Is it time to outsource your order fulfillment?
It’s a question many business owners ask themselves but too few take the time to examine some important questions behind the question.
There any number of signs that it might be time to contract out your pick, pack and ship activities to a dedicated service provider. Some are practical and quantifiable, others emotional and intangible, but all have a direct impact on where you spend your valuable time and how you service the customers who will define your future success.
For that reason, we suggest asking yourself the five questions below before making the decision to outsource or keep your fulfillment operation in-house.
5 Questions to Ask Before Outsourcing Order Fulfillment
We see all kinds of great products whose founders prefer to ship direct to consumer, but fail to consider some key questions about their operation before taking the plunge. Outsourcing your order fulfillment can be the best decision you will ever make for your company to grow, but you need to time it right.
Here are five questions that will help you to understand if you have picked the perfect moment to find a third-party fulfillment provider:
- 1. Does the value of the product(s) you ship hold up after you factor in fulfillment costs?
The low-value item you can successfully ship from your own storage space at a profit might not seem like such a rock star product by the time you build in external fulfillment and shipping costs. Of course, there are wider costs savings that arise from outsourcing your fulfillment, such as improved tracking and more time for you to focus on other business areas, but you will want to have a firm handle on how much of your margin is left after you factor in fulfillment.
- 2. Are your order forecasts accurate?
When you have confidence that you know what’s coming up, you can have confidence in bringing in a third-party fulfillment provider to help you handle that increased volume. If you have no such forecasts, or if you lack confidence in your projections, it’s worth spending some time understanding future demand before committing to an expanded fulfillment plan.
- 3. Is your order fulfillment driving you crazy?
We accept it, not everyone adores order fulfillment as much as us! Sometimes the decision to outsource is made simply because you cannot stand the daily routine of grinding out shipments. If that’s the case, your product quality and indeed your own sanity could be at risk if you don’t opt to outsource. This is more of an emotional issue, granted, but there can be very real business repercussions if you don’t dedicate sufficient time and attention to fulfillment, so this one stands an important question to ask yourself.
- 4. How long until you expect your next order peak?
You need to allow a certain amount of lead time to research, select and start up with a new service provider. This is especially true in order fulfillment and you probably don’t want to be handling that integration process while also trying to get a spike in orders out of the door. Plan your outsourcing well in advance, building in extra lead time or holding off until the time is right. After another hectic peak, you’ll probably be all the more eager to offload those duties anyway!
- 5. What is your time worth?
Too many owners fail to factor in – or under value it, if they do – the time they spend on order fulfillment. Bringing in an outsider doesn’t just mean you have fulfillment expertise on tap, it frees up your expertise and unique skills to focus on other business-critical matters. If you have other pressing matters to attend to, finding the right fulfillment provider could indirectly help you to address them.
If your answers to all of these questions point towards outsourcing your order fulfillment, you’ll find you have a whole new list of questions of your own that need answering.