Benefits of Outsourcing Fulfillment for Online Businesses

Due to ongoing digitalization and increased internet access, over the last few years, ecommerce has become a remarkable part of global retail. Today, anyone can easily own a brand and operate a business from a computer. An online store can replace brick-and-mortar, and all fulfillment processes can be outsourced. 

What does outsourcing fulfillment mean?

Outsourcing order fulfillment means choosing a partner for a business that’ll manage and oversee all order fulfillment processes. The most common outsourcing fulfillment strategies include dropshipping, print-on-demand (POD), and third-party logistics (3PL). 

Each fulfillment company has a different approach, but standard fulfillment services for dropshipping and third-party logistics include storing and managing inventory, as well as picking, packing, and shipping the orders. In contrast, print-on-demand companies create and ship products only when an order is placed, thereby reducing the need for inventory.

Most outsourced fulfillment services also sync with online stores and integrate with all the sales channels ecommerce businesses use for efficient order processing and customer satisfaction.

Outsourcing vs. in-house fulfillment

Order fulfillment strategies vary based on each business’s nature and specific needs. The most common outsourced fulfillment strategies for an ecommerce business are:

• Dropshipping—businesses don’t own inventory but act as an intermediary between the supplier and end customer.
• Print-on-demand (POD)—businesses don’t own inventory, and custom items they sell are printed only after an order is made.
• Third-party logistics—businesses own the inventory, but a logistics company handles storage and distribution. 

When considering fulfillment strategies, businesses often compare these solutions with in-house fulfillment, where a business manages the entire fulfillment process internally, including product manufacturing, inventory storage, and order fulfillment. 

Let’s say someone is thinking about starting a streetwear clothing brand, with their first product being custom t-shirts. While in-house fulfillment provides them with more control over the entire process, it requires investing time and money. So, choosing a POD outsourcing fulfillment strategy is the best option for them. 

With POD, one can spend their time creating outstanding designs and working on their brand’s advertising while their fulfillment provider takes care of the orders. What’s best, choosing this type of outsourcing fulfillment method means low startup costs. Win-win!

Benefits of Outsourcing Fulfillment

1. Scalability 📈

As a business grows, so do the responsibilities and workload. While the first orders are always exciting and so is packing them, it becomes overwhelming when the number of orders exceeds one’s expectations.

When the business starts to expand, handling fulfillment in-house can become ineffective and hard to manage. To not set themselves up for failure by doing it all on their own, business owners need to hire staff or involve an outsourced order fulfillment provider. Outsourced fulfillment companies have the necessary staff, technology, and infrastructure to take care of the fulfillment process and seamlessly handle any fluctuations in order volumes.

And what’s best? The time spent packing orders, printing labels, going to post offices, and doing other fulfillment-related tasks can be spent on different business areas. After finding a fulfillment partner, business owners can fully devote their time to new product ideas or marketing projects.

2. Inventory management 📦

Whether a business already has a warehouse space or it’s storing inventory elsewhere, dealing with it isn’t a job for the weak. Managing inventory by themselves is a big responsibility as it requires business owners to constantly and accurately keep records, prepare for seasonal fluctuations, and avoid running out of stock. And in seasons when sales are low, businesses would still need to rent warehouse space, thereby adding to their monthly costs. 

When choosing to outsource fulfillment to a 3PL, they take care of the inventory storage: store, manage, organize, and keep track of it. A fulfillment provider will regularly inform a business about accurate stock levels and remind them when to send more inventory to a fulfillment center to avoid selling out.

However, if businesses choose to use print-on-demand services, they won’t have to store inventory at all. All orders are processed and fulfilled on-demand—as soon as an order is made. That way they don’t need to worry about running out of stock or pay for storing excess stock.

3. Faster shipping ✈️

Fulfilling orders in a single fulfillment center in one area and shipping internationally means that shipping time depends on the recipient’s location. However, most outsourced fulfillment providers have fulfillment centers in multiple locations around the world. 

By outsourcing, businesses can fulfill products closer to their customers no matter where they reside, ensuring a faster shipping process and no customs tax. Most fulfillment services will also provide automated package tracking, so end customers can enjoy fast and secure deliveries.

By choosing Printful as a POD dropshipping partner, brands can access customers all around the world, thanks to fulfillment centers located worldwide.

4. International expansion 🌎

There are many requirements for sending orders across international borders, like shipping costs, customs declaration, duties, taxes, and import/export restrictions. Handling it all can be time-consuming and overwhelming, so why not hand it over to a fulfillment company? 

By choosing to outsource order fulfillment operations, e-commerce businesses can easily expand internationally. These providers have the necessary expertise and logistics to navigate all the complexities of worldwide shipping.

5. Reduced shipping costs 💰

By opting to outsource fulfillment services, businesses can achieve significant cost savings on shipping. Fulfillment providers can negotiate better shipping rates from carriers due to the high volumes they ship each day. They partner with multiple carrier companies and can switch between them and offer various shipping options.

Another advantage of multiple warehouse locations is that fulfillment companies can select the most cost-effective shipping routes and offer their clients the lowest shipping costs or even free shipping.

6. Reduced labor and HR management 💼

Business owners often avoid partnering with an outsourced fulfillment provider simply because of additional fulfillment costs. But, considering that it eliminates the need to hire employees and manage HR, this partnership can lead to cost savings and enhanced profit margins over time.

Order fulfillment services have dedicated teams with expertise to manage and complete each step of the fulfillment process.

The takeaway

Outsourcing order fulfillment offers many perks, allowing store owners to focus on their business’s scalability, improve customer experience, explore new geographics, and more. 

But it’s important to keep in mind that not all businesses are the same and outsourced fulfillment might not be the solution for everyone. When business owners decide between keeping fulfillment in-house or outsourcing, they should go over these steps:

• Defining whether their business and products are highly specialized or personalized, or require unique handling. 

• Deciding if they let go of their current fulfillment operation completely or combine it with outsourced fulfillment.

• Doing cost analysis by comparing the costs of in-house fulfillment and outsourced fulfillment. 

Before partnering with an outsourced order fulfillment provider, one to remember to carefully compare them, as each company has a different approach. 

📌 Looking for more benefits of outsourcing fulfillment? Find them here!