Since ecommerce has grown companies are increasingly looking to use the Internet as a sales channel. Many companies has experienced huge growth in Internet sales and this has led to many companies setting up expensive remote warehousing or distribution facilities. This usually has a large number of associated costs and many companies are now looking towards dedicated fulfilment services to offer companies a way to outsource their pick and pack operations. But just what are the benefits of outsourcing your fulfilment?
Outsourcing fulfilment is a great way to improve your business. It lets you focus on what really matters for your online business. You can concentrate your resources on marketing, customer services and product catalogue improvements whilst still ensuring your orders can be fulfilled efficiently. Your business volumes are able to grow without requiring lots of investment in warehouse space, systems and staff. You know you can provide efficient order fulfilment even if your volumes triple or even higher very quickly.
The first major benefit is clearly a direct cost saving and this is in many areas. Firstly there is a large saving in staff costs, fulfilment companies usually operate at a much higher efficiency than you can provide internally and therefore you can make a saving in staff costs. You also do not have to worry about staff issues such as recruitment and human resource issues. There are many savings also to be found in postage and packaging rates. Fulfilment company tend to have large bulk volume contracts with post and packaging providers and therefore can offer cheaper postage and packaging costs than would normally be possible by buying these directly. Finally, the fulfilment company will normally include liability insurance, shelf space and raw materials like label paper and printer toner at a lower cost, therefore removing these costs and lowering your overheads.
We have highlighted already that there is cost saving by outsourcing your products but there are several other benefits from outsourcing that sometimes get overlooked but are still extremely important. Your orders are likely to be processed a lot more efficiently, improving the turnaround time between the order being received and the item being received by your customers. Customer satisfaction is therefore improved.
You will also find that by integrating your system closely with the fulfilment company, you will have very accurate information to hand on stock levels and product information. By synchronising this with your own system its possible to provide your potential customers with very accurate lead time information, again improving your customer relationships. What you will also see is an improvement in the quality and accuracy of your order fulfillment. Less errors in picking and higher quality in order processing. This again helps improve customer satisfaction.
Most offshore fulfillment companies will offer their services as a fixed cost per item. This is usually the best model as it means no matter what your volume you will always be paying the same rate and if you can build this cost into your margin calculations you will be able to save a considerable amount of money in the long term for your business and at the same time improve customer service and efficiency.