra space for your employees, hire them, train them, pay them, and purchase all the tools and equipment they need to pick, pack and ship orders efficiently.
By outsourcing, the task of staffing and hiring employees falls on the 3PL logistics service provider, meaning you can keep your business structure lean and avoid all the headaches that come with hiring and managing employees in your fulfillment center. This will also help you reduce staff costs.
3. Focus on growing your business
Order fulfillment is a time-consuming process. It takes time to pick, pack, and wrap boxes accurately for shipping. You may find it easy to manage fulfillment when your e-store is still small.
As your business grows, items begin flying off the shelves faster, and you find yourself with more orders coming in from different sales channels such as in-store, sales events, online, among others. At this time, order fulfillment can overwhelm your staff’s capacity and eat into your working hours.
You find yourself struggling to strike a delicate balance on where you should spend your limited time –growing your business or fulfilling orders. At this point, something has to give! You are better off leaving order fulfillment to the pros and concentrate on growing your business.
A 3PL warehouse has experienced employees who are well versed with the pick, pack, and ship process, and can do it faster and better than you. Allowing a 3PL service provider to handle the heavy lifting on your behalf helps you focus your time and effort on marketing, designing, sourcing, and selling your products.
4. Manage seasonal and sales fluctuations better
During low seasons, your overhead costs and order fulfillment costs remain the same if you keep order fulfillment in-house; you will still have to pay all your workers and other overheads. That means your costs can easily eclipse your profits during this time. It doesn’t matter whether you ship 10,000 or 100 orders; you still have to pay rent and wages for your warehouse employees.
Entrusting your eCommerce order fulfillment to a 3PL warehouse saves you the costs of warehouse staff, and other lease obligations, hence helping you manage seasonal and sales fluctuations better. First, you only pay for the warehousing space your inventory is occupying, and you don't need to hire staff to pick, pack, and ship your orders as that is taken care of by your 3PL provider.
5. Reduce shipping costs
Shipping costs can derail your margins if your goods are not stored closer to your customers. Many eCommerce fulfillment companies have warehouse facilities across the country and even overseas, which gives them an upper hand in offering competitive shipping rates. By ensuring that your goods are stored closer to your customers, 3PL logistics companies help you reduce shipping times and costs.
Depending on where you outsource your eCommerce fulfillment services, you can save anywhere from 15% to 35% in shipping costs. This is because 3PL companies can negotiate discounted shipping rates from courier companies due to the large volume of orders they send to them.
They also have powerful shipping software that allows them to browse and compare shipping rates from different couriers and select the most cost-effective rates for your packages based on your product catalogs and shipping rules.
You will also be able to take advantage of the buying power of 3PL warehouses to reduce drayage costs for transporting less than truckload (LTL)/Full Truckload (FTL) shipments when transporting your supplies at pre-negotiated rates. You will also reduce packaging costs due to the reduced cost of packaging and shipping supplies.
6. Scale your business to new markets easily
eCommerce order fulfillment is not a walk in the park. It takes time to receive, store, and organize your inventory, not to mention the process of receiving orders from customers, processing them, and delivering the goods to your buyers' doorsteps. It is a very labor-intensive and time-consuming process that leaves you with little to no time to scale your business and enter new markets.
Outsourcing your order fulfillment to a 3PL logistics service provider means that you don’t have to worry about packing and distributing orders, inventory management, and hiring fulfillment employees. It frees you to think of new ways to expand and grow your eCommerce business and enter new markets.
When scaling up, you don't have to rent expensive warehouses or build brick-and-mortar stores in different countries where you plan to sell your products. Partnering with 3PL companies in different countries will help you avoid tax, and duty issues because your goods are stored where your customers are. This helps you scale your eCommerce business and enter new markets more easily.
7. Better technology and inventory management
Inventory management can be a headache and result in inventory errors, inconsistencies, and lost items that can be costly in the long-run. When you work with a 3PL company, you can take advantage of their inventory management system that uses the latest technology to process and ship your orders.
When you integrate your eCommerce store with their systems, you can eliminate the risks of shipping errors and ensure accurate and efficient order fulfillment processing. Through their state of the art inventory management technology, you will be able to track your stock levels, process payment, select carriers, and automate order processing hence streamlining the pick, pack, and ship operations.
8. Improve your customer service
Customer services is an important aspect of handling the order fulfillment process, and it takes time to handle customer concerns and process returns. Working with eCommerce fulfillment companies helps you provide efficient customer service and help process returns, exchanges, and refunds faster.
Most 3PL logistics services offer customer support through phone or email 24/7. This gives you a better chance to improve and offer better reverse logistics operations and excellent customer service.
Make Easyship Your New Order Fulfillment Service Provider
If you are at a point where you feel that you need to switch and take advantage of all the benefits that come with outsourcing your order fulfillment, Easyship can help. Easyship is a well-established and well-connected 3PL company with warehousing partners across the world. We can provide you with all the tools you need to automate your eCommerce business and shipping needs and streamline your order fulfillment process in the following ways:
- A network of warehouses
- Sync your orders
- 250+ shipping solutions
- Global tracking system
For a real-world example, learn how Easyship helped Ostrichpillow improve its delivery service, expand its distribution worldwide, and reduce shipping costs by 62%
If you’re looking for a new warehouse fulfillment partner, Easyship is here to help! Get in touch now for more information and to speak with a representative.
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