March 31, 2022

The Pros and Cons of Outsourcing Your eCommerce Fulfillment

Fulfyld Team

If you have been fulfilling orders in-house or via dropshipping, you may be wondering whether it is feasible to switch to a third-party eCommerce fulfillment company. The best way to determine whether this is the best thing for your eCommerce business is to consider the pros and cons.

This article discusses what eCommerce fulfillment services are, what value they can bring to your business, and what disadvantages you should be aware of before making a commitment.

Looking for a Reliable Fulfillment Service Provider?

Suppose you are looking for a service provider who offers same-day shipping with a number of features and options to choose from. In that case, you should contact us today! Fulfyld offers specialized services for eCommerce businesses, ensuring that your orders are delivered on time, every time!

What Are Third-Party Fulfillment Services?

If you’ve just started your new online store, you might not be familiar with the concept of “fulfillment services” yet. However, the odds are that you’re probably already fulfilling orders.

Order Fulfillment is at the Heart of Every eCommerce Business

The truth is that order fulfillment is at the heart of every eCommerce business because it involves picking, packing, and shipping orders to your customers.

Fulfillment service providers, otherwise known as third-party logistics or 3PL, also keep track of your inventory, store your products systematically in a fulfillment center, maintain stock levels, and process refunds and exchanges, among other things.

3PLs Offer Efficient Delivery

Because of the benefits that service providers offer, most eCommerce enterprises begin outsourcing their shipping and logistics to them. As an eCommerce company expands and receives more orders each month, it needs a 3PL provider that can offer a seamless and efficient delivery experience for customers.

Cutting-edge Technology

Thanks to the cloud-based technology that most fulfillment companies use, you can view inventory levels, order information, analytical data, and more whenever you need to.

The Pros of Using a Third-party Fulfillment Service Provider

If you have been in the eCommerce business for a while, you probably understand how valuable fulfillment services are. Here are the benefits you can expect if you outsource your order fulfillment.

1. Lower Shipping Costs

One of the most inherent benefits of third-party logistics is its cost-effectiveness. Because these service providers work with a number of businesses, they may offer eCommerce businesses lower and more appealing shipping rates.

Handling logistics in-house is a significant financial expenditure. You will need to obtain a warehouse to store your products, hire staff to manage and pack orders, and drivers to deliver the goods to your customers. eCommerce fulfillment companies, on the other hand, can offer better rates because of their economy of scale.

2. Warehousing

Third-party logistic companies also provide warehousing services, which is a significant benefit. These service providers acquire your inventory and store it in a number of eCommerce fulfillment centers.

Many individuals mistake fulfillment centers and warehouses for the same thing. This, however, is not the case.

Warehouses merely store things, whereas fulfillment centers are specifically intended to store products in a manner that optimizes the usage of space while also allowing products to be located easily when needed.

When a consumer places an order, the fulfillment service provider will quickly pick, pack, and ship it from the fulfillment center nearest to the customer.

As a result, these companies not only take on the burden of inventory management but also make quicker deliveries to clients, which brings us to the next point.

3. Faster Delivery

Because 3PLs specialize in logistics, they have many delivery vehicles that can quickly transport orders from one location to another. They can also guarantee fast delivery because they have multiple fulfillment centers located throughout the country.

When you hire an external company to handle the eCommerce fulfillment process, they are equipped to ship products in a day or two.

Many service providers can also provide urgent order fulfillment services, which means that you can offer your customers faster shipping.

4. You Can Track Your Orders in Real-Time

Ensuring the free flow of information between eCommerce businesses and their customers requires real-time order tracking.

That way, if a customer needs to know when they can expect delivery, you can track the order in real-time from your computer or mobile device, thanks to the cloud-based technology that fulfillment companies offer.

3PL companies make this possible by providing an easily accessible order tracking page that clients may view by providing a tracking number.

Many carriers can also give consumers order updates via phone and email. Ecommerce businesses develop trust and brand loyalty by keeping their customers informed about the status of their orders.

5. Outsourced eCommerce Fulfillment Services Also Offer More Delivery Options

Customers are demanding faster deliveries, which is why many service providers have begun to provide two-hour, same-day, next-day, two-day delivery options.

eCommerce enterprises can benefit from more efficient fulfillment services by partnering with a 3PL. The faster the customer gets their order, the happier they are, and since customers are at the heart of every eCommerce business, happy customers equal growth.

6. Each Fulfillment Center Manages Your Inventory

Inventory management is another advantage of outsourcing order fulfillment. Ecommerce businesses can depend on third-party service providers to oversee their inventory by keeping track of what’s in stock, refilling inventory as needed, and updating stock levels when customers exchange or return goods.

An eCommerce fulfillment provider will organize your inventory into SKUs and house them in bins and racks. To manage inventory efficiently, most companies use order management software. 

7. Several Payment Gateways

When you work with an eCommerce fulfillment service provider, your customers can benefit greatly from a variety of payment gateways.

The reality is that cart abandonment is attributed to fewer payment methods, so offering more payment options increases the likelihood that a customer will complete the checkout process.

Most 3PL companies also accept cash payments from bank transfers, debit or credit cards, and cash on delivery. Customers will be less likely to abandon their carts and more likely to be satisfied with their purchases if they are offered a variety of payment choices.

8. Offer Shipping to a Broader Area

If you fulfill your orders in-house, shipping them to another county or state could be difficult. Because it’s so challenging to send goods to other locations, most business owners lose clients because they limit their operations to a single location.

