From stressful to streamlined, are you wondering how to grow your ecommerce business without investing more resources?
Outsourcing order fulfillment to a third-party provider is how e-commerce sellers scale their business efficiently and meet the increasing online market demand.
Companies that have moved to outsource fulfillment have more time to focus on marketing and growing their brand.
This article considers how outsourcing to a fulfillment center is a good move, including the benefits and what to look for when choosing a third-party provider.
Fulfillment Centers
A fulfillment center is a large warehouse or distribution center designed to handle and process orders for various products.
The primary function of a fulfillment center is to receive orders from customers or retailers and ecommerce businesses, pick the items from the inventory, pack them, and ship them to the designated destination.
Fulfillment centers play a crucial role in the e-commerce industry, where they help online retailers to manage their inventory, handle customer orders, and deliver products in a timely and efficient manner. They use various technologies, such as automation systems, robots, and conveyor belts, to streamline receiving, processing, and shipping orders.
Fulfillment centers can also offer additional services such as inventory management, quality control, returns processing, and customer support. They help online retailers to save time, money, and resources by outsourcing their order fulfillment process to a third-party service provider.
The importance of outsourcing to a fulfillment center cannot be overstated for e-commerce sellers. It’s how ecommerce businesses can meet customer demand and expectations.
Growth
The growth of e-commerce sales means that businesses need to be able to handle the increasing demand for order fulfillment.
Grand View Research says the global e-commerce fulfillment services market size will likely “grow at a compound annual growth rate of 13.9% from 2023 to 2030”.
Benefits of Outsourcing to a Fulfillment Center
Less cost
One significant benefit of outsourcing to a fulfillment center is that it can help businesses save money. Fulfillment centers have the resources to negotiate lower shipping rates and better pricing on packaging supplies.
Scale
Using a fulfillment center can also help businesses scale without additional staff or warehouse space. Furthermore, businesses can focus on scaling other areas, such as marketing, sales, and customer service.
Software
Another benefit of outsourcing to a fulfillment center is access to custom software. For example, many fulfillment centers have advanced software that can track inventory levels in real-time, provide accurate shipping rates, and automate order processing.
Custom software can help businesses to streamline their fulfillment process, reduce errors, and improve accuracy. As a result, companies can enjoy a higher accuracy rate, leading to time and money savings.
How To Choose A Fulfillment Center
When choosing a fulfillment center, there are several factors to consider, including the following:
- Multiple facilities/warehouses
- Automated fulfillment ordering
- Customer service
With multiple facilities, businesses can save on high costs and reduce shipping times because the shipping distance is shorter and there are fewer zones to cross. In addition, companies can offer their customers faster delivery times, increasing customer satisfaction and retention.
Intelligent fulfillment processes can automatically import orders into the system and process them with minimal manual intervention. This automation reduces the risk of errors and delays and helps to improve accuracy.
Real-time tracking
Real-time tracking can reduce customer inquiries and improve customer satisfaction, leading to higher retention rates and repeat business.
Access to real people in customer service is not a given today; there are AI chatbots so it is essential when evaluating fulfillment centers to consider if there are humans should any issues arise. Some examples of issues that need a human can include assistance with tracking shipments, resolving issues with carriers, and providing guidance on best practices for order fulfillment.
Ideally, there is a point of contact in the fulfillment center for your business to ensure that problems are addressed promptly, increasing customer satisfaction and loyalty.
Ecommerce Business Examples
A clothing company experienced long shipping times and high shipping costs due to the distance between their warehouse and customers. After switching to a fulfillment provider with multiple facilities, the clothing company reduced its shipping costs by 20%.
The fulfillment provider split the company’s operations across multiple warehouses, reducing the shipping zone distance and resulting in significant cost savings. Fewer returns and reships led to higher customer satisfaction and repeat business.
A makeup company used a single warehouse for its fulfillment operations. However, outsourcing to a fulfillment provider allowed it to split its operations across two warehouses, reducing the distance between the warehouse and the end customer and shortening delivery by 20%. By leveraging The Fulfillment Lab’s expertise and resources, the makeup company was able to save over $150,000 in shipping costs.
Conclusion
For e-commerce sellers looking to grow their business and keep up with the demands of the online market, outsourcing to a fulfillment center is a smart move. By doing so, companies can focus on marketing and expanding their brand while leaving the fulfillment process to the experts.
The advantages of outsourcing to a fulfillment center include cost savings, access to specialized software, and improved customer service.
When selecting a fulfillment center, it’s important to consider multiple facilities, customized software, and access to real people for customer support. The examples presented in this article demonstrate how outsourcing to a fulfillment center can enhance customer satisfaction and lead to repeat business.
