When Should Your E-Commerce Business Start Outsourcing Order Fulfilment?
It’s one of the biggest questions in the e-commerce book: at what point should your business start outsourcing order fulfilment? In most cases, you won’t need this kind of service when you launch. The majority of e-commerce businesses start small, selling modest numbers of their products each month and being able to handle the storage and shipment of those orders in house. However, as your company grows and you find ways to improve your website, you will start selling more and more of your products. Before long, you might start wondering about hiring a third-party company to handle all of it—storage, inventory management, and shipping—on your behalf.
Some e-commerce experts are against the idea of outsourcing order fulfilment. After all, shipping your products to paying customers is arguably the most important thing your business does. If something goes wrong—like if the order goes out late, ships to the wrong address, or arrives on the customer’s doorstep damaged—that can colour the way your customers view your company. In turn, these negative customer experiences can turn into bad word of mouth for your business, which can stall your momentum and stunt your business growth. It’s no wonder that some e-commerce specialists would tell you to continue handling order fulfilment in-house.
The problem with this advice is that “doing it in-house” can become an unrealistic proposition as your e-commerce company grows. Here are a couple of reasons for why in-house order fulfilment can quickly become unsustainable for your business—as well as why outsourcing the service solves the issues inherent in each point.
- You no longer have the storage space to house your inventory.
As demand for your products increase, you are going to need more supply on-hand to satisfy it. This statement is a simple fact of economics. As your product inventory grows, you are going to require more space to store it. This statement is a simple fact of physics. Whether you are storing your inventory in your basement or in some small storage unit that you rent for a monthly rate, you are probably eventually going to run out of space. (And really, you want to run out of space because it means you have built a successful business.)
Going forward, you have two basic options. The first option is to rent a larger storage space (or a full company warehouse) and continue trying to manage the inventory in-house. The second option is to hire an outside company to store your goods, manage your inventory, and handle order fulfilment. The latter option will save you and any employees you have time without costing abundantly more money, and will ensure that your customers are getting their shipments in a timely fashion.
- You are devoting all of your time to managing inventory and fulfilling orders.
How many hours per week are you devoting to inventory management and order fulfillment? If you have employees handling the work, how much are you paying them per week to pack orders and deal with inventory? Take some time to actually add these numbers up and write them down on paper. You might be surprised at how much money and time you are losing on managing your inventory. And while these steps are important—after all, order fulfilment is the step that gets your product off your shelf and into the hands of your customer—they are not the only necessary measures behind running an e-commerce business.
On the contrary, you need to spend time marketing your products, interacting with customers on social media, fielding customer questions or complaints, developing new products, and thinking about ways to grow and evolve your brand. Outsourcing inventory management and order fulfilment will clear those responsibilities from your schedule and free up time for you and your employees to focus on other important things.
The bottom line is this: if you feel like handling order fulfilment in-house has become an unwieldy and overwhelming responsibility, then it’s probably time to start looking for an e-commerce fulfillment service. Yes, letting go of the control of that part of your business can be stressful and unfamiliar. However, by doing your homework and finding a company that you feel comfortable working with and know that you can trust, you will reap more benefits from outsourcing your inventory management hurdles than you can predict.