Many businesses struggle with the idea of outsourcing to a fulfillment center or 3PL warehouse to help save time and money. While many businesses find benefits to this option it is not for everyone. We will outline some reasons why this is not always the best solution, and give you some guidance on how to manage your own fulfillment better. We will also provide a couple of reviews for some products that help businesses perform better on their own.
What are Good Reasons for not Outsourcing?
The first thing that probably comes to mind is cost. When profits are not high yet it might be difficult to start outsourcing fulfillment. When looking to use a fulfillment center there are start-up costs involved, storage costs, charges for movements, charges for employees that they are using to fulfill all of your business needs, etc. When there is not a lot of extra cash flow these costs can be very daunting and to some just not an option at all – especially if you have to rely upon your own time in lieu of paying a fulfillment center. Of course shipping costs can be very high for companies with a smaller order volume which is where a fulfillment center could help you save money, as these companies usually do have a better rate. Look at what costs your company is incurring for all of these services and compare them to the rates of these fulfillment companies and 3PL warehouses and you will find your answer. As a start up, you might have to boot strap it a while until you can afford the cash flow expense of an outsourced solution.
Then there are the businesses that have specific needs that entail too much work to outsource without a large potential for problems. For example, there are many different businesses that rent out clothing on a monthly basis to their customer. When these boxes get returned the clothing needs to be dry-cleaned and inspected thoroughly. Not that this is impossible to outsource, but these unique services will more than likely not be provided by many 3PL warehouses or fulfillment centers. Most outsourced warehouses ship standard goods and anything out of the ordinary could become problematic. Odd sizes and unique requests will add to the cost of outsourcing your business needs. When it comes to these niche companies it will more than likely be better to keep this side of the business under your own control.
Speaking of control, there are also businesses (and their owners) that need a little more control over their process. Outsourcing to a 3PL warehouse or fulfillment center means letting go of part of your own business. If you’ve been handling your own fulfillment and have created a working procedure for yourself, it could be difficult to let go and hand this over to another company. Most fulfillment centers have a streamlined process in order for them to best handle fulfillment for many different companies using their services. It is very important for a business owner to find a company that meets their needs as well as a good partner to work with. This may be hard to find for certain companies so maybe the own fulfillment process could be streamlined better instead of looking for it elsewhere.
How to Manage Your own Fulfillment Better?
If outsourced fulfillment isn’t in the cards, then you need to make sure you are armed with the right processes and systems to do it effectively. Anything can be managed on a very small scale, but as you grow, additional sales will expose any problems in the fulfillment process and will result in potentially catastrophic errors.
So what are the most important things to help your business? In order to be successful with in-house fulfillment you will need well-trained people and the right technology and software. It’s what all of the professional 3PLs and larger companies use to ensure success. While you may not be able to purchase robots to pick orders, certainly bar code scanning and inventory software are affordable options to significantly reduce errors.
When you look around you will find quite a few fulfillment software platforms to help you manage your business better. These software platform companies know that not every business is going to fall in line with outsourcing to a fulfillment facility. As such it can be overwhelming for you to try to find something that works right for your business. One of our recommendations would be to seriously consider other alternatives before using any shopping cart plug-ins. While these do have their pros and cons, you may run into trouble with these in the long run. The positive aspects are reasonable prices, free trial periods, no selling limits and unlimited storage. On the negative side, they may lock you into inflexible work flow processes that either set your company up for errors to take more time to process, and the customer service is sometimes erratic. They also frequently charge you with transaction fees, something you’ll see add up dramatically as your order volume rises. In addition, many of these services don’t offer refunds, bringing nothing but a money-losing risk when you need to gain the most profit. You need to find something with dependability and experience, as well as scalability. Lastly, it’s smart to avoid any service locking you into a contract, despite seeming impossible to find.
What to consider for In-House Fulfillment Software?
If not outsourcing is the right choice, you need to look beyond and see what tools you can use to make fulfillment work better in-house. You’ll need something that will fully integrate with your existing systems to avoid transition problems. In our quest to help businesses find what is the right fit for them we’ve started reviewing some of these Software platforms.