There are many reasons your business may consider outsourcing to a fulfillment service. The most important, although difficult to monetize, is time. Once your business has grown beyond the startup phase and begun to sustain itself, prioritizing your time, and that of your employees or partners, is crucial to continued success.
In addition to needing time to concentrate on business growth, here are four more signs that it is time to outsource your fulfillment.
Too Many Questions
You are an expert in your field. Your business knows its target markets and has a plan in place to increase sales. As your product offering widens and your customer base grows, your orders become less homogeneous. Soon you intend to pursue wholesale customers, increasing the variety even further. All of these changes bring questions.
What is the best shipping method for wholesale orders? Is it the same as retail orders? Should we use the same carrier for all packages to increase volume discounts, or can we save money in other ways? Do we need to stock more shipping box sizes? And, above all, are we paying too much for shipping?
A reliable fulfillment service already has the answers to your questions and will allow you time to market your business and develop your assets.
The Sea of Rising Costs
Shipping costs have risen over 60% in less than a decade. Many companies spend 10-12% of their revenue on shipping costs alone. Utilizing different carriers for different shipping scenarios can save money, but diffuses your volume discounts for a single business.
An established fulfillment service is able to offer discounted freight rates based on the volume they handle for all clients together. Leveraging this power in numbers will save your business more money than it can earn from its own volume discounts for many years, if not indefinitely.
As sales grow, many related costs increase: the staffing costs to pack and ship orders, packaging materials, storage space, shipping costs, returns processing, and more. This is in addition to advertising and marketing costs, manufacturing, freight, web development, legal and other expenses. And time, the most precious and nonrenewable resource. When the fulfillment need begins to drain resources, outsourcing is the decisive action that consolidates and manages these costs into one bill, one concern, one (very important) cog in the wheel.
A Barrier to Growth
Expanding to new markets and marketplaces requires planning and logistics management. The software integrations alone can save valuable time for a growing business. Third-party logistics partners (3PLs) like Sprocket Express have existing software integrations that can take your orders directly from most any shopping cart or marketplace and automatically process the orders through their system.
With expansion, peak season traffic also increases. This is great news for your business, but is your in-house capability ready for the heightened activity? With a professional fulfillment partner, your business can focus on promotions and social media, rather than shipping orders during busy times. They will have seasonal staff on hand to meet the demand and they have regular pickup, plenty of packing materials, and the experience to keep the whole thing running smoothly.
Trying to forge ahead once your business reaches the tipping point can impede your success. It’s like trying to start two businesses- one in your field and one in the fulfillment field. If that idea resonated with you, it is probably time to outsource.
Depending on your product line, warehouse space may become a concern early in the game. For businesses that import containers of goods, storage space is key. If your products are small and/or purchased in small quantities, it may not be urgent to find a separate location for storage. For those that deal with large items or quantities, a professional warehouse is immensely helpful. Over time, it will save money to use a warehouse rather than your own business space to house inventory.
Recreating a knowledgeable and experienced shipping department is a deviation of resources, both time and money. Once you have taken hold in your market, diverting your focus to this task may not be the best course of action. Outsourcing fulfillment at this crucial moment can streamline your operations and provide room to scale.
If you are ready to consider outsourcing your order fulfillment, contact us for more information.
Sprocket Express is a division of Medallion Enterprises and owned by Medallion Fulfillment & Logistics.