If you ask whether or not it is better to outsource fulfillment services the answer will depend on who you are talking to. However, you could take it from millions of companies that already use third-party services to handle all of their fulfillment needs and see that it is much better than building and hiring a full in-house team.
Table of Contents
Advantages of Outsourcing Work
The term “outsourcing” can lead people to believe that somebody from another far and distant country will be handling all of the work, yet this is an inaccurate thought. Thee are countless businesses in the United States that offer business services to other businesses. One prime example of this is a third-party human resources company.
In any event, when a company chooses to hire an outside agency to handle parts of the business that the owner is not an expert at, they are taking the initiative to better their own business without having to incur excessive expenses.
Some of the advantages of hiring a third party are:
- Fewer fully burdened employees
- Not responsible for insurance
- Not responsible for taxes
- Outsourced parties have their own equipment
Hands down, if a business is a small company that has only a few people that make it work, the best way to deal with many types of series is to hire an outside company to help with it.
Of course, in situations where the company offers services that they are experts in, it is best to allow in-house work. For instance, a web development company shouldn’t need to hire a third party to handle their website. Nor should a law firm hire lawyers outside of their own office.
However, if a company sells jewelry online, but does not have a storage facility for the products, or anybody available to take orders and ship out merchandise, they could always hire an outside service to handle taking orders and packaging up the sales items.
When it comes to making great money with an eCommerce site, the brains behind the business can easily control the mainframe of the business, while they hire another professional company to house merchandise, send and receive packages, fulfill orders and do the rest of the grunt work.
Warehousing and Merchandise Storage
The typical eCommerce business does not have the capacity to provide its own warehouse, tools, and equipment in order to maintain a high level of sales and fulfillment. Although larger companies such as Amazon and eBay have their own facilities based throughout the world, many of the eCommerce stores operate out of homes or tiny offices.
Many of the robust fulfillment services companies out there supply their own warehouses, equipment, and staff so that they are completely equipped to handle even the biggest moving sales forces on the internet.
Some fulfillment companies that provide warehousing services also provide:
- Storage racks
- Forklifts
- Pallets
- Pallet wraps
- Laborers
- Receiving
- Shipping
- Order processing
The way that it works is that the online store attracts visitors and gets them to order products. When products are ordered the fulfillment crew receives alerts regarding the orders and then kicks into action.
In a situation where the merchandise is kept meticulously placed in storage spaces, the crew will easily be able to locate each item that has been ordered by searching for the area, the shelf, the space on the shelf, then the item.
In some situations, the items being sold will have to be picked and set out within a matter of minutes, and in other situations, the time to respond will be within 72 hours. In any event, the crew that handles the order fulfillment services will take care of the entire process, including dealing with the customers.
Order Fulfillment
In order to further explain the way that fulfillment services work, let’s take a look at a common example of the way that an eCommerce site works. Say, for instance, you visit a website that sells a particular line of clothing. The store may offer shirts, skirts, gloves, hats, and even beanies that have a logo printed on them.
When you visit the website you can browse around and look at items that are available in the online store, or you may already know what you want and decide to go straight for the purchase. When you get to the point where it is time to buy the thing you are faced with a few options.
- The type of shipping you want
- How fast you would like the item
- Where the item will be shipped
You might also be asked various other questions regarding the style or the color of the item that you chose to purchase. In any event, you make the purchase, you pay for it, and then you wait for the item to be delivered to your door…or go to a designated place to pick it up.
In any event, once you order the item the next phase of the order comes to life. Somebody is made aware of the purchase and then proceeds to put things into motion in order to fulfill that order.
When a person on the other end gets notice of the order it could be in the form of:
- An email notification
- A text message on their phone
- A chatbot that is programmed to send messages
- Another type of automated communication system
Once the order is put into motion the fulfillment associate will locate the item, or items, being purchased. Once the items have been found the associate will use a barcode scanner to input the transaction into the database, then they will bring the item to the shipping department where it will be packaged, labeled, then shipped out to you.
Depending on the choice that you made for the shipping method it could take anywhere from hours to weeks before you received the product that you ordered.
Businesses that have a high volume of sales can very much benefit from an outsourced company to handle all of the transactions because they are equipped to do so, and a home office may not have the room or resources required to handle multiple sales at one time.
Since the entire process will be with the help of software and computers everything will be documented and recorded from the beginning to the end. From the time the customer makes the purchase all the way through until the time that they receive the order every step of the way will be documented and accounted for.
Shipping and Receiving
When a company sells merchandise from an online store they do not only have to worry about shipping the products to the customers, but they also have to keep in mind to order items to restock the shelves and to keep everything flowing nicely without interruptions.
One of the perks of outsourcing fulfillment is that the warehouse staff will automatically ship and receive all items for the company and neatly tuck the items away on the shelves where they belong so that they can be found easily and conveniently.
Instead of having to work out of the garage or living room of a home, a third party can handle all of the physical aspects of the merchandise from receiving to shipping.
Conclusion
There are companies that may not need an outsourced company to do all of the hard work for them because they already have things established. However, for the businesses that are working out of homes or tiny offices, outsourcing the heavy fulfillment aspects of a business is the best way to go because it saves money, resources, and time.