A third-party fulfillment partner is a company that stores, stocks, and ships goods on behalf of another company. The goods they handle and ship are not their own. However, they pay the workers who do the work and possess the technology, equipment, and warehousing space needed to handle these products.
Most E-commerce businesses are increasingly turning over all or almost all inventory control to third-party logistics (3PL) firms. This is due to the many benefits they come with.
Why you should consider third-party fulfilment
Higher order accuracy
3PLs can increase order accuracy since they have the necessary resources, know-how, and technology. Companies are always searching for ways to get better and reach higher levels of order accuracy, whether by allocating pickers to improved routes, opening new fulfillment centers to reduce shipping times, or enhancing their warehouse picking and packing procedures.
You have room to grow
Of course, expansion is the aim of any e-commerce enterprise. A significant sign that your business is growing fast is an increase in orders.
While this is great, a sharp rise in sales will strain your resources if you manage every aspect of the business in-house. It’s possible that you won’t have enough workers to carefully choose, package, and mail every one of your items.
It’s also possible that you’re paying prices with your existing carrier that aren’t allowing for increases in profit margins.
As mentioned, third-party fulfillment professionals come equipped with information and tools designed to grow with you. You can concentrate on expanding your firm without worrying that it’s too soon or that your present system can’t support your growth.
You have professional picking and packaging
If your ecommerce business is rapidly expanding, you can easily experience order overload. When this happens, returns rise, customers get upset when orders are shipped to the incorrect address or merchandise is packaged incorrectly.
Fulfillment specialists at amsfulfillment.com can take care of the fulfillment process if you leave the warehouse picking and packing up to them. Since that is their only work, they professionally deliver the orders to your clients on time.
You should note that even when you leave the fulfillment to a professional company, you still have complete control over the process.
You can check where your order is in the fulfillment process, search for specific orders, easily access shipping related information, filter orders based on status, and quickly determine which orders need action by using the company’s dashboard.
You save on space
Because e-commerce has the potential to have minimal start-up expenses, it’s easy to start. One prominent illustration of this is the ability to launch your business without owning or renting a commercial facility.
Since you can engage with clients online without a physical store, you can start your e-commerce enterprise from even your home.
The issue is that, to prevent order fulfillment from slowing down, you will need to have a greater inventory as demand for your products increases. You also soon realize that using your office or home as a warehouse is not a viable solution.
Fulfillment via a third party allows you to expand your inventory in line with demand. Hiring a 3PL provider is far less expensive than leasing a commercial location for product storage, especially if you combine your warehousing expenses with other expenditures associated with order fulfillment.
How do you know it’s time to hire a third-party fulfillment?
You have uneven sales
If the volume of orders you process varies throughout the year, committing to running and staffing a warehouse might not make sense. A fulfillment company is an excellent choice in such a time.
The beauty is that the expert can handle times when your daily order volume peaks so you can maintain a consistent customer experience. If you were doing the fulfillment by yourself, unexpected spikes in sales can compromise your delivery promise which might have a negative impact on your business.
You are too busy
Outsourcing should usually be your first move if order fulfillment takes up all your time and prevents you from concentrating on growth. You must invest time in marketing, growing your sales channels, locating new items, and enhancing your firm as an owner.
If you can’t do this because you are busy delivering orders, it might be time to source the services of order fulfillment companies.
You don’t have the necessary infrastructure
Expense increases and lengthier shipment delays are examples of logistical obstacles that can prevent you from entering new markets. If you want to reach new markets, a worldwide fulfillment partner can use its many locations to meet your client demands without requiring you to invest in the new market.
Situations when a third-party fulfillment partner doesn’t make sense
As much as a third-party partner comes in handy, there are some situations when hiring one might not make a lot of sense. These situations include:
You sell specialized products
Sensitive materials, highly delicate items, and customized products might be problematic, and many fulfillment centers might not be willing to handle them. Also, they might ask for additional fees for the extra work they have to do.
Your business has limited cash flow
You should bootstrap your business growth and manage your fulfillment process if additional funding isn’t accessible. For instance, in the early days of Amazon, workers would hand-pick and package book orders for clients in the evenings.
Hiring a third-party fulfillment partner might not make sense if you are too early in your business.
You have a limited daily order volume
If you’re not getting many orders every day, it’s probably too early to think about outsourcing fulfillment. You or an employee can still handle it internally at this point.
You should consider looking for a 3PL after reaching five to ten shipments daily.
Parting shot
Now you know whether a third-party fulfillment partner is right for you or not. If you are just starting your ecommerce journey, it might be ideal to handle your fulfillment, but if the business has gotten traction, you can go ahead and hire a third party.
When hiring, ensure that the fulfillment partner you work with is experienced and has all the necessary tools such as tracking software and enough warehouse space.