10 Benefits of Outsourcing Fulfillment for Your Online Business

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

But what exactly does outsourcing fulfillment mean, and what are the benefits of it? In this article, we’ll compare outsourcing with in-house fulfillment to show how third-party solutions can be advantageous for your business.

What does outsourcing fulfillment mean?

Outsourcing order fulfillment means choosing a partner for your 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 your 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 your online store and integrate with all the sales channels you use for your ecommerce business for efficient order processing and customer satisfaction.

While that’s a lot taken off your shoulders already, outsourcing fulfillment solutions have even more benefits.

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—you don’t own inventory but act as an intermediary between the supplier and your customer.

• Print-on-demand (POD)—you don’t own inventory, and custom items you sell are printed only after an order is made.

• Third-party logistics—you 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 you’re thinking about starting a streetwear clothing brand, with your first product being custom t-shirts. While in-house fulfillment provides you 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 you. 

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

If you’re interested in starting a clothing brand, check out our step-by-step guide on how to start a clothing brand before choosing your fulfillment method. 

Now that you have a solid grasp of outsourcing fulfillment strategies, let’s delve into the advantages they offer for your business.

10 Benefits of Outsourcing Fulfillment

1. Scalability

As your 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 your expectations. But isn’t that what all business owners aim for?

When the business starts to expand, handling fulfillment in-house can become ineffective and hard to manage. It’s important to accommodate the increased order volume while maintaining the quality of your service. 

To not set yourself up for failure by doing it all on your own, you’ll 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 areas of your business. After finding your fulfillment partner, you can fully devote your time to new product ideas or marketing projects.

2. Expertise

By managing all fulfillment operations yourself, you’ll also have to deal with unexpected challenges, such as running out of stock during peak season or having unsatisfied customers in multiple shipping zones whose orders took longer than expected.

Outsourced fulfillment companies have the expertise to handle all these challenges. Because it’s a specialized field that requires fulfillment expertise, partnering with an outsourced fulfillment provider will save you a lot of costly mistakes.

Fulfillment partners know all the best practices and have the connections to seamlessly take care of ecommerce fulfillment, offer the best shipping deals, and much more.

3. Inventory management

Whether you already have a warehouse space or you’re storing inventory in a spare room in your home, dealing with it isn’t a job for the weak. Managing inventory by yourself is a big responsibility as it requires you to constantly and accurately keep records, prepare for seasonal fluctuations, and avoid running out of stock. And in seasons when sales are low, you would still need to rent warehouse space, thereby adding to your monthly costs. 

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

However, if you choose to use print-on-demand services, you 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 you don’t need to worry about running out of stock or pay for storing excess stock.

4. Faster shipping

If you fulfill orders in a single fulfillment center in one area and ship internationally, you know 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, you can fulfill products closer to your 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 your customers can enjoy fast and secure deliveries.

If you choose Printful as your POD dropshipping partner, you can access customers all around the world, thanks to fulfillment centers located worldwide.

Printful’s fulfillment centers

5. International expansion

When you have an excellent product, you want to share it with the world. However, self-fulfillment can pose multiple challenges for international shipping. 

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

By choosing to outsource order fulfillment operations, your ecommerce business can easily expand internationally. These providers have the necessary expertise and logistics to navigate all the complexities of worldwide shipping.

6. Reduced shipping costs

By opting to outsource fulfillment services, your business 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.

7. Order accuracy

Ensuring accurate orders might be the key to customer satisfaction and loyalty. Outsourced fulfillment could provide it for your business.

When you partner with a fulfillment company, no busy days or daily struggles impact order accuracy. Your fulfillment provider will ensure that all orders have the correct contents and labels and that any fulfillment operation is carried out precisely all year round.

8. 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.

9. Access to technology and analytics for business growth

The order fulfillment process involves a lot of technology and order tracking. Outsourced fulfillment providers have advanced software systems that integrate with your sales channels and connect with your entire supply chain. By doing so, they’ll be able to automatically process payments and orders, track them, and update the order status. For instance, most fulfillment companies have the tools to identify growth areas and analyze key performance indicators.

10. Returns management

Dealing with the order fulfillment process is challenging, but you have to consider returns as well. And, similarly to accurate order fulfillment, you need to establish return accuracy to meet customer expectations. 

There are multiple advantages to trusting third-party solutions with ecommerce order fulfillment. Outsourced fulfillment providers are experienced in handling reverse logistics and provide better customer service for returns. These providers will take care of and inspect returned orders. It’s crucial during peak seasons when sales volumes increase, raising the numbers of returns as well. 

The takeaway

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

But keep in mind that not all businesses are the same and outsourced fulfillment might not be the solution for everyone. When you decide between keeping fulfillment in-house or outsourcing, go over these steps:

• Define whether your business and products are highly specialized or personalized, or require unique handling. 

• Decide if you let go of your current fulfillment operation completely or combine it with outsourced fulfillment.

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

If you decide to partner with an outsourced order fulfillment provider, remember to carefully compare them, as each company has a different approach. 

We hope this article will help you choose the best fulfillment method to discover your business’s full potential!

Read Next: 10 Differences Between Print-on-Demand vs. Do-It-Yourself