When to shift from in-house to outsourced fulfillment

What is your eCommerce business’ competitive advantage? Is it your product range, the exclusivity of your brand, your prices? Or is it your fulfillment?

Many eCommerce business owners are surprised to hear that fulfillment is their competitive advantage, but with the ability to handle more orders, deliver better customer service, save costs, and create time, your fulfillment process can drive you forward or hold you back.

Knowing when to shift from in-house to an outsourced fulfillment provider is vital to your business’ success – but how do you when it’s time?

The importance of perfecting your fulfillment

Your fulfillment strategy is your business’ lifeblood, so having a fluid process that allows you to scale and handle thousands of orders is critical.

But the days of simply ordering stock in and sending it out are gone – customers, selling channels, and your profit rely on your fulfillment solution operating at full efficiency.

It affects the availability of your products

Having an accurate real-time figure of your stock levels ensures you know when to order more and avoid selling out or overselling. This will protect your buyer experience, shield you from negative reviews, and keep your customers happy.

It affects how quickly you can deliver products

The smoothness and efficiency of your warehouse layout and shipping process affect how quickly you can deliver products, which in turn affects which fast shipping programs your listings are eligible for.

It affects your overall profits

Finally, the quicker you can deliver and replace your stock, the higher capacity you have to sell more; increasing your profits and growing your business.

The differences between in-house and outsourced fulfillment

In-house fulfillment

This is where you are responsible for the entire fulfillment process including receiving sales orders, picking, packing, shipping, tracking, and resolving any late, missing or damaged deliveries. At the beginning of your eCommerce journey it gives you control, an insight into your business and a cheaper way of starting up. As you grow, in-house fulfillment can be harder, more expensive and increasingly time-consuming to maintain.

Outsourced fulfillment

This is where you partner with an outsourced fulfillment provider, shipping your items to their warehouses for them to pick, pack, ship, track, and ensure delivery dates. Often used to supplement business growth, it brings benefits of expertise, lowers costs, larger space and quicker delivery times.

If your small business is growing faster than you can manage, it’s time to consider outsourcing some of your important operations, before you fall behind. Small business fulfillment services handle the hassle while returning significant profit boosts, cost-savings, and time.

What is a fulfillment service?

A fulfillment service is a third-party operator who stores, picks, and ships your products for you. Key features of small business fulfillment services include:

  • Multiple warehouse locations, to ship your inventory to
  • Competitive costs, covering storage and shipping
  • Integration with your sales channels, for seamless order processing
  • Access to and eligibility for fast shipping programs

When to outsource your fulfillment

The differences between in-house and outsourced fulfillment are simple. It’s clear that in-house fulfillment is beneficial when beginning your eCommerce business, and that outsourced fulfillment is needed once you’ve scaled your eCommerce business. But when is the tipping point? When do you make the change?

1. Your delivery standards are slipping

First and foremost, if your delivery standards are slipping, it’s time to outsource your fulfillment. 17% of customers (that’s nearly one in five) won’t return to your store following a poor delivery experience. If the growth of your order volume is leading to late or incorrect deliveries, you must consider outsourced fulfillment.

Outsourced fulfillment providers have the expertise, space and staff to deal with an increase in orders – whether it’s a gradual increase as your business expands or a seasonal increase due to the types of products you sell. You are guaranteed perfect deliveries each and every time – keeping customers happy and loyal.

2. Your cart abandonment rates are high

Logistics is one of the biggest reasons for cart abandonment. If slow delivery speeds and costly shipping options are turning your customers away, a small business fulfillment service can overcome this by:

  • Enabling you to offer a variety of delivery speed and cost combinations;
  • Allowing you to satisfy customers paying for fast shipping subscriptions by qualifying you for programs such as Amazon Prime and Walmart Free 2-Day Shipping;
  • Generating shipping cost-savings that can be used to offset the costs of free shipping.

3. Your seller ratings are low

Feedback ratings are crucial for converting customers, improving organic search result placement, and marketplace advertisement eligibility. If your inability to meet shipping deadlines and standards is affecting your ratings, it’s time to outsource your fulfillment to a company who guarantees high shipping standards, before irreparable damage is caused.

4. Your conversion rate is low

With cart abandonment rates at 69.89%, you won’t be alone in trying to increase your conversion rates. You’ve likely lowered your prices, added free delivery options, and started sending cart abandonment emails. But have you considered the impact of logistics on your cart abandonment rates?

Outsourcing your fulfillment enables you to guarantee fast shipping times, which qualifies you (often automatically) for fast shipping programs such as Walmart Free 2-Day Shipping. Fast shipping programs increase conversion rates by offering customers guaranteed fast shipping by a brand that they know and trust, and outsourced fulfillment ensures that your delivery rates are good enough to get on and stay on these programs.

5. Your listings aren’t visible

If you’re on the second line of the search results for your keywords, you’ve got a battle ahead. If you’re on the second page, you might as well forget about it. Optimizing your listings for increased search ranking is a great start but supplementing this with free and fast shipping is even better.

