Benefits of Outsourcing E-Commerce Order Fulfillment
Order fulfillment in the ecommerce industry can be energy-draining, time-consuming and very difficult all at the same time.
This is because you will have loads of orders to receive, process, package, record and deliver to the consumer who may cancel their order if you keep them waiting for too long.
Seeing how competitive the ecommerce industry has become, it will be foolhardy for you to decide to handle everything by yourself, including finding hot-selling products, purchasing, customer support and running Google and Facebook adverts.
Even if you have the best ecommerce products in the most profitable niche, you will struggle if you don’t outsource certain aspects of your business, like, order fulfillment or customer support.
According to a survey conducted by Statista and published by Alexander Kunst, 35% of online shoppers in the United States in April 2017 said that they cancelled their online orders because of “Too long delivery time.”
What causes delays in ecommerce product delivery if not late order fulfillment?
But before we dig in, let’s look at what exactly order fulfillment means in the ecommerce industry.
What is E-commerce Order Fulfillment?
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Order fulfillment services in the ecommerce industry has to do with receiving an order, processing and recording it and delivering it to the doorstep of the exact customer that requested it.
If you spend a day or two in a big warehouse with thousands of orders to fulfill, you will understand that the order fulfillment process in the e-com sector is not as simple as it sounds. This is why most Shopify gurus are constantly looking out to hire the best order fulfillment experts for startups like theirs.
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Normally, they integrate their order fulfillment software into your ecommerce store and help you receive, package and deliver the products to the end-users.
Cons of E-commerce Order Fulfillment
There are tens if not hundreds of disadvantages of outsourcing order fulfillment in the ecommerce industry. But for today, we shall be discussing just a few.
– Inability to Personalize Packaging
If branding and how-the-box-looks is a very important aspect of your business, then you will probably lose in that area when you outsource your order fulfillment.
This is because you are going to lose that personalized touch you would have given it if you did the packaging and delivery yourself.
Personalized packaging is custom packaging featuring the name, image or other personal features of the customer.
– Outsourcing Order Fulfillment Can Be Expensive
Depending on who you hired to handle your order fulfillment outsourcing can be pretty costly, especially if your warehouse is in a state like California or New York.
Even if your ecommerce product is the best in the world, it will make no sense to your bottom-line if you are not profitable. It will only be a space of time and your business will pack up. You wouldn’t want that to happen to your business.
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The way out? Make sure your dropshipping product order fulfillment is not overshooting your budget. In addition to that, always calculate fulfillment per order.
– Vendors Can Make Silly Mistakes
This is most likely going to be the worst disadvantage of outsourcing order fulfillment. Imagine sending products meant for customers in Australia or Malta to South Africa and shipping products meant for South African customers to Canada because of misplaced identity.
When this happens, customers that placed an order online will cancel their order and ask for a refund if they have paid already, the shipping cost will increase and your reputation will be damaged.
To help you get it right from the beginning, we recommend working with reliable Shopify fulfillment partners.
Note: If you can control or influence whatever packaging is used for your products by the order fulfillment center, reduce the cost and ensure they don’t make silly mistakes, you will be able to improve your order fulfillment to a great extent and increase your profit.
How to Outsource Order Fulfillment in E-commerce
In 2017, the ecommerce giant, Amazon spent $21.7 billion on shipping, $16.2 billion in 2016 and $11.5 billion in 2015.
In order to reduce cost and fulfill orders super-fast, they launched their own in-house shipping company.
Related: 5 Proven Methods to Drive Traffic to Your E-Commerce Website
Before outsourcing your order fulfillment, here are 3 things you must do:
- Understand what you want – the kind of service delivery you want.
- Research the available and of course, the best shipping providers around.
- Ask friends and senior colleagues who are more successful than you in the ecommerce industry for a recommendation
Working with 3PLs (Third-Party Logistics) that are locally owned has proven to be the most recommended by a majority of the Shopify experts that we worked with.
Benefits of Outsourcing Order Fulfillment in E-commerce
1. Outsourcing Shipping Helps You Reduce Operating Cost
Amazon spent $21.7 billion on sortation and delivery in 2017 before moving on to run its in-house logistics company. This accounted for about 1% of FedEX revenue, the CEO claimed in a report.
What does this tell us? It reminds us that order sortation and delivery is very expensive. If you are not as rich as Amazon, you can’t think of handling everything all by yourself and survive it. Hence the need to outsource.
2. Outsourcing Order Fulfillment Helps to Improve Customer Service
Another advantage of outsourcing shipping is because it helps in improving your customer service delivery and a possible increase in sales.
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You can sign up with any of the third-party logistics companies near you and quickly integrate the 3PL software into your ecommerce store.
3. When You Outsource Delivery, You Can Focus on Selling
Writing stellar sales copies, building the sales funnel, sourcing for products and running an advert on Facebook, Google and Instagram is a lot of work on their own. Now imagine what it will look like adding order fulfillment to it.
Ecommerce gurus who outsource their delivery enjoy more time freedom to focus on selling and selling more of their products.
4. Faster Delivery is Guaranteed When You Outsource Packaging and Shipping
Do you remember we told you that about 35% of online shoppers said that they cancelled their order because delivery took too long? Yes, that will be completely all taken care of when you outsource this aspect of your ecommerce business.
Companies using 3PLs for their deliveries always have a lesser order cancellation ratio. According to a survey published by MarketingProfs, about half (49%) of shoppers say same-day delivery options are enticing enough to get them to shop online from a specific retailer.