However, you get to ship nationwide when you outsource your order fulfillment, thanks to 3PL fulfillment centers located throughout the country.

9. Custom Packaging

Maintaining a strong brand identity is a smart business practice that can help your business stand out from its competitors. One way of ensuring that customers get to see your brand is to offer custom packaging.

Some of the best eCommerce fulfillment companies also offer logo design services, so you can design your own custom logo to include on the packaging. Nothing helps you retain customers like attractive packaging, and services providers make it so much easier to customize your packaging.

Moreover, some goods, especially fragile products, require special packaging to prevent them from being broken while being transported. A fulfillment company will handle these goods with the utmost care, ensuring that they are packaged correctly and ready to go!

10. You Will Have More Time to Focus on Growing Your Business

By getting someone else to handle the fulfillment process, you can focus on other core business operations, such as developing good customer support and working on your sales channels. You will also have more time to focus on customer satisfaction and market research.

Thanks to the reporting system and up-to-date inventory tracking, you can see how each product is performing. By scanning a report briefly, you can see which products are selling fast and which are not selling at all.

11. Meet Customer Expectations

Customers appreciate and have come to expect quick and hassle-free delivery. With fast delivery, customized packaging, quick order tracking, status updates, and safe delivery of products without damages or breakage, 3PL companies can supply that.

As eCommerce businesses progress beyond their early phases and scale up, they will need to improve consumer satisfaction to drive their revenue. A better customer retention rate means a steady income and a growing community, which is what every eCommerce business hopes to achieve.

12. Insurance Benefits

If your online store sells jewelry, precious gems, expensive watches, or other high-value items, you’ll need to set up a delivery insurance plan.

The most significant benefit of 3PL is that these companies have insurance provisions to cover any losses you may incur as a result of a shipment error. In the event of an unexpected disaster or mishap, insurance plans can be life-saving! 

13. Returns Management and Exchanges

Another significant benefit of using a 3PL provider is that you will not have to deal with exchanges and returns. When customers return goods, the fulfillment company will handle the returns processing and update stock levels once the return or exchange has been processed.

The Cons of Outsourcing Your eCommerce Fulfillment Process

Now that we have seen what benefits eCommerce businesses can expect from outsourcing their eCommerce fulfillment, it is time to discuss the drawbacks of these services.

Although we agree that the pros outweigh the cons, we still think it is important to discuss the drawbacks to give you a realistic picture of the fulfillment process.

1. Multi-carrier Orders Can Be Hard to Track

If you sell a number of different products on your eCommerce store, the chances are that you will need more than one fulfillment company to handle your orders. However, if you sell a few heavy objects, for example, you may need a service provider that specializes in transporting heavy goods.

Because such carriers specialize in the shipment of heavy goods, you will still need another carrier to deal with your regular products. This means that you will need to deal with two different companies.

The ability to track your shipments is a critical aspect of any eCommerce company. Things can quickly get chaotic if you are unable to effectively track the flow and progress of orders placed on a large scale. This is a 3PL drawback that many eCommerce businesses encounter.

2. Orders Must Be Allocated Separately

Another downside of outsourcing your order fulfillment is that assigning a logistics partner to deliver an order can be difficult if you work with five different companies. Each of them may be given anywhere from 20 to 50 deliveries a day, depending on their availability.

Customers and logistics companies will be solely responsible for informing you of any delivery irregularities, and when dealing with thousands of orders each day, allocating and tracking orders can be difficult.

3. You Will Need to Reach Out to Fulfillment Service Providers Separately

If there are any complications with an item, each company must be contacted independently. While there is no longer an intermediary to slow down communication, reaching out to each fulfillment provider individually to deal with specific order concerns is cumbersome and time-consuming.

Misunderstandings can arise if API integrations are not used to make contact with these companies in a more simplified manner. This is yet another downside of outsourcing shipping operations to 3PL providers.

4. No Standardized Packaging

As mentioned previously, custom packaging and labels are a fantastic option to enhance brand loyalty and ensure that customers remember you.

Consistent packaging and labels also reduce the risk of confusion during transportation. However, the reality is that the best eCommerce fulfillment providers have their own shipping labels and packaging, so when you use multiple 3PLs, each customer will have a different unboxing experience. This means that customers are a lot less likely to recognize your brand.

5. Different Terminology

Another drawback of outsourced fulfillment is different terminology. When dealing with any third-party logistics company, communication is very important. However, it can get quite confusing when different companies use different terminology.

6. Different Platforms and Software

Being able to track your inventory levels, view product performance data, and the status of orders is an important factor. However, every company will have its own platform and software application.

This means that instead of receiving one comprehensive report, you will need to pull data from multiple sources and create a report yourself, which can be time-consuming and inconvenient.

Final Thoughts

As we have already seen, the benefits of outsourcing your order fulfillment exceed the drawbacks considerably. However, it’s essential that eCommerce businesses get into agreements with 3PL providers, knowing what benefits and drawbacks they’ll face.

With the support of these service providers, online sellers may expand into new markets, reach out to new clients, offer hassle-free delivery, and so much more. However, the truth is that business owners may be hesitant to deal with 3PLs due to the loss of control, particularly when dealing with multiple third parties.

Fortunately, by choosing Fulfyld to handle your order fulfillment needs, you won’t need to deal with multiple service providers. We offer personalized service and cloud-based management services, so you always have access to your inventory and shipment information.

Contact us today to find out more about everything we can offer your eCommerce business!

Meta Description: Are you considering third-party eCommerce fulfillment? In that case, you should read about the pros and cons of outsourcing your order fulfillment!

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