Another benefit of using outsourced fulfillment to qualify for fast shipping programs is the increased visibility that shipping programs such as eBay Guaranteed Delivery, generate. Listings automatically rank higher, appear in filtered search results, receive highlighted fast shipping tags, and have a higher chance of winning the buy box.

6. Your costs are too high

You’re running an eCommerce business to make a profit, so you should always be looking for ways to reduce your costs. As your marketplace, stock, and marketing fees grow, so do your warehousing, staffing, shipping and packaging costs.

Outsourced fulfillment can give you more money to invest in free shipping, marketing or your back pocket. How? Outsourced fulfillment providers have the expertise and geographical locations to deliver your items in the fastest way possible, as cheaply as possible – saving you immediate shipping costs. You’ll also spend less on warehousing space, staffing and packaging materials.

Tip: If costs are your motivating factor, use this fulfillment calculator to see if your business is ready to outsource fulfillment.

7. You want to expand

If your online store is ready for expansion, you must ensure that your fulfillment processes are too. Managing multiple sales channels, increased order numbers, and more marketing activities is time-consuming; in-house fulfillment can take you away from these important tasks, especially when you’re fulfilling more orders.

Partnering with an outsourced fulfillment provider takes the stress and time of fulfillment out of your hands – allowing you to dedicate more time to your business expansion plans. It also means that you don’t have to worry about the capabilities of your technology, warehouse, and staff to manage a growing business – your outsourced fulfillment provider will handle that for you.

8. You’re already expanding

Growth is one of the biggest reasons that small businesses like yours outsource their fulfillment operation. Why?

Time

Being a “Jack of all trades” is a common entrepreneurial trait, and it’s what has gotten you this far. But with growth comes competing demands on your time. Outsourced fulfillment allows you to concentrate on business growth, rather than delivery speeds.

Capacity

As orders mount up, your ability to handle them in-house is diminished – resulting in missed deadlines, poor standards, and overworked staff. A small business fulfillment service increases your capacity to handle overall order increase, peaks, and troughs.

Warehouse space

More orders equals more stock, which necessitates somewhere to store it all. If your warehouse is bursting at the seams, and you don’t have the will or budget to increase size, an outsourced fulfillment provider is a solution. Plus, choose a fulfillment provider with multiple warehouses across the country, and you can expand your delivery locations without expanding your warehouse costs.

Staff

And finally, a growth spurt requires the employment of additional permanent and temporary employees. Outsourcing your fulfillment gives you access to extra resource without employing additional staff – extra hands without extra heads.

9. Your expertise is lacking

You started an eCommerce business because you saw a gap in the market, you know how to sell, or you know your products inside out; not because you’re an expert in fulfillment. Small business fulfillment services know how to store, pick, and ship items in the fastest and most cost-effective way possible – knowledge that is extremely beneficial to your business, but not easy to obtain on your own.

10. You’re struggling to offer fast and free shipping

According to Walker Sands’ 2019 Future of Retail Report, fast and free shipping are the biggest online purchase drivers. If you’re not meeting these customer demands, it’s time to use a small business fulfillment service to help you:

Offer fast shipping

By meeting two-day delivery turnarounds across the country, through efficient handling, picking, shipping, and warehouse locations – regardless of volume.

Offer free shipping

By negotiating preferential shipping costs and storage fees to reduce your delivery spend and enable you to offset the costs of free deliveries.

Tip: If cost is your biggest influencer, calculate the costs of fast shipping using our fulfillment calculator

11. You want to qualify for fast shipping programs

Fast shipping programs benefit small business owners through highlighted fast shipping tags, preferential organic search ranking, and buy box eligibility. If you’re struggling to meet the eligibility requirements for fast shipping programs in-house, use a fulfillment service that guarantees eligibility for Walmart 2-day delivery, eBay Fast ‘N Free, Shopify 2-day, and more.

Tip: Deliverr is the exclusive fulfillment partner for Wish 2-day badges. Sellers can access nationwide 2-day delivery for all their sales channels with Deliverr.

12. You want your fulfillment all in one place

Is your current fulfillment process a scattered combination of in-house fulfillment, Amazon Prime, and outsourced fulfillment? A small business fulfillment service can help unify your fulfillment to achieve cost savings, increased efficiency, and consistency across marketplaces – making multi-channel selling easier to manage and benefit from.

We’ll talk more about unifying your fulfillment below.

13. It’s taking up too much of your day

And finally, you started your online business because you wanted to one day sit back and watch it run itself – not to spend late nights packing orders and visiting the post office.

If your day is spent parceling up products, printing shipping labels, and chatting to the delivery person, it’s time to outsource. We’ve even heard stories from sellers whose partners threatened to leave them — it’s a rare occurrence but it has happened, and is something to look out for.

Start managing your business instead of running it, by using a small business fulfillment service to handle your shipping, while you invest attention and time into growing your business.

