While you are considering if outsourcing fulfillment is the right option for your company, here are some indicative signs which can guide you to the right decision.
Increased fulfillment costs cut down major portion of the profit and is pushing entrepreneurs and business owners to look for alternatives
Small businesses and startups often try to cover their operational costs with the retained profits and try to minimize expenses. While it may be considered a good strategy initially, but will it be beneficial for your business in the long run? Would you not prefer for your business to gain competitive advantage in logistics through outsourcing? A choice that might lose you the benefits of a 3PL’s extensive infrastructure and reach.
Lets put it another way. Consider the costs of in-house fulfillment versus outsourcing. It may surprise you that at the end of the day, outsourcing is the cheaper and more feasible option. The total expenses of printers, scales, shelving, facilities, labor, and supplies could be greater than the outsourcing costs. If you include the other opportunity costs, which includes the time you save, the mental peace you gain, and the operational efficiency that you achieve, this could be considered a win-win situation.
Operations involved in order fulfillment can be a bottleneck in the growth of your business
While you are focusing on the growth and expansion of your business, you may not find the time or resources to focus on fulfillment. If you are new startup or a small business, you probably have skills and expertise in other areas besides logistics. Now that your business gains a surge in sales volume, you realize that fulfillment is hindering your growth as you cannot focus on both tasks together. Moreover, you may find that the opportunity cost of in-house fulfillment is higher as it may impact your productivity. Not only do the fulfillment companies would pick, pack and fulfill the shipping requirements, they will take care of all the hassles and worries related to the logistics of your company. This can help you to invest all your attention and time on your growth without any stress related to supply chain.
Giving the responsibility to an entity skilled and experienced in this field will give you peace of mind and will improve the productivity of your company. Before making a decision, consider the future circumstances as well. How will you keep up with the orders when your business grows, 3-6 months from now? Switching to a 3PL then may not be as convenient.