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 enables e-commerce sellers to scale their business efficiently and meet the increasing demand in the online market.

Companies that have outsourced fulfillment have more time to focus on maximizing revenue and growing their brand. This freedom to concentrate on core business activities can empower businesses to achieve their growth goals.

This article examines the benefits of outsourcing to a fulfillment center, including key considerations when selecting a third-party provider.

Fulfillment Centers

A fulfillment center is a large warehouse or distribution center designed to handle and process orders for a wide range of products.

In their blog post, the AMS fulfillment service explains the ins and outs of a fulfillment center. Its primary function is to receive orders from customers, retailers, and e-commerce businesses, pick the items from the inventory, pack them, and ship them to the designated destination.

Additionally, fulfillment centers play a crucial role in the e-commerce industry. They help online retailers manage their inventory, handle customer orders, and deliver products promptly and efficiently. They utilize various technologies, including automation systems, robots, and conveyor belts, to streamline the processes of receiving, processing, and shipping orders.

Fulfillment centers can also provide additional services, including inventory management, quality control, returns processing, and customer support. Outsourcing their order fulfillment process to a third-party service provider and fulfillment centers helps online retailers save time, money, and resources.

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.

Challenges Solved

The challenges solved by fulfillment providers, especially for ecommerce sites, include the following:

• Cost control
• Inventory management
• Scalability
• Handling returns
• Customer satisfaction

Warehousing and staffing, as well as other variable costs, pose a significant challenge for small businesses in managing storage and shipping requirements.

The business would need to lease or buy a warehouse. There would also be equipment costs, which the company would need to purchase or rent, Including Machines, vehicles, packing materials, and shelving, among others. The costs soon add up.

Staffing the warehouse would require warehouse operators, inventory management staff,ff, and administrators.

Companies that manage their own orders and shipping often fail to invest in the technology required to streamline the ordering and delivery process, while minimizing errors, especially as the business expands.

Then there is the returns process. This task can be costly to manage and also disruptive in its own right.

Benefits of Outsourcing to a Fulfillment Center

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”.

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, companies 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 utilize advanced software to 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. Additionally, companies can offer their customers faster delivery times, thereby increasing customer satisfaction and retention.

Intelligent fulfillment processes can automatically import orders into the system and process them with minimal manual intervention, streamlining the workflow. This automation reduces the risk of errors and delays, thereby improving accuracy.

Real-time tracking

Real-time tracking can reduce customer inquiries and enhance customer satisfaction, ultimately leading to higher retention rates and increased repeat business.

Access to real people in customer service is not a given today; with AI chatbots, it is essential when evaluating fulfillment centers to consider whether humans should be available in case any issues arise.

Some examples of problems that require human assistance include tracking shipments, resolving issues with carriers, and providing guidance on best practices for order fulfillment.

Ideally, your business has a point of contact in the fulfillment center to ensure that problems are addressed promptly, increasing customer satisfaction and loyalty.

Ecommerce Business Examples

Due to the distance between its warehouse and customers, the clothing company experienced long shipping times and high shipping costs. After switching to a fulfillment provider with multiple facilities, the 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 seeking to expand their business and meet the demands of the online market, outsourcing to a fulfillment center is not just a move; it’s a strategic advantage.

By doing so, companies can confidently focus on marketing and expanding their brand while leaving the fulfillment process to the experts.

Outsourcing to a fulfillment center offers advantages such as cost savings, access to specialized software, and improved customer service.

When selecting a fulfillment center, it’s essential to consider multiple facilities, customized software, and access to live customer support.

This article’s examples demonstrate how outsourcing to a fulfillment center can enhance customer satisfaction and promote repeat business.