Protip: You can combine the best of both

In-house or outsourced fulfillment aren’t the only options. If you think your business might be ready for outsourced fulfillment, but you’re not entirely sure, why not try both? Send some of your high-selling and fast-moving items to an outsourced fulfillment partner and keep your low-sale products in-house to see what works best.

Decision made – what next?

Once you’ve decided that your business is ready for outsourced fulfillment, then you need to pick a reliable outsourced fulfillment provider to partner with. In doing so, ensure that you make a note of the essential questions to ask your potential fulfillment provider, take a look at their case studies, and check out what fast shipping programs they can automatically qualify you for.

Outsourced fulfillment can be a scary step, but when taken at the right time, it’s an exciting and profitable one.

Feeling overwhelmed? By using a fulfillment partner, you can take the extra step to completely unify your eCommerce fulfillment and gain control of the mayhem.

Reasons to unify your eCommerce fulfillment

One of the biggest barriers to achieving and benefiting from full fulfillment effectiveness is a scattered fulfillment process – and it affects more online retailers than you think. Say you started out on eBay, fulfilling orders in-house. Then you expanded to Amazon and used FBA for ease. And then, you started out on Walmart, outsourcing fulfillment to get on Walmart Free 2-Day Shipping. That’s three different fulfillment solutions, more than three different warehouses, and multiple carriers.

So why should you change to one unified fulfillment solution?

1. Speed

Different fulfillment solutions offer different speed guarantees. You need to deliver within 4 or fewer days to be eligible for eBay Fast N’ Free Guaranteed, but you might struggle to match the same speeds for the Amazon orders that you fulfill in-house.

Unifying your eCommerce fulfillment solutions gives you access to fast shipping programs across all of your sales channels. This not only pleases your current customers, but it also qualifies you for fast shipping programs to increase visibility, reduced cart abandonment, and make more customer sales.

2. Costs

Free delivery is one of the biggest conversion influencers online, but it can come at a cost to your business. You can offset the cost of free shipping by unifying your eCommerce fulfillment to save money.

Using only one fulfillment solution means that you pay less money transferring your stock to multiple places, and can spend less money on warehousing space and staffing costs. Plus, you also have the freedom to choose the fulfillment solution that offers you the most significant savings on storage and shipping fees.

Tip: Calculate how much you can save

3. Efficiency

Imagine how much time it wastes to have to process, label, and ship your packages with separate providers. Having a disjointed fulfillment process can lead to repetition, reduce productivity, and waste time.

A unified fulfillment strategy avoids the repetition involved with sending orders and stock to different warehouses, communicating with different fulfillment providers, and logging into different systems.

The time saved by only doing out these tasks once can be reinvested into business growth and even faster deliveries for your customers.

4. Stock control

A split fulfillment process makes it difficult to view, manage, and organize your stock effectively across multiple sales channels. Not only do you need to log into different inventory management systems to download accurate stock levels, but you must also monitor stock for each sales channel to avoid overselling.

This drastically limits your sales potential on each channel and can be easily avoided. When using one fulfillment process, your inventory can automatically update across all online marketplaces after a unit is sold- maximizing stock availability and preventing overselling or selling out.

5. Consistency

Humans like consistency. It’s why we always buy the same brand of washing powder, follow the same holiday traditions, and visit the same Chinese takeout place. Your online store is no different.

Customers expect the same delivery service from your brand, regardless of where they buy from you, and a unified fulfillment strategy powers you to achieve this.

Your deliveries should be sent with the same care, attention, and urgency regardless of the sales channel – helping customers to build trust in your brand and return to buy more.

6. Customer service

When handling multiple fulfillment avenues, it becomes difficult to monitor, control, and improve the service delivered. Missing packages, late deliveries, and damaged items can become a regular occurrence without you realizing – affecting your ratings, customer happiness, and profits.

Using one fulfillment provider gives you greater control over the delivery service your customers receive, helping to impact your online ratings and CLV figures positively.

7. Expansion

Finally, unifying your eCommerce fulfillment gives you the unrestricted ability to extend to other marketplaces and fast shipping programs. When using mix-and-match combination of in-house fulfillment and FBA, marketplace expansion is something that you simply can’t manage in-house or afford to pay for through multi-channel FBA.

Unifying your eCommerce fulfillment with a multi-channel fulfillment partner enables you to maintain your Amazon Prime badge through SFP, offload your in-house fulfillment to an expert, and automatically qualify for other sales channels and fast shipping programs on various marketplaces.

Striving for unified eCommerce fulfillment

It’s all too easy to get so carried away with online expansion that your eCommerce fulfillment becomes disjointed, difficult, and ineffective.

While a unified eCommerce solution requires some research into fulfillment providers, some effort to switch processes, and some time to get used to, the benefits significantly outweigh a disjointed fulfillment strategy.

Unifying fulfillment brings more time, happier customers, and sustainable business growth – so get started today!

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