Whether you’re just starting or already experienced in the business, e-commerce is the new way to sell other than through a physical store.
As one of those business owners, you might have come across one of three problems: Lack of inventory space, lack of time to pack and ship your orders, and an imbalance between sales and overhead cost. If you find yourself in some of these situations, perhaps it’s time to consider outsourcing your order logistics and shipment to a fulfillment center.
As you grow, your inventory tends to gain as well. And as lovely as in-house fulfillment sounds (for those who want to oversee orders and gain full-control), it is not ideal for a rapidly growing business that ships nationwide or internationally. According to Baymard Institute’s recent report on cart abandonment, the highest reason is exorbitant fees (e.g., shipping fees). This reason accounts for more than half of the abandoned carts that are happening online and can be rooted in many businesses still do in-house fulfillment, though unnecessary.
What Is A Fulfillment Service?
A fulfillment services a third-party warehouse that takes charge of receiving orders, packaging items, and shipping them quickly and safely. This service relieves commercial businesses that have grown beyond their inventory space, the crucial and vital process of a customer’s purchase. Fulfillment services also allow them to focus on other aspects of their business.
The main difference between fulfillment services and a warehouse differs significantly on one point. For one, fulfillment services operate more than just a storage for a merchant’s products; they also manage the inventory, packing, shipping, and meeting customer satisfaction of said package. They are also in charge of assembling, kitting, and labeling packages and are the ultimate returns destination. On the other hand, a warehouse that does not function as a 3PL (3rd-party logistics provider) stores the merchant’s inventory.
The Benefits Of Having A Fulfillment Service
Save On Shipping
A lot of fulfillment centers have branches scattered all around the country. Because of this, you, as a merchant, can take advantage of housing your products on one more than one of their branches and efficiently cut costs on shipping from one location to another.
For example, if you housed your products at a branch located in California, and a customer living in that state orders your work, the fulfillment center can easily pack, label, and ship the product to them directly. In comparison, if you only housed one fulfillment center away from their state, the shipping will take longer to arrive and ultimately gives customers a reason to cancel.
Other than that, some fulfillment centers allow you to piggyback on their rates if your packages fall in the same shipping zone. With these cut costs, you can even afford to provide free shipping to your customers, which influences the purchase of 50% of online customers in the US.
Having a fulfillment service almost always assures you of faster delivery than in-house fulfillment due to a single reason: the location. If you ship your package on your own, chances are our far-away customers will receive their packages longer than expected. But with either a fulfillment center scattered around or a centrally-located one, your delivery time is ultimately cut in half.
It is true that shipping time is one of the great reasons why a customer either becomes a repeat customer or never comes back at all. According to this statistical report: https://econsultancy.com/55-of-shoppers-abandon-carts-due-to-shipping-costs-infographic/, 38% of customers abandon the retailers if the delivery takes more than a week to arrive. This is because of 2-day or same-day deliveries, many e-commerce giants provide to customers. Though a few fulfillment centers can compete with this speed, many of them can assure their customer a shorter time than they expect.
Pay For Your Space
Owning or having your warehouse is a headache in and of itself. In-house fulfillment includes staff training, direct management, and personal inventory most of the time. Also, there is a monthly fee, bills, and other overhead costs to pay regardless of the sales you make. By outsourcing fulfillment, you eliminate these overhead and staffing costs and instead share space with millions of other sellers.
This service fee is usually just one flat price, and then incur costs when there is packaging, labeling, and shipping service used. Other than that, it is better to pay a smaller fee for space you consume rather than pay for a whole warehouse you barely even touched.
Better Technology For Inventory
Many fulfillment centers have the latest technology to handle efficiency-required tasks like inventory to last in the competition. Of course, to avoid inaccuracy, they use state-of-the-art systems to ensure everything runs smoothly, from storing to shipping.
Most of these technologies are used for all sellers and their products, assuring you that your items are in good hands. From doing inventory and tracking shipments to processing payment and ensuring customer data safety, the merchant gets to have this technological advantage by paying so little for it.
Improved Customer Service
There are several tasks to do when working alone, such as preparing your items, packing them diligently, labeling, and shipping them. Other things to think about, like your staff’s work quality and training, that customer service can no longer squeeze into your schedule. Customer service is one of the greatest weapons a small business can wield against their giant competitors. Fulfillment services offer 24/7 emails and call to make sure that one aspect is handled with care. This, in turn, will address concerns, feedback, and returns faster and efficiently.
Other than that, these centers can also provide for the same day or two-day shipping if they can. This will depend on where their center is located and if it is possible to speed up the shipment. All of this work is done to make sure customer service is always responsive and high-quality. As a customer, this is a revolutionary idea that is changing the way we see retail.
Focus On Your Business
Because these centers have taken the responsibility of packing, shipping, and customer service and return from the merchant, they can ultimately focus elsewhere. E-commerce and business owners have endless to-do lists, but this service allows you to grow your business if you’re a small-scale entrepreneur.
When you entered this business, you did it expecting to market a product, not packing them in boxes. In this way, you can efficiently focus more on what you specialize in: marketing, selling, and improving the design of your product. With a trustworthy fulfillment center having your back, doing business won’t seem as back-breaking as it was initially described as after all.
The Bottom Line
Fulfillment services are a way to free up time from busy business owners and entrepreneurs that have no time to do business hands-on. Many of these merchants find themselves needlessly exhausted because of the many problems with in-house fulfillment, such as customer returns, customer feedback, product defect, and the packaging process itself. By taking up this service, they can focus on their business and grow in many ways, thus ultimately scaling their business as time goes by