9 Signs You Should Invest In Third-Party Fulfillment
By Michael Plichta, Sales Manager, Speed Commerce
Likely, your customer service, order accuracy, and possibly bottom line have already suffered in some way due to inefficient fulfillment practices. If you’re experiencing any of these nine signs, it may be time to consider outsourcing your order fulfillment operations.
- Michael Plichta, Sales Manager, Speed Commerce
1: Other parts of your business are taking a backseat.
Operations are the backbone of a direct-to-consumer business, but good marketing and merchandising efforts are the keys to making it grow. Spending all of your time managing inventory, scheduling your labor force, and maintaining a warehouse makes it very difficult to implement new campaigns and pursue additional avenues for growth. If you find that other aspects of your business are getting pushed back in favor of current operational needs, outsourcing can help you get back on track.
2: You’re growing faster than you can manage.
What a great problem to have! But rapid growth does have its drawbacks, too – and it’s pretty easy to tell if your operations are no match for your expansion. If you’re struggling to get orders out the door within 24 hours of receiving them or are finding that your delays in the warehouse are causing packages to miss their delivery deadlines, you might need to turn to an expert.
3: You’re terrible at returns management.
No retailer likes processing returns – but if you’re doing it inefficiently, you’ll be losing a lot more than just a sale. Proper returns management involves staff and warehouse space dedicated to opening returned orders, re-entering them into your inventory, then either refurbishing the product (if needed) and restocking it or preparing it to be returned to your vendor. If your returns process is costing you excessive time, money, or inventory that you can’t recover, seeking an outsourced provider can help.
6: Your shipping rates are killing your bottom line.
Unless you’re an expert negotiator, have a friend employed at a freight carrier, or ship millions of packages per year, you probably aren’t a fan of your current freight rates. Third-party fulfillment providers ship far more packages per year than the average retailer can achieve alone, so outsourcing allows you to take advantage of the economies of scale and experience lower shipping rates for both inbound and outbound freight. Outsourcing to a fulfillment provider can often improve your shipping times-in-transit, too!
4: Poor operations performance is causing customer service issues.
Are your customers complaining about incorrect orders or damaged products? When warehouse staff are stretched too thin, things get chaotic. This leads to slipping order accuracy and a lack of quality control at the pack station. Never let your operations affect your brand’s promise – fulfillment problems can break customer loyalty.
5: Your infrastructure isn’t prepared for your growth.
Are your operations bursting at the seams? Are you unable able to keep your fulfillment performance consistent in the face of your brand’s growth?
Rapid and unexpected growth can leave you scrabbling for solutions such as having to sign a lease for more warehouse space, hire additional workers, and even update your ecommerce technology. Increasing these things all take time, expertise, and capital. If you’re not prepared to outlay those investments to grow the back-end part of your business to match the rest of it, outsourcing is a good alternative.
7: You struggle with inventory management.
Receiving product, reconciling inventory, rotating stock on your warehouse shelves… all of those need to be done frequently (even daily) and with strict attention to detail. An incorrect inventory count can throw everything out of sync – including making your customers unhappy. If you don’t have the technology and expertise to manage it effectively, find someone to manage it for you.
8: Dealing with vendors isn’t your strong suit.
Managing multiple product vendors can be a tricky task for any retailer to execute effectively. If you don’t have staff with the skill set or bandwidth to maintain these relationships, it’s wise to allow an expert to step in. An excellent outsourced fulfillment partner will often take over the vendor management process for its clients, overseeing everything from stock reorders, to inbound freight, to accounting and returns processing.
9: You want (and need!) to expand your capabilities.
Maybe your customers are clamoring for overnight or next-day shipping, but that’s not economically or operationally feasible in your current situation. Perhaps you want to offer more personalization options to your customers, such as embroidery or engraving but you can’t handle it in-house. Through outsourcing, you can select the perfect partner who already offers all of the services to continue growing your business – and at a much lower cost than implementing them yourself.
Now that you’ve determined outsourcing is the right option for you, it’s time to start thinking about the perfect vendor. During your search, keep in mind that you’ll want a partner: a company that understands and is committed to your operational goals and strategic vision and will help grow your brand for years to come. Selecting the fulfillment provider that meets your criteria now will save you a lot of headaches – and money – down the road!
Speed Commerce infuses order fulfillment, customer care, product personalization, and ecommerce technology into a seamless direct-to-consumer experience.
Luc Filiatreault is the CEO of mdf commerce, a company providing eprocurement and unified commerce B2B SaaS solutions to optimize and accelerate commercial interactions between buyers and sellers, servicing over 600 clients in eCommerce alone. Luc has founded and/or led seven businesses in technology, IT and aerospace, completed two IPOs, and raised multiple levels of funding totaling over 200 M$ from Canadian and US venture capitals, as well as institutional investors.