How do you know when to outsource ecommerce order fulfillment? According to eMarketer, the number of consumers shopping online will surpass 200 million by 2015. As the Kickstarter economy has shown us, this booming ecommerce marketplace has nurtured the rise of start-up enterprises selling physical products to consumers. As they grow, these start-ups often find themselves balancing product development, marketing, sales, inventory management, and order fulfillment all from a single office (or garage!) location.
At a certain point in a young company’s growth trajectory, outsourcing ecommerce order fulfillment will be a smart move from a cost, customer service quality, and skills perspective:
- Cost: From a cost perspective, the best time to outsource occurs when your per-order costs exceed that of a third party logistics (3PL) provider. Easy to say, right? Our customers tell us what pushes them over the edge are two simple factors:
o Their own time spent on operations exceeds time spent selling and marketing product; they track their own hours spent for a week and it becomes obvious where time is better spent
o Total costs for running physical distribution operations – warehousing, pick, pack, ship labor, handling returns, and material costs. When they do not scale with revenue growth, it’s time to leverage 3PL operations which should provide clear, predictable operating costs.
- Service Quality: Our customers also tell us that when their service quality takes a hit or two, or three, they need help raising service levels to match brand expectations. The last mile of customer engagement is what the consumer often remembers from their buying experience and it can determine whether they become a loyal return customer or a one-time shopper. 3PLs bring best practices that come from handling all types of customer situations. You’ll know you need us as you listen to your customers.
- Skills: From a skills perspective, the best time to outsource is the point at which handling product delivery logistics with your current internal resources is interfering and inhibiting your marketing and product development initiatives. Partnering with a 3PL and handing them responsibility of inventory management and distribution can immediately free up resources and position your company to continue innovating. Most of our customers tell us this is why they got into business for themselves in the first place – to innovate!
To schedule a free Excelsior Integrated assessment of your product fulfillment operations, please click below. Assessments include analysis of existing fulfillment operations, gaps in process procedures, recommendations, estimated cost savings, and an Excelsior Integrated proposal when applicable.